Brands and Marketplaces Are Squeezing Out Retailers

While 50% shoppers choose to buy something they have never bought before through a retailer like Walmart, Tesco, Aldi, or Target, 47% turn to a marketplace such as Amazon, eBay, Alibaba, or Etsy for repeat purchases. According to “Shopper-first retailing” report by Salesforce and Publicis.Sapient.

Marketplaces dominate for repeat purchases

All the work retailers do to attract new customers doesn’t last beyond the first purchase. In many ways retail channels are doing the work for Amazon and others. They act as the discovery place, helping customers choose what to buy and with the customer service. But after that, when it comes to buying again, they flock to marketplaces for the convenience and price. Especially if they are Prime members.

Brands retain most of their customers - shoppers looking to buy Nike, Apple, or Samsung products still turn to brands. But as marketplaces continue to pressure traditional brands to sell on their platforms that might change. Once customers are able to buy an iPhone cable on Amazon without the risk of getting a knockoff instead they will. For now demand for quality keeps them away.

The results of this research are interesting because they highlight the different reasons customers have for shopping on different channels. And how weak that reason is for retailers, explaining why so many of them have been struggling in the past decade while Amazon continued to grow. Amazon is providing convenience which is the answer for repeat purchases as it is at the answer for new purchases.

Retail’s strength is customer service, brands’ strength is quality, marketplaces’ strength is convenience. But with the rise of digitally native brands using social media as their customer acquisition channel some of the customers don’t need the retailer at all (some of them are even providing great customer service by building their own retail stores). And the Salesforce report found that marketplaces are beginning to chip away at the retail’s ownership of first-time purchases - 28% of shoppers preferred Amazon in 2018, an increase from 22% in 2017.

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Juozas "Joe" Kaziuk─Śnas

Founder of Marketplace Pulse, Joe wears multiple hats in the management of Marketplace Pulse, including writing most of the articles. Based in New York City. Advisor to other startups and entrepreneurs. Occasional speaker at conferences.

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