Surge in Secondhand Marketplaces: Framing Effects on Ecommerce
Defining online secondhand marketplaces
What is an online marketplace?
A marketplace is an ecommerce site that provides a platform for the exchange of services or products through multiple third-party vendors. In online marketplaces, the marketplace operator is commonly responsible for processing transactions, while orders are filled and shipped by participating third-party retailers. Operators typically generate revenue by charging vendors and retailers a “selling fee” or commission.
Marketplaces like Amazon, Etsy, and Wayfair are becoming increasingly popular over time because of their ability to offer a huge variety of products and services from dozens, sometimes hundreds or thousands, of vendors, fostering competitive pricing, product variety, and increased availability.
What are secondhand marketplaces?
Secondhand marketplaces are distinguished from other marketplaces based on the types of products they sell, particularly, used or preowned clothing, furniture, or other tangible goods. You’d immediately recognize some of the most noteworthy secondhand marketplaces: eBay, Letgo, Facebook Marketplace, and Depop. These marketplaces cater specifically to consumers looking for secondhand goods and items, often in the form of ordinary, everyday individuals selling their pre-owned merchandise in a non-professional capacity online.
With both typical ecommerce marketplaces and secondhand marketplaces, user experience and multichannel communities are factors that play a role in the success of these sites. The most successful, organized marketplaces are well-established interactive communities of sellers and buyers that rely on cutting-edge technology like artificial intelligence for personalization and smart checkout functionality.
The reality of the situation is that landscapes of customer buying habits are transforming to reflect these changes, and quickly. Twenty years ago, consumers purchased clothes, appliances, and accessories new in-store; contemporary buyers are faced with a multitude of options for purchasing: brick-and-mortar retail, subscription boxes, traditional thrift stores, ecommerce marketplaces, and secondhand online markets. Advancements in technology and digital experiences have created the opportunity for endless business model possibilities (tailored clothing subscriptions, appliance and equipment rentals, or direct-to-consumer resales) that are fast-replacing more conventional, single-channel stores.
We can put this in perspective even by considering our own behaviors and shopping experiences: Do you subscribe to Stitch Fix for personalized clothing recommendations? Did you purchase a near-mint condition, brand name handbag on Poshmark you would’ve never been able to afford otherwise? Have you used Amazon Prime Wardrobe to test out the try-before-you-buy trend? All of these amazing technologies would’ve been impossible to attain just decades ago.
Marketplaces differ from traditional ecommerce sites and platforms because they provide a space for multiple sellers instead of a singular vender, and often host auction-style bidding or other nontraditional purchasing methods. Letgo, OfferUp, Thredup, Poshmark, Mercari. These digital market experiences aren’t new. Sites like Craigslist and eBay have been around for more than two decades, but it seems like secondhand marketplaces have become incredibly visible within the few years.
What the rise of marketplaces means for the ecommerce industry
Marketplaces, particularly secondhand markets, are not only environments for trade and fiscal exchanges–they are cultural, social spaces that involve complex interactions between individuals. The combination of price barterting, bonding over shared interests, sharing purchases on social media, and direct communication between buyers and sellers are unique to secondhand sites. The surge in the number of secondhand markets coincides nicely with the rise of the “sharing economy,” an economic trend becoming more prevalent as the popularity of peer-to-peer selling, sharing, and renting grows.
As more sellers join the marketplace revolution, spaces may become convoluted and overpopulated, forming a hierarchy of more powerful and less legitimate vendors; this might lead to the creation of niche spaces for increasingly-specialized markets and sellers, while marketplace giants will continue to grow and acquire lesser marketplace sites.
Benefits for vendors
As an ecommerce store owner or retailer, how do you determine what level of involvement your business should take part in when it comes to the secondhand market trend? Whether you decide to sell your goods in a previously-existing marketplace or host a marketplace of your own, these digital spaces present an opportunity for omnichannel business growth.
According to data collected by Forrester Data in 2016 through their Online Marketplace tracker, half of online sales occur on marketplaces (secondhand or otherwise) like Amazon, eBay, and Alibaba. Because marketplace owners have less control over end-to-end shopper experiences, third-party shipping services, outsourced customer service, and vendor contracts or fees are often listed as primary concerns for businesses when entering the marketplace ecosystem.
When it comes to marketplaces, especially secondhand markets, one size doesn’t fit all. There are sites tailored to electronics or tech such as NewEgg, and sites like Depop that target Millennials looking for used streetwear clothing exchanges. If you chose to pursue marketplace involvement, make sure the particular space you chose is well-aligned with your brand, business model, and company purpose.
In the year 2015, there were over 105 million sharers/sellers in the United States and this number has only continued to grow over the past three years (2015 Collaborative Economy Report). While participating in a well-established marketplace like eBay or Etsy may result in the loss of some personalization and customization when compared to your primary store, participating in these communities widens the scope of your business model and greatly expands your visibility to previously unreached audiences. Additionally, expounding upon the fulfillment technology and shipping advantages provided by sites like Amazon can provide you with the competitive edge that shoppers now expect from their experiences.
AI’s role in secondhand marketplaces
It seems that marketplaces aren’t just a fading trend; these spaces are dynamic, timely, and respond well to transformations in customer wants and demands. Secondhand marketplaces have successfully provided a competitive, affordable, and unique customer experience that traditional ecommerce sites haven’t.
It’s simply a matter of convenience: shoppers can compare similar products from a plethora of vendors all over the world. Why pay full price in-store when you can find that trendy, only-worn-once sweatshirt on Letgo for half the price, without ever leaving your couch? In addition to these obvious benefits, secondhand marketplaces create shared experiences between vendors and consumers, solidified in the direct relationship between secondhand selling apps and social media. As marketplaces become increasingly personalized and digitally “share-able,” they will rely heavily on data interpretation, machine learning, and artificial intelligence.
Some uses of AI and machine learning in marketplaces:
- Real-time image recognition
- Titles, categories, pricing, shipping costs
- Tailored, personalized product recommendations and shopping experiences
- Geography-based searches “what’s near me”
- Chatbots or virtual assistants to help with issues, customer FAQs or checkout concerns
- Instant purchase functionality
Whether you’re looking to initiate your store’s web presence, migrate ecommerce platforms, or take advantage of increasingly-necessary omnichannel technology like instant purchase functionality in Magento Commerce or AI-powered Chatbots, Creatuity can help you achieve your ecommerce goals.
Images courtesy of Pixabay and Unsplash (via Adobe Spark)