Charts: Fastest Growing Global Marketplaces

Online marketplaces are proliferating. What follows are charts of the fastest-growing marketplaces worldwide across all industries. “Marketplaces” we define as sites that sell third-party products or services without taking ownership of those items.

According to Statista, the U.K. auto marketplace Cazoo experienced the greatest percentage revenue increase with a compound annual growth rate of 209% from 2020 to 2022. Opendoor, a U.S.-based real estate marketplace, was second with a CAGR of 165%.

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Yahoo Finance publishes financial data and summary overviews for many global marketplaces, including the top five above.

• Cazoo is a U.K.-based used car marketplace.
• Opendoor is a San Francisco-based marketplace to buy and sell houses
• Delivery Hero is a multinational food-delivery marketplace based in Germany.
• CarGurus is a Massachusetts-based new and used car marketplace.
• Rover is a Seattle-based marketplace of pet service providers, such as groomers and boarders.

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Edge by Ascential is a U.K.-based provider of digital commerce data and consulting for global brands and retailers. Last year Ascential published a study, “Future of Marketplaces 2022” (PDF), projecting industry growth and key players through 2027.

Per the Ascential report, Latin America and Southeast Asia will likely experience rapid B2C ecommerce growth during that period as consumers move online. Marketplaces in those regions will be among the fastest-growing.

Charts: Top Global Marketplaces by Number of Visits

Online marketplaces worldwide are booming. What follows are charts of B2C marketplaces ranked by the number of visitors worldwide and for select countries.

With an average of 5.3 billion monthly visits in July 2022, Amazon was by far the most widely used online consumer marketplace in the world, according to Statista. eBay had the second-most monthly visits at roughly 3 billion.

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Amazon continues to rule in the United States, as demonstrated by the over 2.5 billion monthly visits from U.S.-based shoppers in July 2022.

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In the U.K., 12 primarily international marketplaces are most popular among local consumers. The top two are Amazon and eBay.

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The most popular marketplaces of China-based consumers are Chinese businesses.

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With 2.3 billion monthly visits, Amazon is the most popular among India-based shoppers. Second is Walmart-owned Flipkart, with 2.0 billion visits per month.

Amid FBA Fee Hikes, Sellers Consider Alternatives

Amazon has aggressively increased fulfillment fees over the past three years, shifting its own increased costs onto sellers.

According to ecommerce intelligence firm Marketplace Pulse, the ecommerce giant has raised fulfillment fees by over 30% since 2020. For example, in August of this year Amazon announced that between October 15 and January 14, 2023, it would charge $5.06 to fulfill items weighing one pound. In 2020, the cost for such goods was $3.48.

Not surprisingly, many sellers are seeking additional sales channels. Capterra’s 2022 Amazon Seller Survey found 99% of respondents who sell solely on Amazon plan to diversify in 2023.

2023 Fee Increases

In November, FBA initiated increases for warehouse storage fees effective January 17 and in April. Here are the specifics:

• Peak monthly storage fees will rise by 20 cents per cubic foot for non-sortable goods — bulky or oversized items.

• Off-peak storage will increase by 3 to 4 cents per cubic foot.

• Sellers who store a high cube of inventory — the total available space that is utilized, expressed as a percentage — relative to the cube of their recent weekly sales will incur a new storage utilization surcharge effective April 1, 2023.

• Amazon will increase the surcharges applied to inventory stored for 271 to 365 days, effective April 15, 2023.

• Starting April 15, 2023, Amazon will introduce aged inventory surcharges on goods stored for 180 to 270 days, excluding products in the following categories: apparel, shoes, bags, jewelry, and watches.

• Amazon will nearly double the cost of removing or disposing items from its fulfillment centers.

Impact of Increases

According to the Capterra survey:

• 36% of FBA sellers believe it is more difficult for them to succeed on Amazon than when they joined.

• Forty-eight percent of FBA small sellers say the holiday peak fulfillment fee will make them less profitable. FBA sellers with $25,000 in average monthly revenue from Amazon were likelier to say profitability would be harmed than those earning more.

• Over half of FBA users with less than two years of experience selling on Amazon said the fee would make them less profitable, versus 41% of sellers with five or more years of experience.

• In response to the fee hike, 54% of FBA sellers raised holiday prices.

• While 31% of current FBA merchants sell on other ecommerce marketplaces, nearly all said they would consider other avenues in 2023, such as Google Shopping, Facebook Marketplace, and Walmart Marketplace.

Molly Burke, the senior retail analyst at Capterra, remarked in a blog post, “By making it more expensive for sellers and consumers to participate in its marketplace, Amazon is opening the door to rivals such as Walmart, which offers similarly convenient shopping and selling experiences at a lower cost.”

Mitigating Fees

Some FBA sellers are switching to or adding Fulfillment by Merchant, whereby they handle fulfillment. However, many FBM sellers find it difficult to maintain Prime-eligible status (Seller Fulfilled Prime) — guaranteeing one or two-day delivery — by themselves.

Many sellers can only meet the delivery timeframe by paying for a third-party logistics service, but the cost of doing this may erase any savings.

Hence some sellers are migrating elsewhere.

Choices

For many Amazon sellers, raising prices is inevitable. Consultants such as Gartner recommend that merchants be transparent with shoppers about price hikes and explain the reasons.

While Amazon will undoubtedly retain its clout in ecommerce, online sellers should not rely solely on Amazon for sales.

Some sellers may bow out. Over the past few years, many Marketplace merchants have sold their businesses to aggregators. These large companies are less affected by the fee increases than smaller businesses.

This year, however, aggregators are struggling to raise funds for acquisitions.

Amazon’s ‘Customers ask Alexa’ Is a Marketing Opportunity

Amazon’s “Customers ask Alexa” capability has similarities to search engine queries and may represent a new content distribution channel for mid-sized and enterprise retailers and brands.

For Alexa, a “capability” is something the voice assistant can do, such as play music, make a to-do list, or tell a shopper when her Amazon order has been delivered. In September 2022, Amazon announced a new capability, “Customers ask Alexa,” meant to permit brands and, potentially, retailers to answer questions related to their products.

“Amazon recognizes brands as experts on their products. With this new capability, we have made it easier for brands to connect with customers to help answer common questions and better inform their purchase decisions,” said Rajiv Mehta, general manager of Alexa Shopping at Amazon, in a post on the “About Amazon” site.

The service was first released to a small group of brands in October 2022 and should open to more brands and third-party sellers in 2023, according to Jon Elder, the founder of Black Label Advisor, an Amazon Marketplace consultancy.

Opportunity

This new Alexa capacity represents a new content marketing opportunity and a new way to attract shoppers. Brands can capitalize by creating informative answers to engage potential customers who interact with their products through Alexa. Brands could also include direct links to their Amazon store page, allowing shoppers to purchase products immediately.

As more Amazon shoppers ask questions, research products, or make purchase decisions via voice, the “Customers ask Alexa” capability will become increasingly important for brands and retailers to recognize and use as part of their content marketing strategy. By creating helpful content and guiding prospects through the purchase journey, brands can increase product awareness, drive sales, and create a positive customer experience.

That is the opportunity.

SEO Analogy

The “Customers ask Alexa” capability is similar to a product-related search on Google, wherein the search results page is likely to include manufacturers, brands, and retailers. The difference is that Alexa reads the customer’s answer via a smart speaker, i.e., Amazon Echo.

This is how Amazon described it:

A customer shopping for cleaning products on Amazon.com could ask, “How can I remove pet hair from my carpet?’” A brand can now provide answers to such questions, along with links to its Amazon storefront.

The similarity to search engine optimization is clear. With SEO, businesses — e.g., brands, retailers — create product detail pages, blog posts, and similar content optimized for search engine discovery. When a potential customer searches Google, the business wants its content to rank on the first results page.

With “Customers ask Alexa,” the aim is similar, except the goal is to be the single answer Alexa reads to a shopper.

A difference, however, has to do with keyword research. For Google, a search-engine optimizer must discern which phrases generate the desired traffic. Amazon is telling brands specifically what content is needed.

“Inside Seller Central, there is a list of growing questions Amazon allows a brand owner to type in answers for,” wrote Elder, the Amazon consultant, in a Twitter direct message. “All these answers from sellers go into a ‘bucket’ that Amazon then applies artificial intelligence to decide which answer is the most relevant.

“I expect the vast majority of sellers to invest time in adding answers within Seller Central and for the tool to also become an SEO extension of their optimized listing,” Elder continued.

In Seller Central, Amazon is telling brands what questions need to be answered. Source: Amazon.

Content Distribution

For businesses selling on Amazon, “Customers ask Alexa” may represent a new content distribution channel. A workflow could go something like this.

• A brand finds relevant questions in Seller Central.
• If an answer exists on the brand’s website, repurpose it for “Customers ask Alexa.”
• If it does not exist, create it, and post it on Seller Central and as an article on the brand’s website.
• Test the content, asking Alexa the target question and monitoring how often the brand’s answer is used.
• Optimize until Alexa consistently uses the answer.

There are a few points about this potential workflow.

• It recognizes that content should be owned media. So it should always have its home on a brand’s or retailer’s own website. “Customers ask Alexa” is a distribution channel. If you create content for Alexa, be sure a complete resource is available on your company’s own internet properties.

• Seller Central is now a source of keyword research. The questions Amazon wants brands to answer for Alexa are likely to be good keyphrases for Google and other search engines, too. Ranking first on Google may drive significantly more sales than winning with Alexa.

Shoppers Buy Necessities, Not Gifts, in Amazon’s October Event

For years November’s Black Friday and Cyber Monday sales signaled the kickoff to holiday shopping. Recently, however, merchants have offered discounts before then, diminishing the importance of the two biggest holiday shopping days. This year, Amazon started even earlier with its “Early Access” event for Prime members.

Prime Early Access took place October 11 and 12 — 48 hours — in the U.S., Canada, and 13 European countries. While the event lacked the hoopla surrounding July’s Prime Day, consumers took advantage of the discounts, focusing on household necessities rather than big-ticket items. Amazon said Prime members ordered more than 100 million items from merchants during the sale.

Amazon’s inaugural Prime Early Access occurred October 11-12 in the U.S., Canada, and 13 European countries.

U.S. Results

The following numbers are from market research firm Numerator, which conducted over 3,500 buyer surveys during the Early Access sale.

The average order size during the event was $46.68, down from $60.29 on Prime Day in July. Fifty-six percent of households placed more than two orders, resulting in an average household expenditure of roughly $110.

The top categories consumers said they purchased were household essentials, health and beauty items, clothing and shoes, and toys and games. Twenty-three percent bought everyday items. Only twenty-nine percent of shoppers surveyed said they purchased holiday gifts. American merchants that sold televisions, desktop computers, and other high-end items had disappointing sales.

The top five items purchased during the Prime Early Access sale were:

• Amazon gift cards,
• Amazon photos projects,
• Melissa & Doug toys,
• Simple Joys pajamas by Carter’s,
• Echo Dot.

Best sellers among the Top 100 deals list were the Macbook Air M1, Peloton Bike, Bose earbuds and headphones, and Shark hair dryers, vacuums, and air purifiers.

Globally the best-selling items were apparel, home goods, toys, and Amazon-branded electronic devices.

Fifteen percent of surveyed shoppers said they purchased items they would only buy on sale. Of those respondents who shopped both the Prime Early Access sale and Prime Day in July, 36% spent more at the Early Access event, while 64% spent the same or less.

Twenty-nine percent said they waited for the sale to purchase a specific item at a discount. Shoppers showed a good deal of price sensitivity. Forty-eight percent of shoppers only considered Amazon for their purchases, while 52% considered other retailers.

Why Another Prime Day?

• Amazon’s sales are in a slump. The first two quarters of 2022 showed declining revenues in Amazon’s Online Stores division. The company’s stock has plummeted 33% this year and will likely experience its worst profit year since 2008. Amazon has closed or canceled 44 warehouses.

• The company is wooing new Prime members. Growth in membership has leveled off despite adding many new features such as a free Grubhub+ membership and exclusive access to Thursday night NFL football. Amazon claimed its highest number of new Prime subscriptions in three hours during the first game this season.

• A Prime Day in October could benefit from the trend of early holiday shopping, but this appears not to have occurred.

• The company may have excess inventory to sell.