Rise of the Global Market Places: When will Amazon and Alibaba own 100% of online sales?

Amazon’s success has made retailers and brands revisit their digital strategy. The need for speed, creativity and understanding the customer, have climbed to ew heights with the digital transformation. Uber is the world largest taxi company without any vehicles, Airbnb is the biggest accommodation provider but does not own any real estate. Alibaba does not own any physical warehouse. These examples show that information is the most important asset.

Retailers expect global market places to own nearly 40% of online retail market in 2020

According to an elaborate research study conducted by the Ecommerce Foundation and Nyenrode Business University, Adobe, Informatica, Lengow and LiveWords, retailers from all over the world expect that global market places, such as Amazon and Alibaba, will own 39% of the global online retail market in 2020. This indicates that the influence of market places on retailers and brands continues to grow considerably over the next few years.

For more information about the Rise of the Global Market Places study, please download the online version or order the full version.

 Global Market Places
Rise of the Global Market Places study

By order of the Global E-commerce Summit, the Ecommerce Foundation, an independent non-profit organization, initiated the Rise of the Global Market Places research study, together with Nyenrode Business University and sponsored by Informatica. Around 30 CEOs of leading companies worldwide provided their views in more in-depth interviews.

Overly optimistic outlook

“According to the respondents, e-commerce platforms can indeed significantly increase domestic and international sales of retailers and brands, by helping them to reach more customers,” says Jorij Abraham, Research & Advice Director at the Ecommerce Foundation. “However, market places charge companies who want to use their services a hefty price, taking up a large part of their margins and profit.”

Popular strategies

In terms of actions in response to the rise of global market places, retailers believe they should focus on specific customer segments, improve their customer services, and focus on specific markets and/or products. Retailers do not see reducing their prices and investing in offline stores as viable options.

When asked about strategies for dealing with market places, retailers consider cooperating with and selling through market places as the most interesting options. The respondents were clearly not very keen on completely ignoring them or exiting the market due to the competition.

Do Retailers really see the shift happening?

The answers provided by retail consultants show some interesting differences compared to those of retailers, especially with regard to the obstacles that retailers face towards dealing with market places. Where retailers see many different barriers, consultants clearly see a lack of general leadership as the largest problem for retailers. In their opinion, retailers in general do not see the urgency of market places and lack a clear vision on how the market will develop.

Three Advices from Retail CEOs to Retail CEOs

Through the qualitative interviews with CEOs around the globe, three main advices regarding dealing with market places emerge.

  1. Partner with marketplaces: Retailers and brands should definitely use marketplaces to increase their domestic and international sales and also learn them. Not only from their success, but also from their mistakes.
  2. Focus or Long Tail: Retailers have to migrate towards the vertical and/or specialist retailer model.
  3. Emotions: Companies should build a brand with a heart. Or as Paul Greenberg, Executive Chairman of the Australian e-commerce association NORA, puts it in his interview: “Pure players are typically smart brain companies. Retailers can also offer a heart. They will have to start, however, internally by building an emotional relationship with their employees and other stakeholders before they can build up a real relationship with their customers.”

How to build a data-ready retail org?

Becoming a data-ready enterprise has the highest priority now. The relationships between data have great potential. Being able to predict the next logical action of a consumer or business partner will be the key in my eyes. If you are able to create a data ready mindset, your company will be able to succeed.

  1. Customer Experience is the new marketing. According to Gartner from 2016 customer experience will be the main factor for customers to buy or not to buy.
  2. Building a 360 view of all customer interactions across all touch points, understand the household potential will be a key component
  3. Leveraging the power of the social relationships for better targeting or fraud prevention can be addressed by overcoming the burden between big data and customer profiles. More easy and much cheaper, with Big Data Relationship Management transaction data and customer master data become one.
  4. Customer experience is an investment, yes. Supplier chain efficiency is the bother of retail customer experience. Mitigating supplier risks, streamlining supplier onboarding and product introduction with our Supplier Relationship Management App can impact speed and risk reduction.
  5. Fuel marketing tools and sales apps like marketing automation with a relevant bundle of information: the right customer, right email address, right home address, relevant product offer.
  6. Nothing is more personal like your name and home: Address validation, email validation, autocomplete – some very basic things, can make the difference on your mobile site, web shop or app.
  7. Make the business day more delightful: get the right information to all critical roles in retail: Supply chain, category management, omnichannel, marketing, finance. The time to market pressure requires more agility in processes, collaboration and decision making. Right workflows and automation can help to steer the right things to the right people. E-mail alerts, task views and interfaces tailored to the needs of a roles, can make people easier approve content, accept a supplier, or update a website. I call this business process integrity.
  8. As the customer of today is very easily turned off. This sets the bar high. Customers expect very comprehensive information before taking a purchasing decision. Across every product category consumers use more than 10 different sources of information before willing to buy. Quality standards for product content, for customer profiles or supplier information, require a holistic data governance concept. Data governance experts talk about bimodal governance, which executes standards from top down, but also allows a more democratic and agile approach to great exceptions and new standards from buttom up. This is not well established yet, but a wise thought for the future.
  9. Analytics: Which tools are your executives using for desicion making? Where is all the data to fuele these apps? Next-generation analytics and BI can only deliver if you feed them great data.

Fueling any service, marketing or sales apps in a retail organization with trusted information, is the foundation of a CustomerReady retailer to achive great customer experience.

For more information about the Rise of the Global Market Places study, please download the online version or order the full version.