Our lives have become increasingly automated and digitized so it is no surprise that e-commerce has reached an all-time high. At this point, more and more people are purchasing everything from clothing to groceries online. Interestingly enough, consumers are now buying goods through online marketplaces more than the big-name retailers. An online marketplace refers to an application or site where several third parties provide products or services. In fact, you’re on one right now! Of course, the most popular examples of online marketplaces include Amazon and eBay. Nonetheless, the advent of the internet has brought about a dramatic change in the way people make a purchase.
Consumers now make more direct purchases online using electronic devices like laptop or smartphone. This means that they do not need to step foot into traditional brick-and-mortar locations to buy items. Online marketplaces have grown over the years because they offer real convenience to buyers. In 2017 alone, $1.47 items were purchased on the 75 largest websites in the world according to Digital Commerce 360. That value represents a 27% increase from the 2016 figures. E-commerce stores now account for about half of the sales made online globally. The reason for the rising numbers is that selling products online helps to increase a retailer’s reach.
Online stores help ensure that the profits merchants make are no longer limited by the number of buyers that can physically visit their brick and mortar location. With an online store, sellers can sell across borders, without having to worry about geographical limitations.
Internet Retailer ranks, profiles, and evaluates the top online marketplaces that jointly constitute about 90 percent of global marketplace sales. The ranking was done using online marketplaces’ estimated 2017 third-party merchandise volume and consists of crucial financial, performance, as well as corporate metrics on each online store.
The online marketplace space is dominated by e-commerce giants such as Alibaba and Amazon. And, as with brick and mortar stores, lower prices lead to more sales, as buyers tend to buy more items when rates are low. Amazon and especially Alibaba have helped third parties to position their products for success by recognizing this fact. Besides these two giants, other online marketplaces, especially those that sell products in a particular retail category, have also witnessed an increase in sales between 2016 and 2017.
Of the top websites, 42 are located in North America, 15 are located in Asia, and 12 are located in Europe. Latin America contributes 3 online marketplaces to the list, while Middle East Africa accounts for 2 of those. Similarly, Chinese online store, Taobao, leads the race in terms of gross merchandise value (the total value of goods and services sold).
The site is closely followed by another Chinese e-commerce store, Tmall in second place. American electronic commerce and cloud computing giant, Amazon, comes in at third, while another American company, eBay, places fourth on the list. JD.com (China) rounds off the top five, placing closely behind eBay. Note that the ranking was done based on the gross merchandise value from third-party merchants that sell in their stores, and does not include the sale of the firm’s own products.
Further information revealed that 35 out of the 75 companies, representing more than half of the leading marketplaces, launched in the last seven years. This goes a long way in showing how far the online marketplace has come and the growth potential therein.