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Are you jumping into the Merchant Marketplace explosion?

Updated: Jun 18

The marketplace business model may not be new – after all, eBay and Amazon have been around for a while now – but it is reported to be the fastest growing model in eCommerce.

In the merchanting sector it's a slightly newer phemomenon than in other areas of retail, but there is an accelerating trend for marketplace-style selling platforms, and more and more merchants are getting involved.

What's new in the market for merchants?

This month saw the launch of the B&Q marketplace, in partnership with Mirakl, with a view to expanding its current 40,000 strong product range to more than 100k, allowing brands like Black & Decker and Breville access to sell directly to customers via its website and app. The full expanded range is not available as at launch (March 2022), but will be added to over the coming months. (See this article at InsightDIY for more info)

However, other platforms are taking the marketplace model to the next level, enabling merchants to list products themselves to access new audiences and connect with customers in different ways.

While trade-focused platforms like Woodscanner are already doing excellent work in connecting buyers with available stock at the right price, many merchants are also looking to take more advantage of the thriving DIY market, currently worth over £14bn* a year to the UK economy. Trade will always remain important of course, but trends for home improvement, driven by the pandemic and the rising costs of living, as well as increasingly sophisticated DIY guides and self-help resources available online, continue to rise.

One notable example of this, as reported in Builders Merchant News is the recently launched DIY marketplace Plane and Simple. This platform, part of the Donaldson Group, aims to connect DIYers to local merchants, allowing greater exposure for local sellers. While currently focused in three areas of the UK (Central Scotland, Devon & Cornwall, and Sussex & Kent), the longer term aim is to cover more of the UK.

Why are marketplaces a big opportunity for merchants?

With more merchants turning to eCommerce as part of the broadening digital transformation of the sector, it’s unsurprising that marketplace models are becoming more widely adopted.

The rise of online purchasing has already created greater pricing transparency, while supply chain and availability issues have been widely reported, forcing many tradespeople to search online for available stock. The majority of product research is already done online, and this trend is only set to intensify with an increasingly digital-savvy customer base.

Ecommerce is becoming more broadly adopted by merchants, and competition is fierce, so it makes sense to connect with as wide an audience as possible. Increasingly simple eCommerce solutions, whether industry-specific of “off-the-shelf” solutions like Magento or Shopify, are helping a greater number of merchants to compete in this flourishing market, and modern technology’s enhanced interoperability (integration capacity) makes it easier for more merchants to list products on marketplace sites like eBay or even Amazon.

One of the big challenges for local or independent merchants is awareness, so marketplaces can be an excellent tool for helping to connect them with local audiences. The emergence of platforms like NearSt underline the importance of this, again helping to raise the profile of local availability for DIY and trade customers alike.

So how can merchants make the most of the opportunity?

Firstly it’s important to decide whether this is a market you want to compete in. At first glance it may seem that marketplace selling is going to have a greater focus on price, though in line with online trading trends, we predict the availability, reliability and range will continue to be greater drivers of trade.

Screenshot of Merchanter ERP system

If you do decide to go down this route, your stock control capability needs to be top notch. You’ll need really responsive, up-to-the-minute stock management software to ensure you’re completely on top of your stock availability, and your product information and logistics functions will need to be similarly capable of dealing with demand.

Using an order management system that will easily integrate with third party platforms is always going to make life easier if you’re entering the merchant marketplace, and you’ll need to dedicate internal resource to managing your service well – online, reputations can be won and lost very quickly through reviews and testimonials so don’t promise what you can’t deliver.

It’s also important to select the marketplaces that you’ll be able to service excellently. If you can’t offer national delivery, don’t go for a national marketplace – look for the local options and stick to your established boundaries. It’s also worth establishing whether you want to focus on DIY or trade markets, or both, as different platforms offer different marketing and reach, so make sure the ones you’re signing up for fit the audience profile you know you work best with and which add the best value for your business.

Services like VirtualStock are aiming to help merchants extend their ranges too through dropship, so if you’re looking to extend your range, it’s worth taking a look there too, which could offer another way to expand your offering.

You may initially reject the principle of marketplace selling but do bear in mind that this is a growing trend. If your customers are heading that way – and statistics suggest that they are – then you don’t want to be left behind. Yes, customers often have a great deal of loyalty to a particular merchant, but it’s not infallible, so it’s really important to keep track of what your customers want, and be where they are.

*figures from the Internet Retail Group study


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