With over $1.2Tn worth of B2B business moving online, and a growing proportion of this trade being done on marketplaces, B2B marketplaces offer a significant growth opportunity for organisations looking to shift from traditional supplier or distributor models to a multi-vendor direct to customer business model.

Omnyfy CEO, Fabian Rebeiro, sits down with Paul Skeldon from RetailX to discuss B2B marketplace in this webinar, which has been broken down into 4 easy to view parts, each discussing a specific topic.

Part 4 – Key features required for B2B marketplaces

In this section of the webinar Paul and Fabian discuss the key features required by operators of B2B marketplaces.

Other Parts

• Part 1 – B2B Marketplace Growth and Usage
• Part 2 – What’s driving the shift to B2B marketplace buying and how are customers buying?
• Part 3 – What are B2B customers buying?
• Part 4 – Key Features required in B2B marketplaces

With over $1.2Tn worth of B2B business moving online, and a growing proportion of this trade being done on marketplaces, B2B marketplaces offer a significant growth opportunity for organisations looking to shift from traditional supplier or distributor models to a multi-vendor direct to customer business model.

Omnyfy CEO, Fabian Rebeiro, sits down with Paul Skeldon from RetailX to discuss B2B marketplace in this webinar, which has been broken down into 4 easy to view parts, each discussing a specific topic.

Part 3 – What are B2B customers buying?

In this section of the webinar Paul and Fabian discuss what customers are purchasing on B2B buyers. This includes services, product and procurement for businesses.

Other Parts

• Part 1 – B2B Marketplace Growth and Usage
• Part 2 – What’s driving the shift to B2B marketplace buying and how are customers buying?
• Part 3 – What are B2B customers buying?
• Part 4 – Key Features required in B2B marketplaces

With over $1.2Tn worth of B2B business moving online, and a growing proportion of this trade being done on marketplaces, B2B marketplaces offer a significant growth opportunity for organisations looking to shift from traditional supplier or distributor models to a multi-vendor direct to customer business model.

Omnyfy CEO, Fabian Rebeiro, sits down with Paul Skeldon from RetailX to discuss B2B marketplace in this webinar, which has been broken down into 4 easy to view parts, each discussing a specific topic.

Part 2 – What’s driving the shift to B2B marketplace buying and how are customers buying?

In this section of the webinar Paul and Fabian discuss the different products and services that B2B customers purchase via marketplaces.

Other Parts

• Part 1 – B2B Marketplace Growth and Usage
• Part 2 – What’s driving the shift to B2B marketplace buying and how are customers buying?
• Part 3 – What are B2B customers buying?
• Part 4 – Key Features required in B2B marketplaces

With over $1.2Tn worth of B2B business moving online, and a growing proportion of this trade being done on marketplaces, B2B marketplaces offer a significant growth opportunity for organisations looking to shift from traditional supplier or distributor models to a multi-vendor direct to customer business model.

Omnyfy CEO, Fabian Rebeiro, sits down with Paul Skeldon from RetailX to discuss B2B marketplace in this webinar, which has been broken down into 4 easy to view parts, each discussing a specific topic.

Part 1 – B2B marketplace Scale and Growth

In this section of the webinar Paul and Fabian discuss the rapid growth of B2B marketplaces globally.

Other Parts

• Part 1 – B2B Marketplace Growth and Usage
• Part 2 – What’s driving the shift to B2B marketplace buying and how are customers buying?
• Part 3 – What are B2B customers buying?
• Part 4 – Key Features required in B2B marketplaces

Internet Retailing identifies third-party sales through marketplaces will be the largest and fastest-growing retail channel globally, adding more than $1.3trn in sales by 2027 and accounting for 38% of all global retail sales growth. First-party ecommerce sales will shrink from 44% today to 41% in 2027, adding $778bn in sales over the next five years. By then, third-party sellers through marketplaces will capture 59% of global ecommerce sales, up from 56% in 2022. (Source: https://internetretailing.net/marketplaces/third-party-marketplace-sales-to-account-for-59-of-all-global-ecommerce-by-2027/)

Now although these stats refer to “marketplaces” – with the right technology platform, any Online Retailer with an eCommerce store can incorporate Third-Party Sellers into their existing online catalogues to take advantage of the benefits that this form of online retail offers.

What is Third-Party Selling?

Third Party Selling is a business model where an Online Retailer enables third-party sellers – i.e. brands whom they do not carry or stock themselves, to list their products and services alongside their own, offering customers a much larger catalog of products from which to purchase, or affiliated services such as installation, delivery, insurance, complimentary products etc.

Fulfilment of Third-Party items may be through drop-shipping or cross-docking:

• Drop Shipping is a fulfilment process wherein the Vendor or Seller of the item ships directly to the customer. In the case of Drop-Shipping, the customer may receive multiple packages if purchasing from more than one Seller.
• Cross-Docking is a fulfilment concept wherein the Vendor or Seller of the item ships to your warehouse and the items are immediately combined for delivery with first-party items that the customer purchases from your catalog for consolidated shipment to the end-customer.

Benefits of Third-Party Selling to Online Retailers

As an Online Retailer, Third-Party Selling offers you the following benefits

1) Expand your Catalog and offer customers a much wider product range

Product range is a significant driver of GMV – the more you have to sell, the higher the potential value of your GMV. Especially when your first party catalog has obvious gaps.

2) Expand range, without increasing warehousing and holding costs

With Third-Party Selling, you as the online retailer, do not purchase or hold the stock. The stock is shipped directly to the customer or consolidated via your 3PL partners, or cross-docked prior to dispatch. This significantly lowers holding costs, thereby increasing your margin on these products.

3) Increase revenue through commissions or negotiates wholesale rates, depending on your preference and product range

Third-Party Selling offers several monetisation opportunities, discussed below. All of which deliver significantly better net-margin as compared for 1st party items, primarily because of the significantly lower holding costs. If priced correctly, commissions, rebates or margin from third-party products can offer significantly higher benefits.

4) Addressing range gaps and non-core products

Depending on the type of Online Retailer, addressing range gaps could either mean developing new product offerings, supplier engagements with new brands and distributors or development of own-brands. In many cases, these gaps could simply mean lost revenue potential as consumers look for products that aren’t being carried. The same can be said for stocking of non-core products – such as fittings, installation goods, assembly equipment, maintenance and repair items and operational commodities – customers would still need to purchase these items during the operational life of the product, but in most cases online retailers wouldn’t stock these items because the holding costs wouldn’t be worth it.

Third-Party selling offers a great strategic option to address range gaps, by simply identifying sellers who can list those products, without having to carry the associated stock or sink capital into inventory, coupled with marketing expenditure to drive sales and move stock.

The added benefit is that depending on the sales of these items, online retailers can then shift these products using trusted sales data, to first-party stock, or more efficiently. negotiate better rebate opportunities for sales targets on a monthly or annual basis.

5) Complimentary Products and Services

For online retailers of consumer electronic goods, furniture, outdoor goods, home installations, business furniture or electrical goods, industrial equipment, electricals, floor and wall coverings etc, their products would usually entail associated services including installation, insurance, accessories and fittings, measure and quote or the purchase of additional fittings.

By enabling Third-Party sellers of these products or services to be listed and purchasable alongside the main catalog items, retailers can offer their customers a more integrated and seamless buying experience, while also developing an ecosystem of products and service providers.

Monetising Third-Party Selling

Third-Party selling can be monetised several ways:

1. Commission-based model: The most common method is the commission model, where the platform charges sellers a commission on the Gross-Value of the sales. It is recommended that any shipping fee NOT be included in the commission fee, as this may negatively impact your ability to secure Vendors on the marketplace. Commission itself can be split into several types including:
   1. Seller Commission – Based on the sales value of the order
   2. Category Commission – Based on the product category
2. Wholesale model: In the wholesale monetisation model, the retailer effectively negotiates a price per product that is being listed (List or Cost Price). This price is stored on the platform along with the retail or sale price. When the item is sold, the Vendor or Seller receives the agreed List Price x Quantity purchased. This model is great for online retailers with significant customer base in a specific niche category, where they prefer to offer pricing discounts and promotion offers without impacting the value agreed with the Vendor.
3. Rebates: Rebates are another “add-on” monetisation model, alongside Commission or Wholesale Model. Rebates are extremely powerful and offer significant price competitiveness to the online retailer. A Rebate is effectively a percentage of total sales value generated for the specific Seller, paid-back to the Online Retailer at the end of a specific period, whether it is monthly or annually. Usually combined with marketing budgets, promotions and other channel incentives. When setting a rebate, Sellers would look to establish an agreed sales quota for that period, and the rebate is based on that quota (e.g. 5% rebate for total sales over $2m for the year, and 3% if less than $1.5m). Rebates should be flexible as they have a high degree of correlation with the product type and Seller.
4. Subscription-based model: Third-party sellers pay a monthly or annual fee to be able to list their products on the marketplace. Subscription models are a good “add-on” monetisation model for most online retail platforms, but tend to be the main monetisation option for Service Platforms.
5. Advertising-based model: Third-party sellers pay to have their products highlighted or promoted in certain areas of the marketplace, or to have their products appear at the top of search results.
6. Value-added services: The online retailer charges additional fees for value-added services such as order fulfilment, customer service, and shipping.
7. Transactional fees: Third-party sellers are charged a small transaction fee for each sale made through the marketplace.

Getting Started with Third-Party Selling

So what do you need to get started with Third-Party Selling? We’ve compiled an exhaustive list of the most crucial platform aspects required to turn your existing eCommerce store into a third-party sales rocket ship!

The Business Model

Ensure that you have clearly articulated the goals and business model of your Third-Party Sales Strategy – this includes:

• Target vendors within the first 3,6, 12 and 24 months
• Target Third-Party Catalog – specifically the categories of Sellers that you’re looking to onboard and the product ranges
• Establishing a clear product category taxonomy to ensure that your Seller Acquisition team knows precisely the product range that you’re looking to establish via Third-Party Sellers while also making it easy for your Sellers to integrate existing stores and map data between their systems and yours.
• Establishing a clear fulfilment strategy – offering Sellers the option of Drop-Ship or Cross-Dock depending on your business’s capabilities and the shipping efficiency and associated costs.
• Determine your shipping cost strategy for Third-Party items, will you be passing on the shipment of items to your customers for third-party items, absorbing the costs, consolidating shipments etc?
• Monetisation strategy
• Payout / Disbursement process and timeframe, as this is one of the most commonly asked questions by Third-Party Sellers – When and how will I get paid?
• Returns and RMA process for Third-Party items
• Invoicing, Tax-Withholding (if applicable) and Cross-Border disbursements

Selecting the right platform to drive your Third-Party Sales Solution

• Choose a platform that provides a comprehensive API suite or connector for your existing eCommerce store. At the minimum you will need to ensure that the following is supported:
  • Product Catalog sync
  • Pricing and Inventory sycn
  • Order sync
  • Fulfilment / Shipment sync
  • Vendor / Seller communications (if you would like your buyers to have the ability to communicate directly with sellers)
  • Promotions sync

• Seamless vendor onboarding with the ability to customise vendor onboarding forms to enable your platform to connect the data and information required to review and approve the seller to your eCommerce store
• An approvals process to review and Approve / Reject potential sellers
• A seamless online payout process whereby your Sellers can be onboarded for payout of their orders
• A platform that supports a wide range of monetisation options (as listed above) to provide you with the flexibility to create a monetisation plan that suits your business
• A robust, automated and accurate solution for calculation of payouts based on the range of monetisation options selected
• Comprehensive Vendor Dashboard and Seller Portal to allow your vendors to manage their profiles, catalogs, orders and shipments and to receive notifications of orders via the platform
• Robust connectivity options for your sellers to connect their existing eCommerce stores, PIM systems, ERP’s or product feeds
• Connectors to allow your Vendors to receive order fulfilment information directly from your eCommerce store, without having to login to manage their orders on your platform. The majority of Vendors already have several sales channels that they’re managing and they’re not interested in having to login to any more channels to manage orders. They expect centralised order sync and management from their existing eCommerce systems.
• Connectivity to retrieve shipment and tracking information directly from your Sellers, to update the order information on your platform with ease, so that customers can track their third-party orders
• Automated invoicing management taking into consideration partial fulfilment, order cancellations, refunds and other edge cases – ensuring that your customers are properly compensated while managing Seller payouts seamlessly.
• Seller assessment is vital for success, so ensure that the platform you select has processes to monitor seller performance including reporting for:
  • Time to fulfil – ensuring that Sellers ship their items within a certain timeframe of receiving the order
  • Vendor Review and Ratings
  • RMA processes with the ability for customers to leave detailed product reviews and reasons for returns etc
• Comprehensive customisable reporting built in – to give you the data you need to operate your Third-Party sellers.

What to be aware of when establishing a Third-Party Seller Strategy

When executed correctly , Third-Party Seller Strategy can deliver significant value to Online Retailers. The following points highlight the potential risks and things to be aware of when planning to execute this strategy.

• Quality of Quantity at launch: Assess your potential Sellers carefully, especially in the first two years of operation. Poor customer experiences with Third-Party sellers can affect confidence and review quality of your first-party items as well, especially when cross-docking, as delays in Third-Party fulfilment may affect when customers receive their overall packages.
• Establish SLA’s for fulfilment with Sellers and ensure that this is part of your onboarding contracts
• Track and monitor Seller Performance and Ratings / Reviews from customers to weed out low-performing Sellers
• Do not support back-orders, especially for consumer marketplaces and ensure that your Sellers are ideally providing near-real-time inventory as it is essential that customers receive the items they purchase rather than being notified of it being out-of-stock after they place their orders. This leads to dissatisfaction and loss of trust in the store.
• Be realistic and set expectations with your Sellers: Many Online Retailers who initially go down the path of Third-Party Selling over-estimate the value of their revenue potential and over-promise sales to their Sellers. Sales and industry data are good indicators, but temper and be conservative with expectations and build slowly.
• Establish a monetisation strategy that makes it easy for new Sellers to say “Yes”: From a Vendor / Seller acquisition standpoint, new Third-Party Channel platforms are usually risky for Sellers – they have to put in the effort to sell, manage their catalogs etc, so make it as easy as possible for them to say yes – do not charge a fixed / subscription fee for them to join your platform especially as it is unproved if it is a cold-start. Offer realistic commission agreements and focus more on rebates, if you are confident of driving sales, as this is the monetisation method offers the best cost/benefit mix for new Sellers.

Built with support for Adobe Commerce V2.4.3 and above and also providing support for Adobe Commerce Enterprise version, Omnyfy V4 is the new foundation from which we will continue to build and extend, with capabilities unique to V4 only.

Omnyfy will continue to support clients on V2 and will begin our migration of all V2 marketplaces to V4 in early 2022, we will be communicating with each of our existing marketplace clients about the migration schedule in early 2022.

These are just a small sample of the enhancements that we have delivered in V4. Omnyfy has also addressed a ton of minor bugs and issues that we felt were impeding the quality of our marketplace product to create the most stable version of Omnyfy ever.

Professional services marketplaces are one of the fastest growing and most lucrative types of multi-vendor marketplace business models. Research from 2017 indicate that the market was slated to grow by 5.4% YoY, reaching almost $5 trillion globally, by 2020. This rise can be attributed to several key factors including:

1. Increased trust and quality of providers on professional service marketplaces
2. An open and transparent review and recognition mechanism that rewards performance and highlights poor quality work, enabling the cream to rise to the top
3. Increase in professionals working remotely.
4. Finding the best person at the best rate rather than having to rely on someone locally, especially for highly specialised workloads including development, design, content production, research services, tax services, accounting etc.

For anyone looking to either offer or obtain specialized services, marketplaces provide a great opportunity to find the best person for the job, at a price point that the customer can afford. In addition to connecting professionals and businesses, these platforms also allow for secure payment transactions, where funds are held in an escrow facility and only released when the service is delivered or the work has been completed to a satisfactory level of quality.

This way, service providers have peace of mind knowing they’ll receive payment for the work they’ve done. From the buyer’s perspective, marketplaces allow businesses to reduce risks of online scams, especially after receiving a subpar service.

According to Forbes, the value of the B2B marketplace commerce in the U.S. alone will be worth of $1.2Tn. With that in mind, demand for having a specialized marketplace is higher than ever. This provides a great opportunity for anyone who plans to launch such a platform.

Types of professional services marketplaces

Services Marketplaces include a range of sectors and levels of jobs, from trades jobs such as finding electricians and plumbers or locksmiths through to high-end professional services such as developers, accountants, legal practitioners or conveyancers.

There’s generally two paths that can be take by professional services marketplaces, depending on how sophisticated or accessible the supply side (online sellers) can be:

Generic professional service marketplaces land up becoming listing sites or directories. Apart from providing the contact details of the provider and behaving as a low-quality lead generation mechanism, these marketplaces do not usually offer any additional value. Directories such as Yellow Pages, fall into this category. View this video to see how marketplaces have evolved, especially with professional service marketplaces.

Generally speaking there are two three types of functional marketplaces that you can create when considering a professional service marketplace.

1. One way is to allow professionals to create their own profile and state what kind of services they’re able to offer. Businesses can then search your marketplace and look for people who are able to provide the exact service they need.
2. The other solution is to build a platform that goes allows businesses to request services they need. By looking at the job description, professionals can see what kind of work the business requires and in what time frame. If they think they’re able to fulfill such a request, a professional can then submit their proposal and wait for the feedback.
3. Of course, there’s a third option to consider as well, which combines both of these models. Although this can make your marketplace pretty versatile, it can also increase its complexity. Naturally, you can solve this by optimizing the user experience for your marketplace, making it a breeze to work with.

The 5 Most Important Features Your Marketplace Should Have

1) Advanced Search Options

The ability to quickly and easily find a service provider online is key to developing a winning professional services marketplace. When looking for a specific service for your business needs, it would be quite inconvenient to have to scroll through all the service listings.

To provide a good user experience, having a powerful search engine is a must. Besides that, it also needs to have various filters which can include service categories, subcategories, and specializations, for example. It’s also important to be able to search listings by other criteria, such as charge per hour, availability, location, language, etc.

Wizard type searches such as those used on Serviceseeking.com.au are a great way to guide your users in making selections, leading them to a search outcome.

2) Payment Processing

Once you enable professionals and businesses to connect with each other, the next step is to provide secure payment processing. By allowing your users to charge and pay for the services directly through your marketplace, you eliminate any additional work they’d have otherwise. This creates a stress-free environment, both for those paying for services and those that charge for providing them. Of course, this directly feeds to your business case as well, since you’ll collect a marketplace fee from these transactions.

Service marketplace billing is the next most important feature to look for. Billing for service marketplace must a range of billing options including fixed price billing, hourly based billing and billing on quote.

Payment processing on a marketplace involves holding the funds in escrow until the service is delivered. This offers confidence to both seller and buyer, that their funds are being held and will be released once both parties are satisfied with the service delivery.

3) Service and product listing

The Service or Product listing page is the page that customers use to make their decision on whether or not to engage with the provider..

Service listing should be a top consideration and must allow service providers to clearly showcase their offering. The page should include a detailed description of the service, examples of previous work, display of past reviews and tagging with a range of attributes that are used by customers when conducting searches.

4) Notifications and Messaging

Performing highly-skilled tasks requires seamless communication between two parties. That is why your marketplace must include an internal messaging system to keep all the communication on your platform. This will allow for proper business communication between users, eliminating the need to use e-mail or any other form of communication.

Besides being able to chat between each other, your users also need to exchange documents and files. Another feature worth pointing out is the chat history, which serves as proof of any previous conversations.

5) User Profiles

Along with job postings or service offers, each user in your marketplace needs their own profile page. For professionals, this will allow them to provide information about the services they offer. This is also the place where they can show their previous experience, special skills, and how much they charge per hour. For businesses, a profile page can allow professionals to understand what their company works on, what kind of services they require, and how often they hire professionals.

6) Scoring System

Reviews and ratings are an important part of any marketplace. This allows the users to provide relevant feedback about their partners, as well as choose a professional or company that’s in good standing. Although you can rely solely on the feedback and comments, it’s best to introduce some kind of a scoring system as well. One of the most common examples is star rating, which goes from one to five stars, with the latter being the highest mark.

Learn from the Existing Examples

With so many online marketplaces already in place, it’s essential to use this opportunity and learn from the best. Two of the most popular platforms that provide all kinds of services are Upwork and Freelancer.

Both cover a wide range of professions and mostly focus on businesses posting job offers. This allows service providers to pick and choose jobs they’d like to work on. Of course, once they submit their proposals, it’s on the business owner to decide who they’ll hire.

If you’re planning to create a specialized marketplace for high-end services, you can check out some of the top online marketplaces for professional services below.

To get a better insight into how this works for particular professions, the list below features examples for Legal, Accounting, and Web Development services.

Legal Services

• UpCounsel

UpCounsel enables entrepreneurs and businesses to locate and hire attorneys. Depending on the business’ requirements and their budget, the platform will provide three to four attorneys that look like the best fit.

After attorneys send their proposals, the business owner can select one to work with. The main benefit of this system is that businesses don’t have to sign expensive contracts with law firms. Instead, they can choose an attorney for a single task if they want, without wasting time on complex paperwork, meetings, and negotiations.

• Avvo

With Avvo, things work a little differently. First of all, the main component of their marketplace model is scraping the internet to find licensed attorneys and include them in their listings. Creating a huge number of lawyer profiles this way, they can easily service any kind of legal need for businesses. Avvo boasts that their marketplace includes over 97% of all licensed attorneys in the U.S.

Accounting Services

• InHomeAccountants

Providing on-demand services in the accounting profession, this platform connects independent accountants with businesses that require such services. The process is quite simple.

First, an accountant creates a profile and enters their accounting and software skills, as well as the licenses they have. Next, a company defines their project by entering its scope, deliverables, and deadline.

They may also require a specific skill set or a license. Finally, the platform matches accountants with the existing projects, allowing everyone an equal chance to bid for the job.

• Shngli

Being another accounting marketplace, Shngli approaches the game differently to others. In order to provide the best accounting services on their platform, they go the extra mile in their process. Focusing only on southern Florida for now, Shngli interviews and validates each accountant they bring to their platform. Although not a world-wide marketplace at the moment, this is a great example of how to think out of the box and approach your niche directly with an added value.

Web Development

• Toptal

Working in one of the most sought-after professions at the moment, web developers can use Toptal to easily connect with businesses. Thanks to the online tests, Toptal is able to initially screen developers that come to their platform. Using skill, personality, and language testing, businesses can be sure they’re looking at the prime selection of online talent. Especially since Toptal chooses only around 3% of the several thousand applications they receive each month.

• Expert360

Based in Australia, this global marketplace provides an opportunity for a large number of highly-skilled developers to find remote work. Just like Toptal, Expert360 has a rigorous screening process, making sure their talent pool is at the highest level. This goes as far as organizing interviews with their applicants.

The best marketplace platform for launching a professional services marketplace

Omnyfy provides a comprehensive marketplace platform on which to build and launch your professional services marketplace vision.

With a comprehensive suite of functionality our PaaS Marketplace Platform delivers everything you need and is backed by our amazing customer service.

If you choose the Omnyfy platform, you’ll receive a host of specialized features that cater to the requirements of a professional services marketplace. It provides a flexible payment system which covers all types of payments, be it fixed, milestone based, or anything in between. To allow your users to properly plan their work time, Omnyfy provides the booking and appointments feature as well.

Besides these options, Omnyfy marketplaces include many others, all essential for the success of your endeavour. You can check out the full list of features specifically for professional services marketplace here.

Relating to your target audience is a relatively wide statement and can range from the type of Fashion you’re selling to the values that your marketplace ensconces. Marketplaces can stand out by focusing on specific segments such as specifically street wear, high-fashion, party fashion or just jeans, or for specific values such as independent brands, co-ops, second hand clothing or sustainable manufacturing. The more precise you are with your positioning and target “tribe”, the more successful you’ll be in acquiring and growing a customer base.

And this is a great time to start. In a recent Round Table interview with McKinsey, Boris Ewenstein of Zalando stated, in response to the boom in online sales driven by the Covid19 lockdown, “But after March 30, the landscape changed again. People who would have bought offline before are now moving into online. Of our 32 million active customers as of March 31, 17 percent are new (year over year). We sold one million items just over Easter via our direct-to-consumer partner program, which is up more than 100 percent from last year. Similarly, new sign-ups to the Partner Program were up 150 percent from February to March.”

This week, in our ongoing Spotlight Series of articles where we focus on specific industry niches and provide advise to new startup entrepreneurs or existing businesses in the sector who want to launch and online marketplace, we are taking a look at the specific challenges of creating a Fashion marketplace. You will learn what customer needs you should really focus on and how a to accelerate your go to market with a PaaS Marketplace Platform. Plus, you’ll see what the best in the business is doing, and why it works.

The Types of Online Fashion Websites

When looking to launch an online marketplace, where the need to create the network effects are critical to success, first identify precisely what your positioning will be and evaluate if there is a sufficiently large Total Addressable Market in your segment, for your marketplace to be successful. Remember the closer the shared interest between your vendors (sellers) and buyers, the more network effects it generates – i.e. more sellers attract more buyers and vice versa, which will ensure organic growth of your marketplace.

Broadly speaking, fashion vendors can be broken down into anywhere from five to ten segments.

The value market is the lowest on the ladder. Essentially, brands in the value market focus on volume sales. Their products do not need to meet high-quality standards, but consumers expect to get something affordable. Fast-Fashion falls in this segment and there is a large and growing collection of marketplaces and brands that meet the needs of this sector.

Fast Fashion is however seeing push back in countries where customers are recognising the impact that cheap fashion is having on the environment as well as the terrible conditions in which producers of Fast Fashion clothing operate – especially in countries such as Bangladesh and Sri-Lanka where a large volume of these clothing are produced.

High street brands: mass market, mid-level, and high-end. Without delving deeply into each, high street brands are those that have a specific aesthetic and cater to a defined group of consumers. These brands can span the gamut of price and value, but the defining characteristic is their core customer profile, which reflect interest in the latest fashion trends and an age range that skews towards teenagers through to early-stage professionals.

The number of brands in this category are in the thousands and include both owned brand department stores like H&M, Uniqlo and M&S through to designer labels such as Chloé, Furla, Max Mara etc. We’re simply not doing this category justice in naming brands, as this is widely considered the largest sector of the fashion market.

Luxury fashion and the haute couture segment follow high-end mass market brands, with a focus on designer labels, premium production and exclusive distribution, usually through top fashion retailers or direct to consumer channels.

In many cases brands in this category do not showcase their pricing online in the retail channel, but are regularly featured in the second-hand resale fashion marketplaces, where top brands such as Chanel, Louis Vuitton, Prada and the like are regularly sold. Marketplace such as Vestiaire Collective (https://www.vestiairecollective.com/), Cocoon Club (https://www.cocoon.club/) and Edit Second Hand (https://editsecondhand.com/) are examples of marketplaces that provide a secondary market for people to sell prized high-end luxury fashion and accessories.

The handmade market segment is one of the most popular on some online marketplaces, such as Etsy. Prices can vary widely among handmade vendors and the quality of products depends on the source.

Lastly, the bespoke fashion segment is one of the fastest growing in the online fashion marketplace scene. Although the term bespoke typically indicates high-end products, there are many vendors who specialise in affordable bespoke clothing. Examples of bespoke brands or made-to-measure fashion include Indochino (https://www.indochino.com/) and Sumussura (https://www.sumissura.com/)

Picking a Marketplace Platform Solution to Meet Your Customers’ Needs

Now that we’ve looked at the different types of segments in Fashion, primarily based on Fashion type, rather than the aforementioned “Values” proposition, and you’ve identified the specific segment of customer based that is large enough to sustain the marketplace, let’s look at what you need to create a winning one.

We will be following a structure in all our Showcase articles when discussing functional requirements of a marketplace for a specific sector:

1)     The Hygiene Factors – these are the requirements that you simply cannot live without and should not compromise on. In most cases these functional capabilities of your marketplace will also align with general best-practices when developing a high-performance, UX optimised website.

2)     The Winning Factors – These functionalities will differentiate you from the pack and is where your selected platform on which you choose to build your marketplace must support customisation and extension

3)     The Cream on the Cake – This is where your innovation comes in – based on your experience in the sector, working with vendors in the industry or simply a functionality that will draw a large number of users, both vendor side or buyer side, to your platform.

The Hygiene factors

Here are some of the basic Hygiene Factors that fashion consumers want from an online marketplace:

For buyers

• Simple product listing and navigation.
• Faceted search – the ability to search everything and have filters that are relevant to the category that they are viewed
• Fast search with instant lookup – remember, customers all approach search differently, some prefer to browse hundreds of category pages searching for what they want, while others want to get straight to the product or brand they are looking for
• Category pages with the ability to add category descriptions, critical for SEO
• Human readable URL’s – a URL structure that uses the category names and hierarchy to display the categories so that it can be crawled better by search engines
• Beautiful, informative and usable product pages. If there are unique aspects of the products on your marketplace, consider using iconography to highlight which products deliver on these specifications. This could include Organic, Cruelty Free, Co-Op produced, Supports fight against modern slavery etc. Do not forget that your customers will want to quickly get to products that match their values and buying requirements, so make it easy for them
• Reviews and ratings that are immediately visible to customers
• The ability to easily configure their intended purchase with size, colours etc with an accompanying size chart for every product to minimise the chance of customers buying the wrong size and having to return the product
• The ability for customers to immediately see who is selling the product
• Beautiful seller pages that showcase the seller’s differentiating factors as well as their products on one page

• A fully integrated online payment solution with the ability to use multiple payment methods including local payment methods around the world.

For Sellers

• A streamlined onboarding process for your vendors, to allow them to onboard, get verified and start selling easily
• Social media integration for sharing
• Quick and easy product listing for approved sellers.
•  Effective messaging channels between buyers and sellers.
• A friction-free order system and comprehensive analytics.
•  Responsive online shopping – without a mobile-friendly marketplace, you will have a serious uphill battle reaching fashion vendors.
• Reliable uptime – missing out on sales during an important product drop because a site is down can mean crippling losses for a vendor in the fashion space.
• Perhaps most importantly: the ability to turn traffic into revenue

Top 5 Key Features That a Marketplace in Online Fashion Needs to Have to Win

Surprisingly, many online fashion marketplace websites fail to identify crucial elements of success in the industry. And it stems from a failure to marry some traditional concepts of fashion with their counterparts in the multi-vendor eCommerce store space.

Here are five features you cannot do without if you want to succeed:

1. Extremely high degree of customisation. More so than in other industries, merchants in fashion need to constantly update their product offering and marketing approach. And it is worth considering the scaling issue from the start. Note however, that the more complex you make your personalisation for your buyers, the more effort is required from your sellers to create configurable or customisable products on your marketplace. It is better to support this than not – and you need to ensure that you provide sufficient help guides to your sellers to guide them on how to setup highly customisable product listings.

2. Accessible product catalogue. In the world of fashion, product catalogues change by the hour in some cases. Merchants will want the freedom to modify their product offering easily. Consider integrations with the retailer’s own stores – ensure that your marketplace platform can support API integrations with top eCommerce platforms to allow your vendors to integrate and sell their entire catalogue on your marketplace.

3. Analytics from day one – Integration with Analytics Platforms such as Google Analytics with the ability to also track with GTM for advanced analytics. GTM and advanced eCommerce Analytics from Google in crucial to provide step-by-step conversion tracking for your marketplace. Ensure that these are configured from day one, so you do not miss tracking data that tells you how your marketplace is performing.

4. Integrated shipping and logistics: One of the biggest elements of marketplaces that we see missed when determining the features and functionality is integrated shipping. In many cases your marketplace vendors will have their own carriers, however, to provide vendors a complete solution, providing integrated carriers is critical. This allows Vendors to onboard more easily and utilise either the marketplace owner’s shipping solution or sign up for their own and use the marketplace to perform all their shipping for marketplace orders. For integrated vendors, the orders will be passed back to their eCommerce store, from which they can fulfil using their existing 3PL or freight providers.

5.  A platform that supports customisation and extensions – Fashion marketplaces, if not customised to meet the needs of the specific segment that it is targeting, will inevitably become just another site on the internet from where you can purchase products. Software-as-a-service marketplace platforms are simply not sufficient for long-term, scalable marketplace growth.

Keeping in mind that according to Forbes, Amazon accounts for over 80% of all sales in the U.S. that leaves an already minor share of the fashion pie within which thousands of online retailers and brands compete.

To stand out and be different your marketplace must have a secret sauce. Here are examples:

• Allowing your customers to showcase their fashion ideas or create Look Books (like Fashmates – https://www.fashmates.com/)
• Integrate with Instagram to show off their new fashion
• Target unique selling methods such as flash-sales
• Provide buying opportunities from unique sellers or provide integrations with a whole host of other platforms

the ability to customise and extend the marketplace platform is crucial and should be a key determining factor when selecting which platform you want to build your marketplace solution.

Best Online Fashion Marketplace Examples and What They are Doing Right

The best marketplaces in the fashion industry have a few things in common. They are crystal clear about who their target audience is, and what those customers need to be successful. Here is a list of some of the top performers in the industry.

1. Zalando

One of the biggest online retailers in Germany, Zalando accounts for around 1.6% of the fashion spend of the entire European Union. Although their partner marketplace is only a small part (10%) of their business, it is a small slice of a €6.6 billion ($10.8 billion) pie. Seeing the opportunity in the marketplace, Zalando aims to grow its partner revenue by 40%.

2. Farfetch

A prime destination for vendors who specialise in luxury brands. Over 3,000 merchants use Farfetch to sell their products and it has just about every type of fashion product imaginable. The business model for Farfetch was ambitious from the start, aiming to provide a platform for all luxury fashion brands across the world. Its success speaks for itself and it offers more features than most competitors.

3. ASOS Marketplace

A global leader in the B2C multi-vendor marketplace sector, ASOS focuses on peerless customer experience as a differentiating factor. The platform insists on free delivery and returns and risk-free checkout options. And its efforts have certainly paid off since it fields almost 100 million visits a month. Originally founded in London in the year 2000, the British fashion retailer now ships to every country in the world in addition to marketplace sales.

4. Myntra

Myntra is a retailer from India that focuses on lifestyle and fashion that ended up expanding into a partner-based marketplace. With a strong focus on merchant satisfaction, Myntra invests in a painless onboarding process and many other vendor amenities to attract customers. It has peaked at over 40 million visits per month.

5. StockX

StockX is one of the most successful fashion marketplaces for high-end sneakers. Still relatively young, the sneaker resale website was founded in 2015 but it is already valued at over a billion dollars. A large part of its success was identifying pain points for both the average marketplace vendor and buyer. One of the main sources of consternation among sneaker shoppers is the shoes’ authenticity. So, the company guarantees every shoe to be authentic with a solid refund policy.

6. Nineteenth Amendment

Although they do not boast the kind of numbers some global competitors do, Nineteenth Amendment carved out a space in a clever way. It allows shoppers to purchase items from independent designers at a pre-purchase price. Then, designers manufacture them on-demand with the help of manufacturing partners across the United States.

7. Lyst

A thoroughly global brand, Lyst focuses on attracting as many vendors as possible and providing a massive catalogue of items. From their apps to their merchant onboarding, everything is designed to make the selling process frictionless. They represent over 2,000 merchants and carry over five million products all told.

8. Amazon

Despite its success, Amazon is a good example of how a marketplace can get away with bad practices if it is great at generating revenue. Amazon’s product management is atrocious, Amazon competes with their own merchants on the marketplace, and the onboard is minimal. Yet, millions of merchants choose it to place their products because it reliably creates revenue streams for them.

Are you looking to start up and create a fashion marketplace?

Picking the marketplace software platform that is right for you, is about matching your requirements to the capabilities of the solution and the ability to support your long term growth plans.

Omnyfy’s Multi-Vendor PaaS Marketplace Platform is the ideal solution on which to build and launch your marketplace. We have developed Omnyfy to tick all the boxes required to start and launch a winning fashion marketplace. Check out our features and modules and case studies on fashion and retail marketplaces below, and if you are ready to proceed, book a meeting with us for a free initial consultation.

Check out our Marketplace features here and explore how Omnyfy can help create a customized marketplace solution for your fashion marketplace idea.

Almost every consulting report, slide share presentation or keynote on retail innovation starts with some iteration of this sentence, however what does this actually mean. Let’s look at the statement “engagement and purchase behaviours of customers” – it’s got two main elements to it, one is the engagement part , and the second, the purchase behaviour. Taken separately, we can start to explore just how these two aspects can affect the simple act of buying something.

The engagement part

Engagement, in our case, simply means getting ones attention and maintaining it in order to complete a task or series of tasks. In order to maximise engagement, the offering must align with needs, goals and desires of the customer while minimising causes of dissatisfaction. In simple words – Customers are happy and engaged when the content of the engagement aligns with what they want, when they want it, and with a level of desirability that peaks their interest, without them having to work too hard to get it.

The purchase part

Purchase behaviours are different to engagement – whereas engagement requires a customer to like what’s happening, purchase behaviours don’t always require this to be the case. A customer may purchase something simply because they need to. The purchase behaviour changes depending on the nature of the buying decision – whether it is High Involvement or Low Involvement.

There are a number of external and internal factors affecting the engagement between customers and retailers, however in this article I wanted to focus on the two aspects which are most interesting to myself and I’m sure, most retailers who are exploring new ways to drive engagement, increase sales, margin and channel exposure for themselves or their tenants. These dimensions are the Customer and Technology, and explore how technology should be leveraged to drive increased engagement based on customer demand.

The core of this article is based on a study and presentation by Thomas O’Connor of Gartner research, that was presented at the 2018 Gartner Symposium. The presentation struck home with me as I could see how, with the clients that Omnyfy services, the opportunities presented by this paradigm would be well placed to drive significant immediate wins and long-term strategies.

In this presentation by Thomas O’Connor, retail customers can be segmented across a continuum from Compliant to Controlling.

A Compliant customer according to the research presentation was one who expects their engagements with retail experiences to be straightforward, seamless and predictable. They don’t have expectations of hyper personalisation or expect, or in fact want, bespoke experiences. Their needs are primarily around efficiency and repeatable process.

A Controlling customer on the other hand is one with very high expectations of personalised experiences and who want to spend time and effort with their purchase process (high involvement, information buying) and are heavily dependent on the selling organisation to understand their needs and deliver bespoke products or services to meet them. Looking at the Technology dimension we have a similar continuum from Transactional, technology that delivers operational and delivery efficiencies through to Transformational, technologies that drive personalisation, intelligent recommendations and new ways of engagement and collaboration.

The intersection of Customer needs with technology

Where things get interesting for Retail CMO’s and Retail marketers who are managing technology transformation projects, is when the two dimensions intersect. We start to see four distinct quadrants emerge, depending on the needs of the customer and the requirement demands they place on retailers.

The areas of this chart that should be driving Retail technology managers are the “Invisibility” and “Elasticity” quadrants – this is where the future of retail and buying lies. It’s not to say that Speed and Strength isn’t important – it’s what’s being done today, with various levels of scale, capability and success. However to truly innovate and create deep engagement and a sense of “well that was great!” …we need to look at creating experiences that transcend base expectations and do it so well that the customer doesn’t even notice. It’s just better.

What does Invisibility mean?

Well, to us at Omnyfy, this is the quadrant that offers the most immediate value to innovative retailers looking to deliver transformation projects for their organisations without having to “break-the-bank” or utilise technologies that could turn out to be just fads with limited take up from end consumers.

Invisibility is about leveraging technology that creates completely seamless interactions for customers regardless of channel or interface – delivering a consistent, engaging user experience while utilising the same pipes, systems and processes that the organisation possesses today. 

Elasticity, not as its own quadrant, but more, well – elastic

In our analysis of the report and our experience in retail shopping and understanding how consumers engage with different brands, personalisation isn’t necessarily a stand alone need for customer – it’s not discrete, rather it is applicable depending more on the type of purchase that is in consideration.

For example, a Compliant customer – one who just wants their shopping to be straightforward, simple and efficient may do so for basic products, or what we call “Low involvement – Utilitarian” products, such as grocery goods or basic clothing. The same customer may transform into a Controlling customer when they’re purchasing an expensive product such as durables, cars, watches, laptops, phones or luxury goods – where personalisation, sales input, research, comparison and a bespoke experience becomes essential.

Taking this into consideration, we see aspects of the “Elasticity” quadrant merge into the Invisibility quadrant – it’s about leveraging technology that works in the background to deliver personalised experiences when needed.

Platforms to power change

So what does this mean for Retailers undertaking transformation projects or looking to implement technology that delivers seamless engagement for their customers? Well, the presentation talks about a lot of different technologies such as AI, Augmented Reality, IoT etc. which is certainly applicable – but also requires significant RnD, testing, experimentation and investment to begin to see returns.

We see things differently, it all starts with the right platform – a platform that forms the foundation of engagement across channels, interfaces and experiences, centralising key data and off-loading services via API architecture. It doesn’t matter what sources of inputs or outputs you’re using – whether it is ERP for product data, Bluetooth LE for-traffic monitoring or OMS for delivery, the core orchestration across the board is managed by a omni-channel platforms that enable these engagements and transactions to take place.

A case study in “Invisible technology“

In a recent project that we delivered for Australia Post, Omnyfy implemented our omni-channel, multi-vendor marketplace platform as the central orchestrating hub to deliver a seamless, integrated eCommerce solution for customers to purchase products in-store, online and via mobile for instant delivery overseas. The entire solution, titled Australia Post China Direct was designed and implemented to create a unified shopping experience, enabling customers who created added product to their shopping cart at home, to simple walk into a store, login to their account and pull through their entire cart, and ship the lot from in-store while also adding their own products to their parcels.

Customers could pay using any payment of their choice including WeChat, AliPay and Credit Card – delivering maximum flexibility and meeting the demands of the target customer, without a need for them to change their shopping habits.

The solution also delivered Infinite Aisle capabilities for in-store purchases, enabling Australia Post to instantly route carts purchased in-store, to their central warehouses for direct fulfillment, allowing stores to minimise inventory and maximise shelf-space for fast moving, high demand items.

Omnyfy’s marketplace solution also remembers shopping behaviour, recommends products and retains past store information for customers. 

In addition, smart shopping logic and boxing algorithms take away the pain of sorting products for both store staff and customers – making it a breeze to purchase and ship products to multiple customers overseas in a single transaction.

It just works, customers simply do what they do, across channels and the platform simple facilitates these actions without being overwhelming or stressful – this is truly invisible technology at work.