The term “m-commerce” was coined in 1997 to refer to any transaction from mobile electronic devices. Today, there is a new “m” in retailing: marketplaces. Amazon is one of the pioneers of marketplace transactions offering a powerful platform for third-party sellers. One of Best Buy’s key strategic initiatives is its Marketplace expansion. Staples features 200,000 items online and plans to hit one million within the next year. Walmart has more than 5 million SKUS in its repertoire, with the majority coming from its online marketplace.
The digital marketplace is an important growth vehicle for retailers because of three important factors.
First, retailers can “dodge death by category killing.” Today, carrying wide assortments in a category can be a liability. However, online aisles and search tools can provide retailers with tremendous opportunities for category expansion.
Second, marketplaces can help “expand the brand.” Target, for example, recently purchased digital brands CHEFS Catalog, Cooking.com, and DermStore.com. Expanding brands in the digital marketplace is a sensible strategy for Target.
Finally, marketplaces can help retailers “avert scale-fail.” Retail stores can also act as pick-up locations for online purchases. Walmart offers in-store pickup for purchases online including those from its online partners. Target will begin offering in-store pick-up for online purchases later in the year. Every store location for Target and Walmart will have the potential to “facilitate sales that transcend the inventory and the category limitations of each stores.”
Discussion Questions:
1. What is a retail marketplace from a 21st century perspective?
2. What are the advantages and disadvantages from the host and the smaller retail participants’ perspectives?
Source: Carol Spieckerman, Retail Wire, January 23, 2014