What Does 2022 Hold For Online Marketplaces?
2021 especially has seen the growth of online marketplaces increase quickly, and positively - online brands such as Amazon, Ebay and Wayfair are dominating the online marketplace and throughout the last 2 years have become many people's go to shopping place. As covid-19 had massive effects on almost every industry, one that took a major hit was high street retail. All bricks and mortar stores had to close for a long period of time - and those that didn't have an online presence or platform simply didn’t survive. The changes to the way we had to shop forced everyone to move their shopping habits online, which is where the main growth of these online marketplaces has come from … and it doesn't seem to be slowing down.
Statistics show that 91% of shoppers in the UK are now shopping with online marketplaces at least once a month. This increased spending online has seen the market leader Amazon grow from big to huge - with Amazon's profits almost tripling in the first few months of 2021 alone. Since the pandemic started Amazon has reported its revenue has increased by 44% overall (£77bn).
So , with the online marketplace presence continuing to grow, and the demand for more is coming.
What does this mean for online marketplaces in 2022? And what changes can we expect to see?
What is an online marketplace?
Firstly, let's start by understanding what an online marketplace is….
An online marketplace is an e-commerce website that connects sellers with buyers. Often known as an electronic marketplace where all of the transactions are managed by the website owner. Companies use online marketplaces to reach customers who want to purchase their products and services - in an easy and efficient way. As external factors have changed what consumers demand from businesses, sellers have had to adapt to processes to provide them with the quickest, and most hassle-free services. Good examples of online marketplaces that most are familiar with would be Amazon, and ebay.
Although online marketplaces were a major trend in 2021 and became a necessity at the start of the pandemic, they have in fact been around since 1995 - which was when ebay was launched.
Ebay became the first buy and auction marketplace online that brought sellers and buyers together in one platform - starting a trend for many other businesses to follow suit. Today online marketplaces are a thing of the norm and over 48% of shoppers will go directly to a large online marketplace when looking to purchase an item online.
So, other than the external factors that have played a part in the increase in popularity of online marketplaces, why else are they beneficial to both buyers and sellers?
The benefits of an online marketplace
Additional source of revenue for existing businesses
Cuts down marketing costs
Allows businesses to internationalise themselves
Creates transparency in availability, stock levels, and prices
Buyers are able to compare prices
Allows you to have a functioning company 24/7 (you can make sales at any time of the day)
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Predictions for the online marketplace in 2022
So, now you're up to speed with what an online marketplace is and why it was one of the biggest trends of 2021, it's time to look at what we can expect to see in 2022. Now that the pandemic is more controlled and lives are going back to normal in most places, will shops that were once closed, and places that had to turn to online marketplaces? The simple answer is …. Yes.
Many businesses' online presence has helped them create more revenue and gain a bigger audience, so to continue to use this method of selling would make sense - but what things are going to change this year?
Let's take a look …..
The year of the marketplace
2022 is predicted to be the ‘Year of the marketplace’ - and we’re not surprised. Amazon has been an example over the last two years of how successful an online marketplace truly can be - and other marketplaces are now fast approaching their success. There are a number of online marketplaces now that have different services, from retail, social media, and auction to craftworks. Although they are forming different channels, they are all growing in one space - the online marketplace.
“In future, protecting brands will mean making sure that your customers have the same emotional experience wherever they buy in the ecommerce environment. That means making sure that the tone of voice and visual look and feel is consistent across the multiple different layouts and formats dictated by the new superpower marketplaces.” - Mel Henson, Head of Creative at Optimizon
The move to the marketplace model is being driven by increasingly sophisticated offerings. For consumers, it brings convenience, choice and value, whilst also providing sellers with access to a large audience, alongside valuable services like fulfilment and payments - which increase their usability.
In 2022 alone the online marketplace model is expected to grow by 15%, as it drives the largest fundamental shift in consumer spending since the emergence of ecommerce. Online marketplaces are rapidly becoming the first port of call for both customers and suppliers, and the days of these platforms being a hub for jumbled second-hand auctioned off stock are a memory of the past - 2022 could truly be the year of the marketplace.
We know that using online marketplaces has risen in popularity due to its convenience with shoppers, but what does it bring to brand themselves?
Marketplaces such as Amazon have previously refused to sell other brands items on their platform - and simply would sell the products as if they were Amazons. However, as of this year we may see some changes in this.
If your company has spent a fortune building up its brand, it's worth protecting. Creating a brand that generates customer loyalty, takes constant nurturing and research - creating this could be difficult if your product appears on marketplaces like Amazon and eBay, where there are lots of elements you can’t control.
Some brands have reacted by refusing to sell on marketplaces, due to the lack of control over their own brand, but now with Amazon projected to be the UK's largest retailer by 2025, how can brands ignore its potential?
So how do you gain brand control in the online marketplace?
“Taking control of your brand on Amazon and other marketplaces is no longer a choice, it is essential. Nobody else will give your customers the same brand experience as you can” - Mel Henson, Optimizon
How to gain brand control
Budget to protect your brand
By gaining brand control and credibility you will see your business flourish even more and customer loyalty will be far easier to sustain. It is predicted that a lot of brands who are in the online marketplace will be planning to gain brand control in 2022 - and we think you should too.
It is predicted that 2022 will see the boom of Q-commerce in the online marketplace. Quick commerce (q-commerce) is the next-generation of e-commerce, and as the name suggests, it is all about being fast. Traditional e-commerce revolutionised the ‘quick’ delivery landscape through online ordering, but even today delivery times average between 3-5 business days and larger orders are encouraged. For example, spend £100 for free delivery, or pay £7 a month for next day delivery.
We have seen one of the largest online marketplaces capitalise on this as Amazon introduced their prime membership - allowing customers to pay up to £8 per month to receive benefits, such as free next day delivery. However with the introduction of q-commerce, this will be something that is available in most places on the internet - and you will have the products within the same day.
Q-commerce can bring small quantities of goods to customers almost instantly, whenever and wherever they need them. An example of somewhere that is already using q-commerce is some food stores such as McDonalds, Subway etc - so why can't retail deliveries do this? Rather than replacing a weekly food shop, or your online bulk buys, q-commerce is there to complement when you need a particular set of items, conveniently and fast.
“As consumer behavior is changing and the demand for delivery of other products is expanding, we are happy to grow our services together with our customers.” - Niklas Östberg, Co-founder and CEO of Delivery Hero - food delivery service.
Tuning in on this customer demand, and introducing q-commerce into your business model could be something that helps skyrocket your business.
You’re probably all familiar with teleshopping channels such as QVC, and would see these as outdated and out of tune with customers needs - but 2022 could be the year that this all changes. Well, sort of. Live-stream shopping is really similar to teleshopping however it would take place on the most popular social media platforms, or from brands own websites.
Live commerce combines instant purchasing of products and audience participation through a chat function or reaction buttons. In China, live commerce has transformed the retail industry and established itself as a major sales channel in the last five years. In a 2020 survey, two-thirds of Chinese consumers said they had bought products via livestream in the past year. Whilst this has been a success in China, retailers and online marketplaces elsewhere are still behind China in the pursuit of live commerce. So could 2022 be the year we see live commerce take off here?
Blending entertainment with instant purchasing, live commerce offers retailers, brands, and digital platforms a new channel with enormous scope for creating value. How exactly brands will incorporate this into their business model still remains to be unknown, but what we do know is that it holds enormous long-term potential for brands and e-commerce platforms alike. If we use China’s experience as an example for this, it would indicate that by 2026 between 10-20 percent of all ecommerce sales will be via live-commerce-initiated sales.
So, how can brands ensure that this method will help generate sales for their business?
Live commerce is an entertaining and immersive function, and anything new is always bound to intrigue people. By keeping these live streams entertaining and beneficial, you can keep viewers watching longer. It also helps speed up the customer decision journeys from awareness to purchase - as viewers are provided with credibility, brand knowledge and visuals of the products/services, all in one instance. Time-limited tactics such as one-off discount codes for all viewers could be used to create a sense of urgency - generating more sales. Companies using this method report conversion rates approaching 30 percent—up to ten times higher than conventional e-commerce methods.
Live stream shopping gives brands the opportunity to get what they want across to their audience in real-time, and it allows brands to be more open. If used correctly this could be huge for the online marketplace in 2022.
With greater concern on the environment and the impact of climate change becoming more prevalent it is predicted that 2022 will be the year of sustainability. It is predicted that due to external influence such as, plastic waste, deforestation and many other environmental concerns - consumers will be more focused on the sustainability and environmental impact that their products have, in 2022.
Consumers are now more likely than ever to be swayed to purchase products that are deemed ‘Climate Friendly products’, over products that are cheaper. Therefore, it's important that businesses are considering their audience and these factors, in every aspect of their business. A businesses environmental impact, from sourcing, packaging, to end-of-product-life planning, could now be make or break for its consumers.
Brands should also be aware of ‘Green Washing’, which many companies - rightfully so, are being called out on social media.
What is Greenwashing?
Greenwashing is when a company or organisation spends more time and money on marketing themselves as environmentally friendly than on minimising their environmental impact.
It is a deceitful advertising gimmick intended to mislead consumers who prefer to buy goods and services from environmentally conscious brands. Today’s society is very receptive to marketing ploys and to mislead your environmental stance could see the downfall of your business - so it's important to ensure that your environmental pledges are genuine.
The online marketplace industry has received lots of backlash over their impact on the environment in recent years. From over packaging of items, pollution from the number of delivery trucks on the roads, to the amount of clothes in landfill because of the poor quality of fast fashion brands.
Amazon is one of the many online marketplaces that has strived to better the environment through their brand by introducing an eco friendly shopping platform. In previous years Amazon faced criticism for its use of excessive cardboard and other packing materials, and came under fire in 2019 for introducing new-style packaging that could not be recycled. But Amazon said their eco-friendly scheme will help lessen the company’s impact on the environment - by introducing plastic-free shampoo bars, organic children's clothing, and over 40,000 items on the platform will carry certificates from schemes such as Fairtrade International and the Carbon Trust to help consumers pick products on their environmental merits.
Due to the increased need for more sustainable brands, and following the success of Amazon's eco-friendly products, it's predicted that 2022 will be the year of environmentally aware online marketplaces - and we truly hope that happens!
From high-end makeup brands,to shoes and dog toys there’s a direct-to-consumer market for just about anything you can imagine. Studies show that an incredible 81% of consumers say that they intend to make at least one purchase from a direct-to-consumer brand in the next five years. And the trend of direct-to-consumer retail isn’t reserved solely for consumer goods either — manufacturers have also discovered the benefits of this highly sought-after retail model.
Firstly, what does direct-to-consumer mean?
Direct-to-consumer (DTC or D2C) refers to a marketing and advertising strategy in which the seller makes a direct appeal to the customer, eliminating traditional advertising methods, such as television ads, and radio ads. DTC essentially cuts out the middle man. The same is true for DTC in retail.
The direct-to-consumer method looks like this:
Manufacturer - Advertising - Customer, eliminating the wholesaler, or retailer in general.
So, what place does this have in the online marketplace?
Many brands have said that D2C growth is one of their main threats, even ahead of Amazon, and it is no wonder why , as of 2021 there was a 19.2% growth in the D2C market- showing how rapid its growth is. Brands such as Beavertown Brewery have seen a 1000% increase in sales since using d2c methods - so many companies are following suit.
When it comes to entering the online marketplace, as discussed previously, many brands often question whether to use Amazon as a distribution channel due to its lack of control. But many d2c companies are thriving on Amazon and it's predicted that 2022 will be the year that many existing d2c companies will find themselves in the in line marketplace - or other existing brands will switch to the d2c model.
As a d2c brand there are a number of benefits you can expect from joining an online marketplace such as Amazon. Simply, it's the most efficient way to reach customers — particularly for the U.S. based shoppers. And the reason it’s so effective is because 66% of new product searches begin on Amazon, vs 20% on search engines, and 4% on brand websites.
Amazon is also a great place to find digital word-of-mouth - after purchasing an item Amazon will ask the customer to leave a review, and many do - so selling a good product on Amazon will eventually end up selling itself - without any marketing! Even when a shopper plans to buy an item from a physical retail store, people often read the product’s reviews on Amazon before purchasing the product.
When it comes to d2c business their main push is advertising, as they need their audience to hear about their products somehow, and Amazon tend to have advertising rates 10% cheaper than most d2c ad costs - which is one of the reasons why many d2c companies are making the switch to working in the online marketplace. Brands on Amazon, also tend to experience an increase in organic traffic (remember, most people search Amazon first for new products). Meaning selling on Amazon can help d2c businesses hit much healthier profit margins.
So, if you're a d2c business owner then entering the online marketplace - especially amazon, could be the solution for you.
Hopefully, this blog has given you a better idea of what the future holds for the online marketplace, as well as how different factors can play into the success of a brand, online or offline. 2022 is going to be a huge year for the online marketplace, so if you're in this industry, be sure to stay on top of these trends - and skyrocket your business.
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