Online Marketplaces: Future Bets

Online marketplaces are a considerable accelerator of e-commerce adoption around the world. Marketplaces make it easy to buy online by offering a variety of products and deals, storing payment and shipping information, providing easy mobile access via apps, and allowing buyers to read and compare product reviews for multiple retailers.

Marketplaces are one of the safest and quickest ways for retailers to scale their businesses and expand to new audiences, both domestic and international. By taking advantage of the built-in customer base and infrastructure each marketplace already has in place, retailers can focus on other priorities such as sourcing, pricing, promotion and fulfillment.

The first two marketplaces that U.S. retailers automatically think of are Amazon.com and eBay. These two behemoths take up a large share of the market, but they're far from the only options. There's money to be made on several marketplaces that have been growing in popularity in the recent years, from niche marketplaces to international marketplaces.

As retailers entertain thoughts of expansion, here's an overview of five marketplaces that can offer new opportunities for online sellers looking to take their e-commerce to the next level:

1. Newegg
Newegg started as a destination site for consumer electronics and IT products. Since then, it's expanded to become a destination for all kinds of products, including office supplies, sporting goods, automotive and industrial products, that appeal to its core demographic, which is mostly affluent, tech-savvy males between the ages of 18 and 35.

Automotive products in particular are getting a lot of attention from Newegg. The marketplace is making the best effort out of all "next generation" marketplaces to establish this category. Sellers with products that appeal to this growing demographic should consider listing on Newegg. Although most Newegg shoppers are male (a rarity for online marketplaces), its female demographic has grown remarkably since the site opened up to third-party sellers.

2. Sears
Sears is the third largest mass-merchant retailer in the U.S. and growing. Launched in 2009, the Sears marketplace now offers several options for merchants — sell on Sears, sell through Sears and advertise on Sears. 
In the tradition of its brick-and-mortar department store, Sears’ marketplace offers a great variety of items to its expanding consumer base. There are 20 categories available to third-party merchants, including electronics, home goods, outdoor products, shoes and apparel, auto accessories, and tools. Sears has a long lead time to get items listed for sale on its site, but once products are published, retailers can benefit from the traffic and exposure of one of the biggest retailers in the country.

3. Rakuten.com Shopping
Rakuten.com Shopping, formerly Buy.com, is part of a global network of Rakuten-owned marketplaces across Europe, the Americas and Asia. A leading U.S. fixed-price marketplace, Rakuten.com Shopping appeals to a broad audience, with most of its customer base ranging between the ages of 25 and 54, and splitting close to 50/50 male vs. female. The marketplace offers name-brand products in consumer electronics, sporting goods, health and beauty, jewelry, toys, and home and garden. Other categories are growing at a rapid rate, including antiques; art; auto, boat and motorcycle; business and industrial; coins and paper money; pottery and glass; collectibles; crafts; food and gourmet; memorabilia and stamps.

One of the appeals of Rakuten.com Shopping is its firm stance as a partner for retailers rather than a competitor. Marketplaces such as Sears, Newegg and others also sell products of their own, as does Amazon. Retailers selling on Rakuten.com Shopping can breathe a sigh of relief knowing that the marketplace wants them to succeed.

Products on Rakuten.com Shopping are also available through its mobile app. In addition, Rakuten has several global sites that serve specific regions, including Rakuten's Play.com in the U.K. Founded in 1998, Play.com became one of the largest online entertainment retailers in the U.K. before being sold to Rakuten in September 2011, becoming Rakuten's Play.com and operating as a marketplace starting in March 2013. Rakuten's Play.com now has more than 3,000 sellers and offers a range of product categories. For retailers looking to expand internationally, Rakuten's Play.com is a good place to test the waters.

4. Best Buy
The launch of the Best Buy marketplace in 2011 was a strategic response by the consumer electronics retailer to the steady decline of in-store traffic that big-box stores are seeing across the board as more shoppers move online. The relatively new marketplace allows third-party retailers to sell name-brand products traditionally sold at Best Buy stores while handling all product fulfillment themselves. Best Buy has invested in efforts to grow its online presence, developing its own technology to power the marketplace. In addition, it offers spotlight opportunities for products (e.g., Best Buy Deals of the Day), as well as a "Reward Zone" loyalty program to sweeten the deal for online shoppers.

5. Tesco
The No. 1 brick-and-mortar grocery and general merchandise retailer in the U.K., equivalent to Super Target or Wal-Mart in the U.S., Tesco has an enormous built-in customer base that it's transferring online. The Tesco marketplace has accelerated significantly since launching in 2012, and now competes with top U.K. marketplaces like Amazon, eBay and Rakuten's Play.com. 
Tesco offers a variety of products, including baby and toddler, home and garden, sports and leisure, toys, clothing, and jewelry.

Selling products via Tesco's marketplace comes with a number of advantages for U.S. retailers, including access to a new market of customers, more exposure for products and brands, and the opportunity to be associated with one of the U.K.'s largest brands. Tesco's click-and-collect service is one way the marketplace stands out from its competitors. The program enables buyers to order products from the marketplace and pick them up from one of Tesco's many stores, saving on delivery costs.

This list is just the beginning. There are many other marketplaces for retailers to consider depending on their goals and location. In China, marketplaces account for 90 percent of the e-commerce market, and it won't be long before we see similar numbers globally. Retailers not selling on marketplaces should take the leap now, and others selling on only one or two should consider expanding as soon as possible.

Rachel Miller is marketplaces product marketing manager at ChannelAdvisor, a cloud-based e-commerce solutions provider. Rachel can be reached at rachel.miller@channeladvisor.com.