In 2018, the biggest online marketplace based on gross merchandise volume was Chinese platform Taobao with a GMV of 515 billion U.S. dollars. Tmall and Amazon ranked second and third with 432 and 344 billion U.S. dollars in annual third-party GMV respectively. Traditional brick-and-mortar stores such as Walmart have also expanded their e-retail spaces to include an online marketplace for third-party sellers. Other online marketplaces such as Etsy have been geared towards handmade or vintage items and supplies, as well as unique factory-manufactured items, providing customers with a more personalized shopping experience than mass-merchandise sales.
Online marketplaces are particularly useful for micro-vendors – a 2018 survey revealed that almost three quarters of all businesses selling on Amazon only had 1-5 employees. As of Q2 2018, 3P sellers generated 53 percent of paid unit sales on Amazon and in 2018, Amazon generated 42.75 billion U.S. dollars in third-party seller service revenues, up from 31.88 billion U.S. dollars in the previous year, making this a lucrative business for both everyone involved. However, it can hardly be denied that the power balance is very much in favor of Amazon – just like Google’s influence over the visibility and ultimately, success, of a business via its search ranking, Amazon’s product listings are extremely influential for consumers purchasing goods online. This is especially noticeable during special promotion periods such as Amazon Prime Day – in 2015, marketplace sellers accounted for 48 percent of Prime Day sales worldwide but in 2018, this share had decreased to 38 percent due to Amazon’s increasing promotion of its own products and brands. During a 2018 survey, online marketing professionals stated their apprehensions about online marketplaces taking a cut of the seller revenues (with the sellers doing the heavy lifting in regard to sales), customer relationships being owned by the marketplace operators and competition from private label brands. Only 17 percent of respondents stated that they had no concerns about e-commerce marketplaces.
Love it or hate it, Amazon is one of the most important sales channels of retail professionals worldwide. Main reasons for usage include an increase in sales and customer acquisition – hardly a surprise when looking at the retail platform’s scale and omnipresence during the online shopping process. Among U.S. Amazon sellers, eBay was also a popular selling platform but only a third of respondents used their own website to sell products. In 2018, the main product categories of Amazon marketplace sellers in the United States were home & kitchen, beauty & personal care, and clothing & accessories.
During the May 2018 survey, 50 percent of global shoppers stated that they preferred to make first-time purchases at a retailer, whereas 47 percent of repeat buyers preferred online marketplaces. According to another global survey of online shoppers, the leading reason for purchasing at a marketplace instead of a retailer were more competitive prices. The most popular online shopping categories at online marketplaces were entertainment, apparel, and electronics.
