Online marketplaces seize growing revenue share during pandemic e-commerce boom

Even as the coronavirus pandemic has accelerated e-commerce growth worldwide, a growing number of companies have turned to online marketplaces—like Amazon, Walmart, eBay, and Rakuten—instead of selling goods over their own websites, saying they are limited by their logistical capabilities, according to a survey released today by French logistics operator Geodis Group and the Accenture consulting firm.

The survey showed that 46% of American companies now rely on marketplaces for their online sales—and that figure was 59% for European companies—generating demand that has pushed marketplaces’ market share from 28% pre-Covid-19 to 38% during the pandemic. More specifically, before the crisis, companies were making 34% of their sales online, including 28% in marketplaces and just 6% on their own websites. Those rates grew during lockdown, when 65% of their sales were made online, including 38% via marketplaces and 27% on brands’ online stores.

Retailers have made that decision because a majority of companies (52%) feel that their e-commerce potential is limited by their logistical capabilities, according to the report, “Getting Ecommerce Logistics Right: Faster, Leaner, Scalable.” The statistics come from  a survey in May and June of 200 European and American companies that operate multiple channel logistics, have sales revenue between $100 million and $20 billion, and operate in the sectors of: consumer electronics, fashion & sport, luxury, furnishings, body care, non-perishable food, home care, and games & toys.

“Many brands use marketplaces as a one-stop shop for selling their products online. This allows them to reach a wide audience and compensate for a lack of resources and logistical infrastructures, all while providing an expected customer experience,” Sohel Aziz, managing director for Accenture Interactive, said in a release.

Despite the broad trend toward opting into marketplaces, most of the brands surveyed believe that over-reliance on marketplaces is not sustainable, saying they want to shift more of that balance back toward their own e-commerce channels. Nearly two-thirds (64%) state that reducing their dependence on marketplaces is their first or second priority for the next six months. And within three years, 77% of American companies and 56% of European companies surveyed wish to sell directly to consumers via their own websites, aiming to make 20% of their total sales there.

“Direct sales from brands’ retail websites currently represent 5% to 8% of online sales. Brands would like to increase that to 20% or 30% in the next three to five years,” Aziz said. “The survey shows that brands are aware of the fact that improving their omnichannel logistics capabilities, such as customer experience—through customization of delivery options and tracking or customers’ ability to modify orders, for example—is essential and urgent if they are to reach this goal.”

However, that transition won’t be easy. The survey found that just 16% of the companies questioned are able to get real-time key performance indicators (KPIs) for their supply chain (including 25% of American brands and 10% of European brands).

“Only a minority of them have real-time supply chain inventory visibility. However, this visibility is essential to ensuring product availability, offering a variety of shipping choices and informing the customer of the product’s shipping status. In short — satisfying the customer,” Ashwani Nath, vice president and global head of e-channel solutions for Geodis, said in a release.

Behind the scenes, that means optimizing the logistics cost for each order and overcoming logistical challenges such as: reconciling the physical with the digital, maintaining a real-time inventory, optimizing stock, managing transportation, and orchestrating orders while dealing with a variety of processes and partners, he said.

“This calls for integrating stores with e-commerce networks to serve as order processing centers, collection points, shipping facilities, and fulfillment centers. One thing is for certain: inventory will have to be closer to the end customer, no matter where they may be, to ensure agility and availability,” Nath said.

PRESS RELEASE | #GEODISeLogistics

GEODIS announces together with @AccentureActive the release of a research conducted across Europe and the US on the key challenges and success factors of ecommerce logistics - ??https://t.co/2Jbf9NsLEJ#GEODIS #ecommerce #KeepRising #Whitepaper pic.twitter.com/qqYBTTCzGl

— GEODIS (@GEODIS_Group) October 8, 2020