Online retail in Germany is growing strongly. According to the German Ecommerce and Distance Selling Trade Association (bevh), German consumers bought goods totalling around 58.5 billion euros on the Internet in 2017 – for an increase of 10.9 percent. In this year also, bevh expects a further growth in eCommerce of 9.3 percent to around 63.9 billion euros total.
Multichannel retailers were particularly successful last year. They grew by 21 percent to 20.1 billion euros in the online and mail-order business, thus turning over almost 3.5 billion euros more than in 2016. The online marketplaces increased their volume by 4.4 percent to 27.9 billion euros, thereby generating the highest of those revenues. Online pure players also grew by 12.6 percent, or almost 1 billion euros, to an 8.56 billion euros total.
These figures now confirm what you have already read in our article “Online marketplace sales channels”, that retailers do benefit from a presence at online marketplaces. Stationary retailers, in particular, have the chance to quickly become online providers, and retailers or manufacturers with their own web shops can additionally profit from the extended reach and sophisticated shop techniques of these marketplaces. Away from the big players of Amazon and eBay, however, it is not always easy to find out where selling is worthwhile. iBusiness has analysed the market and created a comprehensive overview of the German B2C online marketplaces. We summarise those results for you now in this article.
Differing marketplace models and their potentials
In total, iBusiness identified 75 B2C online marketplaces in German eCommerce. According to the analysts, these marketplaces are based on very different business models – six selected marketplace models were more closely examined and their future potential and suitability determined for online retailers and manufacturers.
Model 1: Generalists with a supra-regional focus
This form is the prototype of the original online marketplace, which is also best known for providers such as Amazon and eBay. Retailers and manufacturers sell the most diverse of products here, but their assortment depth is rather limited.
Future potential: Small generalists who want to survive alongside the giants of Amazon and eBay have an incredibly hard time in this category. In addition, according to iBusiness, 42 percent of all German marketplaces have a generalist orientation. Accordingly, most platforms following this model are also unknown to consumers.
Suitability to you, the retailer or manufacturer: Unfortunately, smaller generalists often only attain half the traffic that the larger marketplaces do, and in most cases their marketing also leaves much to be desired. Nevertheless, it can be worthwhile for you to have several irons in the fire. Sales add up, after all, and at the same time, risk is better distributed. If you offer high-priced articles or luxury goods, you should consider avoiding these marketplaces, since you will have no control over product presentation and so risk damaging your brand.
Model 2: Product segment-specific specialists
The product segment-specific marketplaces offer certain target groups everything they desire. Whether it be a special wine or a particular Italian leather shoe, the customer can be sure to find the desired product here amidst a large selection. This marketplace model is even more interesting to manufacturers than it is for retailers.
Future potential: Consumers are guaranteed to find the product they are looking for at specialised marketplaces and these platforms are also particularly exciting for sellers. They will certainly meet their target group here, and with considerably less dispersion losses than at those generalist marketplaces.
Suitability to you, the retailer or manufacturer: The more specific, luxurious or sophisticated your product range, the more worthwhile it is for you to be present at specialised marketplaces. This is not solely about reaching your target group, however. Even more so, these platforms often provide functions, services and marketing activities tailored to your respective retailing or manufacturing group.
Model 3: Retailers with marketplace function
More and more online retailers are adding a marketplace function to their shops. Among these, for example, are Zalando, Otto and Home24. The advantage for operators is that they can offer a much wider product range without having to entertain additional storage or logistics costs. The plus point for marketplace retailers is that, unlike Amazon, their product ranges do not overlap, so there really is no competition.
Future potential: The potential of these hybrids is high. Retailers who have reached their growth limits can continue to grow with a marketplace function at no great risk. Marketplace participants, on the other hand, benefit from the reach and brand strength of the shops, which is often broader than that of some generalists.
Suitability to you, the retailer or manufacturer: These platforms are particularly interesting for manufacturers or retailers with their own brands. Not only can they increase their reach, but they can also retain control over their shipping and returns.
Model 4: Regional marketplaces with a local customer focus
The aim of these providers is to digitise the inner cities and stationary retail. Platforms like Locafox and Locamo, for example, offer products from local retailers to local customers and thus catapult these into the digital age at little extra effort.
Future potential: These marketplaces offer retailers a broad (regional) reach without much effort. The portals could become exciting should they collaborate with the city authorities and the tourism association, and, in addition to their shopping opportunities, also offer tips and activities for that respective city.
Suitability to you, the retailer or manufacturer: Selling on this type of marketplace is particularly worthwhile for local retailers or shops that have a young and/or online-accustomed target group, who wish to draw attention to their niche products or even possess a strong brand. By listing, they benefit from regional marketing and the support of both the city administration and the tourism department.
Model 5: Regional marketplaces of supra-regional customer focus
On these marketplaces, regionally-linked retailers have the opportunity to quickly expand their customer base through supra-regional sales.
Future potential: The model of these marketplaces is interesting to customers looking for specific products (of a specific origin). Here, too, however, marketing is decisive to success. Only when a certain degree of awareness is achieved can such a project become successful.
Suitability to you, the retailer or manufacturer: This marketplace model may be of interest to you as a retailer if you sell local products or import exclusive items, such as foodstuffs of a certain origin, handicrafts or designer goods. But also for manufacturers of luxury goods, selling on such a platform may be of interest. Many customers prefer to buy high-priced products within their region, so that a contact person will be available for any complaints or repairs.
Model 6: Marketplaces with a focus on internationalisation
These marketplaces allow retailers to expand their business abroad. Among the providers are international generalists such as Amazon, but also specialists like the Farfetch marketplace, which unites 400 boutiques from all over the world.
Future potential: With a presence on internationally oriented marketplaces, retailers can tap into completely new customer groups. It should first be checked, however, whether the selected marketplace also meets the requirements in the target region in terms of reach, target group and market environment.
Suitability to you, the retailer or manufacturer: The potential of these platforms always depends upon the respective target country. In any case, you should carry out a detailed market research which shows whether your products are of interest at all, what prices you can command and how the shipping will work out.
Checklist for the selection of suitable marketplaces
The marketplace models mentioned above offer a quick overview of the potential and possible risks of various platforms. But to be able to estimate exactly to what extent a certain marketplace is worthwhile for you as a participating retailer or manufacturer, you must also consider some further criteria. Please use the following checklist, which iBusiness has published, together with the marketplace overview:
- Is the backend powerful and the onboarding, or integration of your own catalogue, easily and quickly achievable?
- Are the commissions of the marketplace agreeable? Are they adapted to product segments, meaning, for example, lower for electronics than for fashion items?
- Does the marketplace reach your target group?
- Does the marketplace even have a broad reach? Or does it help you to significantly increase your reach?
- Does the marketplace invest enough in marketing to steadily increase its visibility?
- Are the functions, services and marketing of a specialised marketplace adapted to your target group? Are the looks and image of the marketplace of high enough quality for your target group?
- How strict are the rules for you as a retailer on the marketplace? Can you come to terms with these?
- Does the marketplace provider sell the same products as you?
- What additional marketing opportunities does the marketplace offer you?
- Is the marketplace innovative, so that it evolves further? Or is there a risk that its concept will be copied?
An ongoing challenge: The optimal price
Most of the world’s marketplaces have one thing in common. They offer a huge range of products from other retailers or manufacturers. Customers only choose from your product line amidst this wide range of offerings if your prices are attractive and your items stand out from the crowd. Such competitive pressure often forces marketplace participants into adopting a low-price strategy. But be careful, since this carries the risk of losing valuable margins! As a retailer or manufacturer, you need to know exactly which articles you can sell on which platforms, at which price and also be able to react dynamically to the market. The Business Intelligence software blackbee helps you to determine your best price while also generating a profitable margin.
Do you need further information on price monitoring and price optimisation on the Internet? Contact us now – we look forward to hearing from you.