● Horizontal Marketplaces. Horizontal Marketplaces offer a large selection of products across
many different categories. Amazon.com is the clearest example of a horizontal Marketplace,
existing as a one-stop-shop for sellers to provide many categories. All transactions are
processed by the Digital Marketplace operator but delivered and fulfilled by the participating
sellers. Marketplaces such as Amazon are now offering branded online stores similar to .COM
but within the Marketplace.
● Vertical or Curated Marketplaces focus on one particular market or industry, for example Food
Services Marketplaces, such as Just Eat and Deliveroo. They can also be considered as
Marketplaces as they connect local restaurants with consumers looking for delivered meals.
● Social Commerce: Social channels such as Facebook, Instagram & Pinterest are now creating
the opportunity for getting products in front of potential customers, or for product discovery.
Each of these social channels is actively putting together a comprehensive eCommerce
capability.
Digital Marketplaces are booming globally to become one of the most significant parts of global
eCommerce. The biggest Digital Marketplaces are colossal. With their scale, Digital Marketplaces like
Amazon, eBay and Alibaba have become household names across the globe. The largest online retailer
in the US is not Amazon, but the Amazon Marketplace.
Marketplaces such as Airbnb, Uber, Deliveroo and Just Eat have revolutionised industries such as travel
and food. Etsy’s Marketplace of handmade and vintage items turns over billions each month. New
Marketplace categories are appearing every week catering for niche markets, yet they are still booming.
For example, there are numerous Marketplaces for selling ‘streetwear’ and trainers in the US.
Marketplaces are now part of society’s wider trends—entrepreneurship, global reach, the gig economy,
and beyond. More than one million US SMEs are selling on Amazon and more than 30,000 sellers on
the Amazon Marketplace turnover more than $1m.
There are distinctions to be made withing Digital Marketplaces. Some Digital Marketplaces have effects
that span the globe. For instance, Airbnb, is a single global network with buyers and sellers all over the
world. However, most food and drink Marketplaces are focused on one country, or regionally focused
in high population areas, due to the requirement of physical fulfilment to consumers.
One aspect of Marketplaces is that they are seen to have ‘winner-take-all’ dynamics. This means that a
small number of companies come to dominate a particular market and capture the majority of available
customers, whilst a few others have at best a modest share. In a winner-take-all market, the winners
have tremendous power to dictate outcomes. Amazon is often portrayed as a ‘winner-takes-all’ example.
However, there is another dynamic in play with Amazon and the Amazon Marketplace: a small brand
can compete with a large brand on a level-playing field. The Amazon Marketplace is a kind of
‘democracy’, where the brand size outside of the Amazon ecosystem does not matter.
Big brands often struggle to make the Amazon Marketplace work as a distribution platform because
their existing marketing ‘playbook’ does not apply. There is no Amazon buyer who you can meet face-
to-face and offer a special deal. Every brand follows the same process to get on the platform and has
the same challenges to make it work. It is this ‘democratic’ aspect of the Amazon Marketplace that
makes it very interesting for small Irish brands.
Regardless of the power of Amazon, and, indeed, in spite of Amazon, it has not stopped the world’s
major retailers considering Marketplaces as part of their strategy. Just as Amazon and Alibaba have
moved into fresh food retailing stores with Wholefoods and Fresh Hippo respectively, some of the
world’s leading supermarkets are now launching or reviving their own Marketplace strategies, including
Walmart (as discussed in this report), Kroger, Carrefour and Ahold Delhaize.
Digital Marketplaces are so ubiquitous that they are now just called ‘Marketplaces’ and this is the naming
convention used in this report.