UK brands turn to online marketplaces for wider reach

UK brands are increasingly expanding their presence on online marketplaces to tap into a broader audience, a recent study reveals.

This trend is highlighted in the new research from Rithum, which indicates that the average UK brand now uses four platforms for third-party (3P) selling, with a significant portion planning to increase this number in the coming year. The report involved a survey of 550 retailers and brand executives across the US, UK, and Germany.

The report notes that the fragmented nature of online shopping is driven by consumers utilising multiple marketplaces, with three out of four consumers (74%) reportedly shopping on more than one platform, using an average of three. This consumer behaviour propels brands to embrace the 3P commerce model, which enables them to extend their reach by selling products directly to consumers via dropship or marketplace models.

The 3P commerce strategy offers distinct advantages for retailers and brands. Retailers benefit by accessing unowned inventory, shifting the risk off their shoulders and acting as intermediaries between brands and consumers. Brands leverage this model to channel owned inventory into unowned platforms, aiding in the adoption of a multichannel sales approach, thereby reaching an increased consumer base.

Philip Hall, Managing Director for EMEA at Rithum, discussed the current marketplace dynamics. "Consumers are constantly shopping around, especially with the peak season in full swing, as they browse multiple sites for the best deals and gifts. Brands are now having to expand marketplaces to keep up - and 3P selling is an important part of this," he stated.

Hall also emphasised how marketplaces provide opportunities in challenging economic times. "Marketplaces are ideal for navigating a difficult economy as they create opportunities for brands to liquidate excess or slow-moving inventory in a more profitable way. The wider digital shelf space of marketplaces allows brands to more easily test different product assortments and combinations to see what resonates with customers," he explained.

However, to maximise opportunities, Hall noted the necessity of data-driven strategies. "To fully capitalise on the opportunity provided by marketplaces, brands need data-driven decision-making, using data from marketplaces to make informed decisions about inventory and customer preferences," he commented.

The research identifies several challenges linked with onboarding to new platforms, which include increasing manpower with specialised skills, managing fulfilment issues, and dealing with added operating costs. Brands also reported consumer complaints and the complexity of managing new platforms as significant obstacles.

Despite these challenges, Hall highlighted the potential role of technology in overcoming hurdles. "Our research found that those without a single platform pulling data from across the sales spectrum claimed a centralised tool would be a 'game-changer' for making decisions on where to move inventory and which products to push," he stated.

Hall also pointed to the potential of artificial intelligence (AI) in streamlining the platform integration process. "Those that succeed will also need to embrace technology, specifically, artificial intelligence. On-boarding to a new platform can be a time-intensive task for those with a wide catalogue of products. AI can solve this issue by taking existing product descriptions and reworking them to the exact needs of the platform. Making this hugely laborious task much faster," he observed.

The findings underscore a significant shift towards third-party selling as UK brands seek to enhance their digital market presence and streamline operations through strategic data and technology use.