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December 14, 2020

Kiri Masters of Bobsled Marketing: How the Oprah-fication of Marketplaces Is Affecting Ecommerce

Written by: Satta Sarmah Hightower
“This Oprah-fication is definitely going to continue. There's going to be more marketplaces. The question is: Is more better? And as a brand, do you want to be everywhere or do you want to be where all the eyeballs are?”
— Kiri Masters, Founder of Bobsled Marketing

When it comes to retail marketplaces, Amazon is still king.

But this doesn’t mean other retailers aren’t trying to knock the ecommerce giant off its perch. Kroger, for example, plans to launch an online marketplace with the help of Mirakl, a software company that provides dropship solutions and an online marketplace platform for retailers, manufacturers, and wholesalers.

Mirakl even plans to launch four more grocers on its platform in early 2021 — so we’ll see even more entrants into this space next year.

Kiri Masters, founder of Bobsled Marketing, is pondering what all this means for brand manufacturers and consumers. Masters shared her take during a recent episode of the Unpacking the Digital Shelf podcast, “The Oprah-fication of Marketplaces.”

Here’s Master’s view on how the explosion of marketplaces is causing both opportunities and challenges for brands.

You Get a Marketplace! And You Get a Marketplace!
The More Marketplaces the Better?

Masters said the answer to this question depends on what side of the debate you fall.

"On one side of the debate, there's [this idea] that more marketplaces equal better outcomes for shoppers and a good deal for everyone, and let these retailers create marketplaces that are going to suit their customers and expand the assortment and drive discovery [of products]," Masters said.

"Then there's the other side of the argument, which is how are you going to out-Amazon, Amazon? Their whole game is selection — a great customer experience and product recommendations. So, how could you ever possibly beat that?"
— Kiri Masters, Founder of Bobsled Marketing

"I see the merits of both arguments, but it's going to be interesting times ahead," she added.

Why Are Retailers Launching Their Own Marketplaces?

It's still not entirely clear what unique value these new marketplaces offer consumers or brand manufacturers. After all, if you could get a train set for your toddler in one day with Amazon Prime, why would you bother to purchase it from Kroger's marketplace?

Kroger executives have offered this reason: "Our customers are increasingly turning to our ecommerce solutions provided at Kroger.com for their grocery and household essential needs. To better serve our customers, we're continuing to invest in technology that enables us to expand our digital services to deliver anything, anytime, anywhere," the company said in a statement announcing the launch of its marketplace.

Masters echoed this point.

"Their perspective is that we want to be with our shopper at all points of their journey — whether that's shopping for their core family goods or if it's discovering new foods and household products that are offered by marketplace sellers," she said.

However, Masters said right now newer marketplaces offer a very disjointed customer experience. The fulfillment experience is completely separate from the online shopping and delivery experience, which means consumers may have to wait longer to get their items.

"It's not going to be part of that core grocery fulfillment. It's going to be shipped to me by the third-party," Masters said.

Retailers and grocers will have to solve for this if they hope to be even somewhat competitive with Amazon.

"There are some hard decisions that need to be made around what kind of game are we playing? How are we going to be different from Amazon rather than just adding selection?" Masters said.

Moving at the Speed of Amazon

One way retailers can solve this challenge is to launch more micro fulfillment centers near their stores, which would allow them to deliver goods to shoppers faster. Retailers can also forge direct relationships with distributors and third-parties to offer a better customer experience.

"Amazon has been gearing up these relationships directly with brands. Instead of working through distributors and resellers and third-parties to acquire inventory and selection, over time they've shifted to developing a direct relationship with brands because the brands are the ones who are going to pony up the money for ad campaigns, product content, and all this marketing expense, which is good for Amazon," Masters said.

"It's good for the customer and is ultimately good for the brand, as well. Amazon has over time moved to forging those relationships directly with brands, but with these other emerging marketplaces — depending on what their angle is — it could make more sense for the marketplace to invest in relationships with distributors and third-parties who have that fulfillment capability and the selection," she said.

What New Marketplaces Mean for Brand Manufacturers

As more platforms emerge for brands to sell their products online, they'll have to be more strategic about which channels they invest in. Masters said brands need to prioritize investment in where people are already shopping online — which means Amazon.

"If you're going to be where the action is, then it's Amazon, clear and simple," she said. "But there are a few use cases for looking at some of these other marketplaces."

Masters said Julie Liu, an executive at Clif Bar, outlined four criteria brands can use to decide whether to invest in new marketplaces:

  1. First-party targeting capabilities: On the advertising front, how robust is the ability to target down to the shopper level and use the data on the platform?
  2. Data quality: Does the platform provide good quantitative and qualitative data — especially for retail media?
  3. Early to market: Are you able to be an early adopter of the platform when it's less competitive and build goodwill with the platform and shoppers to develop a long-term competitive advantage?
  4. Stretching marketing dollars: If you're a national brand, will being on the platform help your marketing and ad dollars stretch further with regional grocers, generating a greater return on investment (ROI) than you traditionally get with a big retailer?

But What About Fulfillment?

Even if a marketplace does tick all these boxes, brands still have to solve the fulfillment conundrum before deciding to onboard their products on these platforms.

"Very few [brands] would have the ability to pick and pack eaches from their existing supply chain," Masters said. Masters said brands who want to invest in new marketplaces need to find fulfillment partners.

"If they want that capability, what I've heard from some of these brands is that they're not even attempting to do this within their existing supply chain," Masters said.

"They're going out to the market and finding a fulfillment partner who will do that for them. Because to engineer into their existing warehouse the ability to pick and pack eaches is way too difficult. They need to outsource that," she said.

Shaping Your Marketplace Strategy

Investing in new marketplaces and dedicating time, effort, and money to all the assortment, inventory, logistics, and fulfillment considerations that come with establishing a marketplace presence may not make sense for every brand.

Brands that want to expand their digital footprint beyond Amazon will need to forge stronger relationships with distributors and ensure retailers have the correct product information on their sites. But retailers also need to give consumers a compelling reason to shop on their marketplaces to make this investment worthwhile for brands.

More platforms may be suitable for brands in the long run — but in the meantime, the industry will be watching closely to see if any of these new marketplaces can eventually out-Amazon Amazon.

Listen to the full podcast episode to learn more about this fast-moving commerce landscape and how to decide where to invest.