If you haven’t been asleep for the past few years, you know that the retail landscape has been dominated by one name -Amazon.com. As the largest online retailer, what you may not know is that around half of the goods sold on Amazon are sold by third party merchants, the greater majority of those being small businesses.
In fact, Amazon has in the range of two million of these third party merchants (again, mostly small businesses) that account for this half of its retail marketplace sales. This provides an opportunity for small businesses, whether product manufacturers or even smaller retailers in their own right, to access the 300 million Amazon shoppers from around the globe.
While Amazon has been a pioneer in embracing small businesses as selling partners (a move emulated very successfully by China’s Alibaba Group, whose entire business is built around marketplaces), other traditional retailers have been slow to follow suit.
Earlier this year, Wal-Mart, which launched a marketplace in 2009 with a handful of better-known mid-size retailers like eBags, said that it was going to accelerate its marketplace focus. However, it’s estimated to only have a few hundred retail partners currently, and although it’s ramping up at the clip of more than 100 per month, are certainly very far behind the two million sellers that Amazon has in place.
Wal-Mart is currently working with ChannelAdvisor to accelerate its ramp up and have a process to request an “invitation” to sell, which you can find here.
Target, which has its own ecommerce woes to contend with, hasn’t entered the marketplace arena at all.
For these larger retailers, partnering with entrepreneurs and small businesses can create the ultimate win-win situation. For entrepreneurs, it allows them to leverage each retailer’s online traffic, and gain exposure to a far larger customer base.
For the retailers, it not only broadens product selection, but if it plays it smartly, it should help it optimize product availability in-store as well. No longer does a retailer have to take a chance on inventory before seeing if there is demand. This is an incredible mechanism to bring hot products in-store, in either a pop-up concept shop, or on a more full-time basis. Having an easier entry point to brick-and-mortar retail is also another boon for the entrepreneurs.
Imagine if Macy’s did this for talented, unknown designers. It could feature key marketplace items to see what was hot, without having to take on inventory risk or worry about the new entrepreneur having the full systems in place to integrate with Macy’s technology. If they find a particular designer is in demand – either regionally or nationally — then, they could invest the resources in making sure the entrepreneur could handle a larger relationship with the retailer.
It is truly a win-win.
Not to mention, these opportunities help small business owners with access to additional resources. Just recently, Amazon held a conference targeted at women entrepreneurs to help them be more successful in their businesses (and as sellers on the Amazon platform, of course). This is a natural fit and next step for companies like Wal-Mart, which already actively support small business owners in various ways, including extensively through its Sam’s Club division.
Of course, retailers have to do this smartly, or it will crash and burn. Best Buy tried, but ultimately closed its own third-party marketplace earlier this year, amidst confusion from customers.
However, those retailers that have a savvy omni-channel strategy and approach its business from that perspective will have a great opportunity to leverage even more entrepreneurs as the next part of their own retail success stories.