The story of Sears is more than the usual decline in
brick-and-mortar sales due to ecommerce. It is also the story of a retailer
that has struggled to redefine itself because of changing retail trends.
Founded in 1893 as a mail-order catalog, it sold off this business, acquired
numerous retail name brands such as Land’s End and then agreed to a merger by
Kmart, another struggling retailer. Today, Sears Holding is among the top 20
largest retailers in the US, and like many of these large retailers such as
Target, Best Buy and Walmart, ecommerce is of great importance to generate
revenue growth.
The marketplace concept is global – China’s Alibaba Group
offers such services via its Taobao subsidiary and UK’s Tesco introduced its
marketplace concept in 2012.
Financially, it has become a successful platform for Amazon
which noted in its fourth quarter 2012 earnings, its operating margin growth in
North America was driven in part by an increase in sales on its website by
third parties, which made up 39% of units purchased compared with 36% a year earlier.
In China, the
marketplace concept is estimated to make up 90% of total ecommerce sales with
most of that coming from the Alibaba Group.
Having only been in operation for about a year, Tesco,
should benefit from the concept as well particularly as Tesco allows shoppers
to earn Clubcard points on every purchase they make, even if the product is
supplied by a third party merchant. In 2012 Clubcard membership in the UK was
about 17m and 35m worldwide. Members can earn points that can be exchange for
money off products in-store, or redeem with one of Tesco’s many partners, for
things like day outs and hotel stays.
Start-up costs for many small-to-medium sized businesses are
reduced when utilizing this type of platform. Payment services and tools to
create and customize seller websites are usually provided. Sellers usually pay
such fees as pick and pack per item, storage and a commission on sales as well
as paying shipping costs; however, they are able to take advantage of lower
shipping costs that are negotiated by the likes of Amazon, Alibaba and Tesco
with their delivery partners.
While sellers gain visibility via marketplaces, valuable
data is being created and shared with the owners of these marketplaces – customer
information, types of goods sold, pricing etc. – which can be used to both
company’s benefit.
For the logistics industry, these C2C marketplaces increase
the competition for fulfillment and other distribution services. Also,
transportation profit could possibly be reduced for providers as more SMEs
utilize the marketplace group discount for such services. 