Retailers from all over the world continue to foresee good e-commerce growth but also expect that global marketplaces, such as Amazon and Alibaba, will expand to own 39% of the global online retail market in 2020, according to a new global survey.
The main conclusion from the study ‘The Rise of the Global Marketplaces’is that retailers have a very positive outlook regarding their future. Even though they expect marketplaces to have a share of 39% in the global retail market in 2020, they also believe that their company will grow as well. According to the study, this optimism is based on two views: retailers consider the impact of marketplaces to be neutral or positive and they believe they can outperform marketplaces.
The online survey, conducted by the Ecommerce Foundation and Nyenrode Business University, was completed by 231 retailers and 43 retail consultants, while around 30 CEOs of leading companies worldwide provided their views in more in-depth interviews.
“According to the respondents, e-commerce platforms can indeed significantly increase domestic and international sales of retailers and brands, by helping them to reach more customers,” said Jorij Abraham, Research & Advice Director at the Ecommerce Foundation. “However, marketplaces charge companies who want to use their services a hefty price, taking up a large part of their margins and profit.”
In addition, retailers overestimate their performance compared to that of marketplaces, the study found. Generally speaking, retailers state that they outperform marketplaces in almost every aspect, but especially in customer-oriented processes, such as customer experience and service. Only with regard to IT and Big Data, retailers are more reserved about their performance.
“This study is a wake-up call for many retailers,” commented Prof. Kitty Koelemeijer of Nyenrode Business University. “Retailers capitalise on their ability to excel in servicing customers while outsourcing part of their marketing efforts to marketplaces. Companies who do not have a clear vision on their future fail to respond timely and will eventually fail.”
In terms of actions in response to the rise of global marketplaces, retailers believe they should focus on specific customer segments, improve their customer services, and focus on specific markets and/or products. Retailers do not see reducing their prices and investing in offline stores as viable options.
When asked about strategies for dealing with marketplaces, retailers consider cooperating with and selling through marketplaces as the most interesting options. The respondents were clearly not very keen on completely ignoring them or exiting the market due to the competition.
The answers provided by retail consultants show some interesting differences compared to those of retailers, especially with regard to the obstacles that retailers face towards dealing with marketplaces. Where retailers see many different barriers, consultants clearly see a lack of general leadership as the largest problem for retailers. In their opinion, retailers in general do not really see the urgency of marketplaces and on average lack a clear vision on how the market will develop.
Through the in-depth interviews with CEOs around the globe, three main recommendations regarding dealing with marketplaces emerge, according to the study. First of all, retailers and brands should definitely use marketplaces to increase their domestic and international sales and also learn from them. Not only from their success, but also from their mistakes. Second of all, they have to migrate towards the vertical and/or specialist retailer model. The existing retail model where retailers have a large role in the supply chain is no longer valid.
Thirdly, companies should build a brand with a heart. Or as Paul Greenberg, Executive Chairman of the Australian e-commerce association NORA, put it in his interview: “Pure players are typically smart brain companies. Retailers can also offer a heart. They will have to start, however, internally by building an emotional relationship with their employees and other stakeholders before they can build up a real relationship with their customers.”
