2022 has been the year in which marketplaces have established themselves as a very valuable tool to adapt to changes in the economic and social landscape. This year, these platforms have made it clear that they are here to stay.
Within this context of boom and growth of marketplaces, it is a reality that sellers of platforms such as Amazon have had to face many challenges in 2022. Changes in the conditions of collaboration, the increase in rates or changes in the Event calendars have generated a situation of uncertainty and complexity among vendors, who in turn were trying to find the balance between good billing and maximum profitability. Added to this is the growing need for other marketplaces beyond Amazon to begin developing their platforms, incorporating, for example, improvements to their advertising systems, catalog attributes, and even purchasing processes.
These circumstances have given rise to the professionalization of the service in the management of the channels to be competitive. Managing a sales channel is already difficult, so imagine several. In addition, due to the growing competition within these platforms, it is also vitally important to create a brand image that offers added value to consumers, and not continue competing on price, which becomes incompatible with achieving that profitability that we were talking about before.
Sin duda, se espera un 2023 muy interesante donde veremos cómo todo esto va evolucionando.
In 2022, it is important to highlight those already existing marketplaces that have worked on their expansion, as is the case of the giants Walmart attracting sellers from the UK to the USA or Amazon adding Belgium to its list of markets. Looking ahead to the spring of 2023, Amazon plans to launch soon in Colombia, South Africa, Nigeria and Chile. The leading marketplace in Latin America, Mercado Libre, which has not stopped breaking records this year, also deserves a special mention.
Mercado Libre had a 63.1% growth in revenue during the first quarter of 2022, reaching 2.2 billion dollars. Its net sales also increased by 40.2%, reaching $1.3 billion thanks to its 40 million unique shoppers. These results demonstrate the long-term success of Mercado Libre, whose business model focused on customer satisfaction has been key to its constant growth and the attraction of buyers and sellers throughout the region.
Parallel to the changes and expansion in the consolidated marketplaces, many companies that had solid e-commerce have also decided to bet on the marketplace model, as is the case of Victoria’s Secret, Brico Depôt or Maisons Du Monde, among others.
In addition to consolidated retailers that are becoming well-known marketplaces and marketplaces that continue to expand, new names have emerged that will surely give a lot to talk about, such as Miravia, the new platform born from the Alibaba group.
It is not surprising that with this development and emergence of new platforms, the word “diversification” is beginning to be repeated more and more among vendors and professionals in the sector.
2022 has shown the need for companies to diversify risk, reduce dependence on Amazon and expand their sales channels by taking advantage of the opportunities offered by other Marketplaces. Based on this, 2023 is presented as the year in which it will become increasingly common for brands to follow an omnichannel strategy, taking advantage of different sales channels to maximize their results. This is where we find the great opportunities and challenges of the coming year…
The opening of new marketplaces: an opportunity for growth, but also a challenge
Taking into account this diversification for which many brands are already betting, it is also necessary to put on the table that the opening of new marketplaces poses numerous operational and logistical challenges for companies.
One of the main challenges is the administrative aspect, such as obtaining the necessary permits to sell in the new market, compliance with tax regulations such as VAT and RAP (Extended Producer Responsibility), which you have heard so much about. Amazon sellers this year, and managing invoices and accounting.
Another important challenge is the operational aspect, since new processes and strategies are often required to sell in a new channel. This may include adapting the products to the requirements of the new market, such as the creation of special packages or packaging, or the adaptation of the marketing and advertising strategy.
The third challenge is the logistics aspect, since many marketplaces do not offer fulfillment services, which means that companies must find a way to manage the storage and shipping of their products on their own. This can be especially challenging if it is a market in which the company has no prior experience, as is often the case.
To address the logistics section, many companies are choosing to work with companies specialized in marketplace logistics, such as Cubyn, Hubbo, Kubbo, Byrd or BigBuy. These companies offer customized solutions for managing the storage and shipping of products in marketplaces, allowing companies to focus on their business while leaving logistics in the hands of experts.
These logistics options can also be interesting even for sellers already established on Amazon, since it is important to take into account that FBA (Fulfillment by Amazon) rates are becoming more expensive. Sellers have to assess whether this option is the most appropriate for the company or whether it is better to opt for other fulfillment solutions.
It makes sense to think that, in a diversification strategy, it is important to have inventory centralized and not dispersed in different marketplaces, in addition to not depending on Amazon FBA and having costs controlled. In 2023, it is also expected that the vendor and 1P models will continue to slow down and that companies will have to find ways to deal with 3P selling.
In addition to the logistical challenges that come with opening new marketplaces, there are also other challenges related to managing these channels. One of the main difficulties is to keep an overview of all the products and offers available in different marketplaces.
This is where the need to use feed integration tools such as Channable, Shopping Feed or Lengow arises. These platforms allow you to unify the management of all sales channels in one place, which makes it easier to update prices, synchronize inventories and optimize offers.
The rise of companies that diversify their sales channels gives rise to this type of platform that aims to make life easier for sellers, such as Venped, which is presented as a solution that “saves up to 60% management time, increases profitability by 80% and grows sales by 10%”. It’s worth taking a look at.
In general, the opening of new marketplaces can be a great growth opportunity for companies, but it also poses a series of operational, administrative and logistical challenges that must be effectively addressed to ensure long-term success.
Parallel to this, the retail media continues to evolve and is facing a year in which it will undoubtedly play a leading role.
What is retail media and why is it the big new opportunity in the world of advertising?
The evolution and rise of Retail Media are the result of the great growth that electronic commerce has experienced in recent years. More and more users browse for products and feel comfortable buying online, which allows companies to monetize that traffic through Retail Media.
Retail Media is a form of advertising that is sold on websites where products or services are also sold. This offers retailers the opportunity to collect vast amounts of data throughout the sales cycle and improve the targeting and measurement of their ads, allowing them to have greater control over their customers’ Customer Journey.
In this “new” era of Retail Media, the connection between the brand and the retailers is based on data, which allows companies to tailor their marketing strategies to the needs and preferences of their customers more precisely. Thanks to Retail Media, companies can take advantage of the traffic their websites receive to promote their products and services effectively and reach a highly segmented and interested audience.
Continuing with the latter, recently we came across the news that Mirakl, the French SaaS marketplace platform for companies, has decided to expand its product portfolio by betting on Retail Media, giving rise to Mirakl Ads.
Mirakl Ads is presented as a transversal advertising solution that makes it easier and faster to manage advertising campaigns with automated functions, taking advantage of millions of data. 2023 will also be the year in which we will see all the potential and the great opportunity that Retail Media represents for the different online sales channels.
What happened to Amazon Advertising in 2022?
Speaking of advertising, it is worth saying that Amazon Advertising has been one of the trending topics this year and will surely continue to be so in 2023. If we had to summarize the evolution of Amazon Advertising in a few headlines, it would be something like this:
- In 2022, Amazon’s advertising business reached an annual rate of nearly $40 billion, ten times what it was five years ago. Despite the growth, Amazon’s ad prices have been stable and slightly cheaper compared to 2021.
- The average cost per click (CPC) in the United States was $1.06 in November 2022, up from $1.24 a year earlier.
- Amazon advertising is growing not only because more ads are being placed in more places on Amazon, but also because the Amazon ad network is reaching more consumers off the platform and with new formats.
- Amazon’s advertising business has outpaced the growth of Google and Facebook in every quarter of the past three years. Though still smaller, Amazon is going after Google and Facebook instead of competing for ad dollars with retailers.
- In the third quarter of 2022, Amazon’s ad business grew 25% to $9.5 billion, while Google’s ad revenue only increased 2.5% to $54.4 billion and Facebook’s ad revenue declined. 3.7% to 27.2 billion dollars.
Trending Social Commerce
Prime Day this year was a great example of social commerce in the United States, videos with the hashtags#primeday2022 and related hashtags have been viewed 77 million times on TikTok. Shoppers used social media to discover the best deals instead of trying to find them on Amazon. Last year it was 30 million and the year before it was 6 million. In 2019 it was practically zero.
It would have been interesting if Amazon and TikTok worked together to enable this, allowing videos on the social network to link directly to products so shoppers could easily get hold of them.
With that in mind, it’s no surprise that Amazon is rolling out the TikTok-like functionality called Inspire, which bills itself as “an in-app shopping experience that gives customers a new way to discover ideas, explore products, and shop without problems from content created by other clients, influencers and brands they love.
The experience is similar to a TikTok feed, with endless photos and videos shoppers can swipe through. Once they see something they like, they can buy it in just a few clicks. In short, Amazon wants shoppers to spend time in the Amazon app even when they don’t want to shop. Be that as it may, Inspire hasn’t been released yet, so it’s hard to say how it will be received by users. It will be something that we will also see in 2023.
The marketplace sector has been non-stop in 2022, the year in which they have finished establishing themselves and in which clues have been given about what we can expect in 2023. I am sure that the word “diversification” will continue repeating a lot this new year.
That being said, we can only wait and keep an eye on the marketplace sector in 2023, which is very busy. Happy New Year!
