Two thirds of global online shoppers buy from E-Commerce marketplaces, and around half of them make all or nearly all of their online purchases through these intermediaries. The equivalent of hundreds of billions of U.S. dollar in value was transacted on marketplaces such as Alibaba and Amazon in 2015, and tens of billions individually on eBay, Rakuten and JD.com. What drives the success of these and other E-Commerce marketplaces around the world? Why do online shoppers buy from them rather than from retailers’ websites directly?
One of the reasons is product variety. By aggregating offerings of multiple third-party sellers, marketplaces achieve a wider product range than is possible for most individual merchants. On marketplaces, consumers can conveniently discover new goods and new sellers to buy from. More than 50% of online shoppers say they go directly to marketplaces to find new products online, beating search engines, online retailers’ websites and social media.
Another important factor is the competitive offering in terms of product price and shipping fees. As more sellers join major marketplaces, the rivalry among them intensifies, benefiting the buyers. For example, in Q3 2016, 67% of transactions on the eBay marketplace in the USA, the UK and Germany were shipped for free, according to the company’s records.
Finally, when using marketplaces, online shoppers not only look for best offers from domestic sellers, but also compare them to international counterparts. Alibaba, Amazon and eBay each have an international platform for their sellers. For the majority of online shoppers in countries such as Japan, China, Germany and India, marketplaces are the first choice when it comes to cross-border online spending.
For more information about the trend behind the rise of online marketplaces, see our report “Global E-Commerce Marketplaces 2016” and the related infographic here.