The general route goes something like this:
Grow to a large enough size to be able to do more than mere (‘pure’) online retail -> Diversify and grow towards platforms et al (marketplaces, services) -> Diversification of revenue streams
When an online retailer reaches a certain size, the company gets to a crossroads of sorts. Business opportunities arise, once a minimum required reach on one side (end customers) is achieved.
We can see that with the ongoing rise of marketplaces at Amazon. Once a ‘pure’ online retailer, Amazon now commands one of the largest (and fastest growing) marketplaces in the world, already the size of eBay in the US and growing beyond. Beyond that, every new business at Amazon is from the start conceived of as a marketplace/platform. Prime Now is a marketplace (for local partners), Prime is closely tied to Amazon Marketplace, and even the Treasure Truck is a (local) marketplace in the making. Amazon also applies platform thinking to logistics with its p2p delivery service Amazon Flex. Thus, Amazon Go has to be looked at in this marketplace/platform light, as well.
Speaking of eBay. eBay of course is itself a marketplace and has been from the start. But that is also why it is so hard to watch how the company missed the opportunity to grow immensly, to go from caterpillar to butterfly. eBay missed a once in a generation opportunity; the scope of this can hardly be overstated:
At eBay’s core is not a selection of a billion unique items. That’s the effect, not the cause. At eBays core is a peer to peer (P2P) model. […]
Some time over the last decade, eBay forgot what the company made big and special. This is a shame because there are now at least two very big companies that are doing something where eBay should either be an investor or a competitor in the same space they are in:
Imagine a P2P juggernaut called eBay, having its hands in anything that uses networks to fundamentally change existing markets.
Think of an eBay building a P2P infrastructure. An eBay acting like a sort of AWS for the “sharing economy”.
Building marketplaces and other platforms means online retailers don’t just keep growing the business they have but using what they have built to create something bigger, more powerful, and more durable.
One online retailer pursuing this transformation as aggressively as Amazon is Zalando.
The latest figure on this: According to Zalando’s annual report for 2016 revenues for services reached €86 million; a plus of 145%.
Small, but fast growing, potatoes for now. Services includes the marketplaces/partner programs, ad revenues, fulfillment by Zalando and others.
Cocooning takes time. But eventually..
- Prime Dynamics: Merchant Increased Sales by 20 Percent with Seller Fulfilled Prime
- Amazon’s Most Promising ‘Stealth’ Project, the Treasure Truck, Celebrates 1st Birthday
- What eBay Lost
- How Amazon is Expanding its Uber-Like Delivery Service Amazon Flex
- What Amazon Go Will Look Like in an Amazon Flex World
- Amazon Marketplace Services, AWS & Prime Each Doubled in Revenue Since 2014
- Amazon’s Advertising Business is Growing Like Weed
- Zalando buys Marketplace Services Provider Tradebyte to Bolster Platform Strategy
- The 3 Rules on How to Expand Marketplaces
- Etsy and the Quest for Successful Specialized Marketplaces
- Vizions: Zalando Announces Platform Conference
- Collabary: Zalando Turns its Connections With Influencers Into a Platform for Brands
- How Zalando Will Persuade Zara and H&M to Join its Platform
- What the Takeover of Amaze Tells us About Zalando’s App Platform
- What Zalando has Planned for its Platform and for the UK
- Why Zalando Has a Shot at Becoming a Platform: It Already Has Significant Scale
- Zalando: “We Want To Become An Open Fashion Platform” | Early Moves