images1Marketplaces have been on the rise on the net for quite awhile.  Marketplaces have grown by helping singular brands build their revenue and their names without having to put a lot of money into their own website.  What is interesting is that as brands have caught up with their need to build their own website one has to wonder how deep should their site go?  It dependent on how big that brand is.

Two marketplaces that I have been using for quite some time are 1st Dibs and Farfetch.  They are both significantly large companies at this point.  What they have in common are a few things.  They capitalized on businesses that were way behind the times in regards to getting their businesses up on the web.  They both realized that creating a one stop shop for all your needs in each of their spaces makes sense for several reasons.  They have helped all the stores on their sites leverage their businesses.  They have built one marketplace brand and so when you shop there you do not feel as if you are shopping at several stores.  You can search for a specific item and it comes up regardless of where it is from.  As far as I know there are thousands of stores on both 1st Dibs and Farfetch but it doesn’t feel that way.  They have got out in front of the curve where brands are now starting to think about building their own website.

I would tell a large brand such as Rag and Bone or West Elm that they do need their own site.  That many customers probably go directly to their site because they want to see what they have specifically.  For other brands who are small and unique that it doesn’t make sense to spend time and money on their sites but to work with marketplaces.  Sure they should have a site but they don’t need to have deep ecommerce.  It takes away from the business at hand.

Hey Gorgeous is seeing that now.  The up and coming brands want to be on their site because their customers continue to come back again and again because the experience is a good one (and obviously the product is good too).  It isn’t a marketplace but it is a singular store brand geared towards a specific customer making it a one stop shop. Venuebook, a totally different marketplace that highlights venues in a variety of cities to book for events, dinners, etc.  If you are a planner that needs to book several places a month you are not going to spend time going to hundreds of individual sites.  You want to go a marketplace that is the leader in the area.  Take a look at Architizer, you can find architects across the globe on there.  Mouth isn’t a marketplace but it sells top indie food and liquor products so it is a one stop shop too.

These days everyone needs a website.  The question is how deep should that site be.  I am suspect of any business that doesn’t have a site these days but I completely respect simple sites that direct me to a killer marketplace.

Comments (Archived):

  1. Seenator

    Excellent article. This is something that is not well understand by most small businesses where they spend a majority of the time on the channel (thier own websites) that provides the least returns. Most small businesses are better of investing in channels where the customers are already are (Facebook Page/ Yelp Page etc) instead of thier own website. Ironically thier own “website” also really means Google SEO to a large extent. All this is just for the acquisition. By the time you focus on conversion and you are done with all the A/B testing – it almost feels one is better of with a marketplace in most small businesses.One suggestion to make the post even better. Is it possible to briefly explain what each of the market place do so that the reader has better context? You did that with Venuebook/ architizer but I had to google for Dibs / FarFetch.

    1. Gotham Gal

      1st Dibs is a marketplace of stores that mostly carry vintage items from furniture to jewelryFarfetch is a marketplace of hip small stores around the globe

  2. Sandeep Grover

    Interesting perspective. Agree the impact a marketplace can make on a small business in the early years but what we tend to see is as the businesses start becoming more successful, they want to invest in their own brand and website for variety of reasons:i) Pricing – the roughly 10% commission that a marketplace charges on a sale seems fair for a new customer acquisition but it hurts quite a bit when the seller pays the same 10% cut for a repeat customer. I don’t know how the pricing works on these newer marketplaces yet.ii) Too much competition and very hard to differentiate – Almost all of the marketplaces you mentioned above are still very niche and hasnt hit the mainstream yet – Once these marketplaces become mainstream, there will be too much competition among sellers and almost everyone starts copying the top selling stuff and the only competitive ground becomes price. In the end, its a great thing for the consumer but you loose out a seller if you don’t invest in shifting your audience to your own site.iii) Omni channel selling: Most likely, the marketplace is going to be just one of the channels for the brand/small business.. the business would and should be exploring other channels such as social (pinterest, facebook, twitter), offline channel and perhaps other marketplaces.. So, there would be a need for them to invest in multi channel experience (multi channel inventory and order mgmt)and if the investment is going to be made in that effort, why not also sell on your own site..iv) Maintain a professional brand: While you made the argument that a small business should have a lite weight site, I personally think one needs to invest in a full fledged site to look like a real business – when dealing with suppliers and potential partners, it makes you look really professional and someone who others would want to work with.P.S. I work w/ GoDaddy – comments are my own though..

    1. Gotham Gal

      1st Dibs and Farfetch are far from nitch. They are huge businesses. Valued in the billions.

  3. Ellen sing

    Ist dibs is wonderful, but some of the prices are at least 25 percent more than what a normal retail price would be