Promising vendors vastly amplified audience reach, online marketplaces can seem an attractive proposition for furniture sellers – but this extra business inevitably comes at a cost. In August's issue, Furniture News looks at the upsides and downsides of joining an online marketplace, with viewpoints from the trade …
Putting multiple sellers in front of a huge audience, online marketplaces continue to disrupt traditional retail, promising greater convenience, choice and pricing, and fewer barriers to entry for sellers wishing to compete with bigger brands.
“The rise of the online marketplace model is driving the largest fundamental shift in consumer spending since the emergence of ecommerce,” stated OC&C Strategy Consultants in 2022. In the same year, Edge by Ascential predicted that third-party sales through online marketplaces would grow to account for 59% of the world’s ecommerce trade by 2027.
These predictions were made in a period in which the furniture industry’s growth in this arena had begun to normalise, as shoppers sought to reconnect with physical retail in the wake of Covid-19. Yet while marketplace growth slowed, it continued, with the emergence of new players and greater consumer engagement.
As OC&C put it, “disruption is always daunting – but for those who are on the front foot, there can be big rewards”.
Trading places
Various models are available, from end-to-end platforms that handle every aspect of a purchase, like eBay, to other general marketplaces like Amazon and Alibaba, which also sell their own white-label products against their market traders. There’s a growing number of retailer-operated marketplaces run by the likes of Tesco, B&Q, Debenhams and The Range, those brands seeking to branch out in parallel to their core offer – and even industry specialists like Houzz, the home improvement hub.
Even those marketplaces relatively new to the scene have made rapid headway. Launched in 2022, B&Q’s specialist home improvement marketplace offers customers “an expanded choice of over 1.2 million products from more than 1100 verified sellers as well as an integrated experience for customers who benefit from both online and in-store facilities”. The retailer says its marketplace continues to go from strength to strength – in January 2024, its sales already accounted for 38% of B&Qs total ecommerce sales.
Risky business?
Yet while online marketplaces enable established retailers to grow revenue and diversify, they present furniture sellers with a dilemma, as getting on board with a big business, instead of going it alone online, inevitably comes at a price.
And there can be significant discrepancies in how businesses selling on marketplaces are treated and rewarded – as illustrated by the British Independent Retailers Association (BIRA) launching a class action against Amazon on behalf of sellers for “illegally misusing their data and manipulating the Amazon Buy Box to benefit its own commercial operation and its overall revenues and profit” (an action currently on hiatus pending the outcome of a concurrent claim).
BIRA’s CEO Andrew Goodacre commented: “One might ask why would an independent retailer use Amazon if it is so damaging to their business? In reality, we have seen a significant shift in consumer buying behaviour and, if small businesses want to sell online, Amazon is the dominant marketplace in the UK. As a result, for small retailers with limited resources, Amazon is the marketplace to start online trading. Whilst the retailers knew about the large commissions charged by Amazon, they did not know about the added risk of their trading data being used by Amazon to take sales away from them.”
Retail’s new frontier
While this class action, and others like it, may have tarnished the way these platforms are perceived by smaller retailers (and suppliers), many would assert that they remain a necessity for any business wishing to compete on a broader stage than its own website alone.
So, do marketplaces represent a lucrative frontier for the ambitious furniture professional, or a ‘deal with the devil’ that few can truly benefit from? Furniture News asked some of our regular contributors for their thoughts. Do they – or their customers – sell through marketplaces, and what are the pros and cons of doing so? Do they feel they have a choice? And what are the likely outcomes, should this “fundamental shift in consumer spending” continue to gain ground?
Read the feature in August's issue to see what they had to say.
