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Marketplaces are shaping the future growth of retailers

March 27, 2023
Read Time 2 mins

By Tarsus Distribution

Over the past few years, a paradigm shift has begun changing the way retailers operate. Online marketplaces that enable organisations to integrate a wide range of third-party offerings into their e-commerce strategy have risen to the fore.

When retailers adopt a regular e-commerce model, there is an order in which tasks have to happen to bring products to consumers. For example, these will include contract negotiation, merchandising, marketing, inventory planning, setting prices, and many more.

Once a product or solution is purchased, the company has to fulfil the order, offer customer support, and make sure its website is kept up-to-date. There is a lot of work involved.

On the other hand, the platform business model sees an open and regulated network of sellers providing their own products to customers. From established behemoths such as Takealot and Amazon, to new players in highly niche sectors, marketplaces are now competing to serve consumers and customers worldwide. The marketplace model has also extended to B2B commerce, with major suppliers unveiling successful platforms for their products and services.

During the COVID-19 pandemic, marketplaces grew even more popular.  A massive strain was placed on retailers during this time and we saw businesses of every size and type reconsider their e-commerce strategies.

Those who were already leveraging the marketplace model enjoyed steady growth, and today, more and more mainstream retailers are looking for ways to incorporate the marketplace model into their own operations, laying the foundation for hundreds of solutions and products to be showcased to a far wider audience.

In the aftermath of the pandemic and the resulting economic downturn brought about by global events, certain businesses have been cautious when it comes to adapting their e-commerce strategy in line with today’s digital era, which is understandable. After all, there are fears that marketplaces can cut into revenues by diluting attention due to the large number of products and solutions on offer.

However, if we look at the bigger picture, the supply chain issues that were driven by the pandemic are over, and with the cost of living crisis hitting every consumer, people are looking for cheaper options on their chosen products. Concurrently, global political crises have made it harder for companies to source, store, and ship the products that their customers want, another problem that marketplaces help to address.

In fact, the wide range of products and solutions is perhaps the biggest benefit of the marketplace model. An enterprise marketplace with several hundred third-party sellers grows the product options from a few thousand to potentially hundreds of thousands or even more products.

In this way, marketplace operators need to worry less about running out of stock, and retailers have their products showcased to buyers who are looking for a specific solution but might not have been aware of their specific brand.

When a popular item runs out of stock, the operator still has one or more partners that offer a similar solution. Similarly, if buyers do not want to spend on a premium brand, another seller with the same type of offering at a lower price point can benefit.

Marketplaces also make sense when it comes to logistics. Back in the day, retailers were responsible for storing and shipping their full inventory and depended heavily on large warehouses to meet the needs of a national or even international customer base.

However, when you have an enterprise marketplace, the burden of storing and fulfilling orders is shared between the network of sellers. In addition, the marketplace operator does not need to shoulder the expense of having enough warehouse space to store inventory. In this way, the marketplace model offers true resilience and flexibility while limiting the risk for the operator, retailers, and customers alike.

As a strategic partner, Tarsus Distribution handles all logistics of fulfilling orders for its customers. This is particularly beneficial for small to medium-sized businesses (SMBs), who lack the resources and skills to manage logistics for themselves. Through Tarsus Distribution, SMBs can benefit from access to an around-the-clock storefront, as well as fewer phone calls and less paperwork when placing a simple hardware order.

Moreover, these smaller entities can still turn to their trusted reseller for support and advice, giving them the benefits and efficiency of e-commerce while maintaining a personal touch.

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