The share of US retail e-commerce sales transacted via marketplaces continues to rise and will surpass $698 billion by 2028. That’s nearly 40% of e-commerce in the U.S., according to eMarketer. That’s why brands and wholesalers are diversifying their selling models and rethinking their direct-to-consumer (D2C) strategy. A growing number are transitioning from first-party to third-party business models. This change is driven by several key factors:
- Amazon, Walmart and other marketplaces may not carry your entire product line.
- A new product line isn’t getting picked up by retail networks.
- Unsuccessful pricing negotiations.
- Relying solely on retailers is no longer profitable.
- Third-party merchants do not properly represent your products and brands.
- Selling seasonal products requires more control over purchasing.
- Inconsistency in retailer purchase orders is causing strain on cash flow.
- Increased reseller minimum advertised price (MAP) requests or inconstant pricing across multi-channel impacting the brand performance and reputation
How to get started with marketplaces
Now is the right time to explore third-party marketplaces. Rithum works with a network of 40,000 sellers across more than 400 marketplaces. Here’s a guide to help you transform your wholesale business into a marketplace business.
Preparation is key
Successfully selling as a third-party on marketplaces demands careful planning and attention to detail. When done right, this approach can result in significant revenue growth, making the investment of time and effort highly worthwhile. Customers have been shopping on platforms like Amazon, Facebook, Walmart, and Target for years, and they’ve developed high expectations for purchasing directly from their favorite brands. Understanding their needs and the stakes involved is crucial.
Start Early
Take the time to thoroughly evaluate your options and gain a clear understanding of the strategies that will work best for your brand. Be prepared to adjust along the way. Remember, your current wholesale relationships with marketplaces can shift unexpectedly, often with little to no notice, so staying agile and responsive to these changes is essential.
Think strategically and commit to a marketplace strategy
This isn’t the time for a trial run. While it may be tempting to just “test the waters,” failing to invest in key areas—such as a robust marketing strategy, product placement, advertising, free shipping, and fast handling times—will make it difficult to compete with your established sales channels. Gaining early market share for products, meeting SEO demands all matter as the marketplace channels quickly rank your performance in the first 30 days after your products go live.
Mastering the best practices of each marketplace and develop new internal processes to support them will take time. Businesses not only have to plan for potentially a first channel launch, but popular channels that do well within your category thereafter. The process and plan must be built with a short term, and long-term vision in mind. Not only through the lenses of brand protection, but scalable infrastructure.
Plan for the future
Unlike the immediate revenue gains from wholesale relationships, D2C selling on marketplaces is a long-term process. Success doesn’t happen overnight.
From high-quality product content to a well-rounded marketing and advertising strategy, competitive pricing, customer service, and fulfillment logistics—staying ahead of all these factors is crucial. Have a plan in place to keep up with marketplace changes, e-commerce trends, and evolving consumer expectations.
How Rithum can help
The benefits of expanding into marketplaces are significant. However, attempting to do so in-house can be cost prohibitive. Businesses needed a single platform allowing them to expand to new markets and help them effectively manage their growing omnichannel presences. According to “The Total Economic Impact of Rithum Managed Marketplaces” study, published in February 2024, Rithum helps organizations to improve speed to market by 50%.
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Kellie Martin is VP, Global Sales Engineering and Renewals at Rithum. Aaron Holler is Marketplaces Strategy Director, Rithum.