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Marketplace mania

Can the marketplace model protect retailers from a weakening consumer spend?
Marketplace mania
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Owning the shop, not the goods is not new in ecommerce. Two of the marketplace model's biggest proponents Amazon (US:AMZN) and eBay (US:EBAY) have been running since the mid-1990s, and have built retail empires by charging third-party sellers fees to use their platforms. The asset-light, diversified nature of these earnings have appealed to investors, along with their potential for driving growth. Frasers (FRAS) is obviously a fan of the model, buying into marketplace specialist MySale (MYSL) at the end of June. The Aim-traded company – proudly a cut-price platform – last week reported improved gross margin for the year to 30 June, rising from 39.4 per cent the year before to 42.3 per cent despite supply chain volatility. 

Frasers is likely just following the customers: research from strategy consultancy OC&C predicts that by 2025, spending through leading online marketplaces, such as Amazon, eBay and Expedia, will overtake direct ecommerce sales in the west, growing at a clip of 15 per cent a year. Although marketplace margins are typically lower, more and more retailers are trying out the model online as a remedy for stagnating revenue growth.

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