Marketplace Winners and Losers During the Pandemic

As e-commerce booms during the pandemic, some marketplaces have greatly benefited, a few prepared for the future, while others were caught unprepared to react. A typical seller relied on Amazon, saw growth on Walmart, got excited by Facebook, and didn’t care about Google.

Etsy, Amazon, Walmart, and eBay are the four winners. They each grew sales for different reasons, added more sellers, and strengthened their market share.

Facebook and Shopify are the two promising companies. Shopify is a winner in terms of general e-commerce but is not a marketplace. Facebook is not one either but is building towards a content-first marketplace. Both could be key players in the future.

Wish, Google Shopping, and Target are the three losers. Wish suffered because it relies on China-based sellers, Google Shopping didn’t make any notable moves, and Target could have seen its marketplace flourish if not for its small seller base.

Marketplace winners and losers

Amazon grew during the pandemic, despite the issues with deliveries. “Beginning in early March, we experienced a major surge in customer demand. This large demand spike created major challenges in our operations network,” said Brian Olsavsky, CFO at Amazon. First-party sales in the first-quarter grew fastest in four years, but the first-quarter only had a few weeks affected by the pandemic - sales in the second quarter will be higher. Fulfillment issues created record-high customer complaints as sellers shifted to handling their deliveries, but despite that, the marketplace growth was strong.

eBay didn’t significantly expand the number of sellers or products, and yet it saw its GMV grow more than during the last four years. Thanks to Amazon shipping struggles, more shoppers went looking elsewhere, hoping for faster delivery times, and eBay was one of those destinations.

In terms of percentage growth, Walmart marketplace outperformed eBay and Amazon. Traffic to and the use of its app increased significantly, mostly due to the increase in demand for online groceries. But as traffic increased and consumers went looking beyond groceries, the marketplace, which carries over 90% of the assortment on Walmart online, handled that demand. Walmart marketplace also slightly accelerated the number of sellers it accepts monthly, nearing 45,000 total sellers.

In 2019, Target launched a marketplace titled Target+, or Target Plus. It started with 30 merchants, and has only grown to 150, more than a year later. It is adding selection to an e-commerce experience built on same-day delivery, which the marketplace is not a part of. Target’s performance as an online retailer for the past few years comes mainly from its use of stores for fulfillment; “stores fulfilled nearly 80 percent of Target’s first-quarter digital sales,” the company said last month. So while the few merchants participating in the marketplace have reported exceptional growth, it remains small, and the company doesn’t appear to be doubling down.

Sales on the Wish app dropped due to the disruption of manufacturing and logistics in China. After all, Wish essentially relies on sellers from China, which make up more than 90% of all sellers. Sales started to recover by March, and the company has reintroduced efforts to recruit sellers in the US. However, diversifying sellers’ demographics is a substantial shift from its playbook so far, and hasn’t brought a material number of new sellers yet.

Amidst the pandemic, Google announced that it would reintroduce free listings to its Google Shopping service. The service combines a shopping comparison experience with a native marketplace, which was previously known as Google Express. The marketplace hosts 5,000 sellers, up from 1,500 a year ago; however, it didn’t accelerate adding more merchants, nor did it improve its subpar shopping experience. Outside of the announcement of the free listings - which had no impact on the marketplace - Google hasn’t reacted to the e-commerce explosion beyond being a key advertising channel.

Facebook introduced Shops, a functionality that turns business profiles into storefronts, and that enables on-platform shopping without leaving Facebook and Instagram apps. Facebook is in a similar position to Google - they both have billions of active users already shopping using them, but by going to an external website. Google is trying to solve this by focusing on the supply, by adding merchants and listings, Facebook is solving demand by creating advertising and integrated storefront functionality. Facebook’s approach is considerably more promising than Google’s. A non-trivial amount of commerce happens on Facebook and Instagram already, and converting that to in-app shopping is more natural than for Google.

Shopify launched a consumer shopping app, called Shop, in April. The app looks almost like a marketplace, although the company has dismissed that. Whether it will grow up to be a marketplace or not, and the fact that Shopify is not directly comparable to the rest of the marketplaces aside, Shopify is perhaps the second most influential player in the e-commerce industry, after Amazon. Traffic across Shopify stores rose during the pandemic, and thus GMV growth in the second quarter will exceed the 46% growth in Q1.

Etsy has proven to have unique strengths. Sales on Etsy set a record in April, only to be beaten by a new all-time high in May. Etsy, too, cannot be directly compared to the general merchandise e-commerce marketplaces, but it competes with both eBay and Amazon for the handmade and vintage sales.

There are dozens more strong marketplaces outside of the few mentioned. Most are doing well driven by the overall increase in e-commerce volume. Some, focused on a category or customer community, are growing while being defensive from Amazon’s competition, by owning a niche. They will continue to do well.

Amazon’s focus on essentials that lead to long deliveries for other items created an opportunity for competitors. It shook the moat built around Fulfillment by Amazon (FBA), too, as sellers got locked out from sending in their products. The winners did well to capture the moment, while the losers didn’t.

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Juozas Kaziukėnas

Founder of Marketplace Pulse, Juozas 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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