Reports Trends

Enterprise Marketplace Index: key takeaways from the report

The digital-first era accelerated in 2020. Someone-stop shop digital giants secured their position as market leaders, but many legacy retailers were caught in the middle, losing a two-front battle. However, a pioneering group of retailers brought innovation to the traditional model of retail. Read the report below based on The Enterprise Marketplace Index to find out more about digital marketplace retailers.

Marketplace growth

The Index found that marketplace retailers outperformed peers and competitors in 2020 by growing 81% year-over-year, doubling the rate of eCommerce growth of 40%, even during a period of massive digital acceleration. Two factors – seller growth and growing sellers – produced the tremendous momentum of marketplace retail. Enterprise marketplaces increased at more than double the rate of overall eCommerce growth. Amidst an unprecedented acceleration of digital transformation, marketplace growth far outpaced even the outsized growth rate of eCommerce.

The Index data shows that sellers provide the foundation of the marketplace growth. Instead of focusing solely on direct buying or stocking inventory, marketplace retailers orchestrate development by leveraging their third-party offerings. 

Sellers power

A new class of seller supply has emerged – traditional brands and manufacturers seeking a path to digital and digital-native brands aiming to accelerate their distribution to drive their growth. The result has been an advantage for marketplace retailers, which rapidly expanded their network of sellers by an average of 46% in the past year.

Let’s take a look at Catch. Sellers offer more than 2.5 million products to Catch customers, filling gaps in existing and new categories. As the marketplace assortment has grown, there has been a strong correlation with site traffic growth: had gone from 750,000 active users when the marketplace launched in 2016 to more than 2.1 million in 2020.

The Madewell company also takes a highly curated approach to the marketplace model. The leading fashion and lifestyle brand works with its seller community to complement and thoughtfully expand its eCommerce assortment, always featuring the latest trending items that customers are seeking. The marketplace also gives Madewell a framework to partner directly with locally-owned businesses. 

Urgent product needs

Urgent shopper needs also marked the peaks of 2020’s digital growth. The new emphasis for retailers was not just to offer the product, but also to fulfil immediately, or risk losing the sale and the shopper. More choice and price competition benefited the shopper, and the increased availability gave retailers greater confidence that they could fulfil it.

The best example is Best Buy Canada which is a one-stop-shop for consumer technology despite expanding its marketplace into core categories. With a team of more than 30 handling seller recruitment, onboarding and account management, Best Buy has grown the Marketplace product count by over 15X on

Site traffic as another advantage

Retailers with marketplaces saw a 34% increase in traffic to their core eCommerce sites in Q4, YoY.  During this period of inflated acquisition and traffic costs, marketplaces provide retailers with an alternative means of driving traffic; organic growth earned by expanding product choice and selection.

Bottom-line growth

With owned inventory, retailers bear the total burden of carrying costs. And, during times of rapid and urgent change, these carrying costs can devolve into margin-deteriorating discounting or liquidation. Adding third-party sellers provides retailers with a means to alleviate the margin pressure by diversifying their retailing model and finding a new revenue channel.

Commission rates, across all marketplace transactions, settled at an average of 13.5%, with the middle 50% spanning from 11.2% to 18.4%.

On average, retailers earned $14,796 of net revenue per seller during 2020. Extended, this meant that every 68 sellers yielded $1 million in incremental revenue for marketplace retailers.

Above all, marketplaces are contributing to retailers’ bottom lines. On average, retailers earned $14,796 of net revenue per seller during 2020. Extended, this meant that every 68 sellers yielded $1 million in incremental revenue for marketplace retailers. Retailers would be wise to think of their ability to recruit, onboard swiftly, and orchestrate their network of high-quality sellers and referral marketing partners as a core competitive differentiator. 

To sum up

The digital-first time accelerated in 2020, as eCommerce penetration increased by years in a matter of weeks. Innovative retailers operating an enterprise marketplace have paved a path to achieve higher – and sustainable – growth by turning to a curated network of third-party sellers.

These third-party selling partners provided retailers with top-line GMV gains of more than $100,000 per seller, bottom-line revenue contributions of nearly $15,000 per seller, expanded product assortment, up 32% YoY and boosted web traffic by 34% YoY.

Marketplace retailers created something more: trusted shopping destinations poised to win in a rapidly growing environment.