Marketplace technology platform Mirakl announced this week that it has raised a stunning $555 million in a new funding round. The company has raised a total of $850 million in the last year, and now holds a valuation of $3.5 billion dollars.
You may be asking yourself, “Who is Mirakl, and why should I care?” Mirakl’s tech allows businesses to set up their own online marketplaces, and sell products from third-party sellers. Currently, the company powers over 300 online marketplaces worldwide, spanning 40+ countries.
As impressive as those numbers are, when you consider the context, it’s easier to understand why various investment firms opened up their checkbooks for Mirakl. In 2020 global ecommerce sales reached nearly $4.29 trillion. Of that amount, an astounding 62.5% ($2.68 trillion) came from online marketplaces.
What the announcement comes down to is this: investors are betting big that online marketplaces will continue to grow rapidly. What does this mean for Mirakl, for the future of online marketplaces, and for the third-party sellers who rely on them?
Are online marketplaces set to explode?
Let’s break this announcement down.
For Mirakl, the additional investment means more opportunities for global expansion, new service offerings, and a dip into AI technology.
Looking strictly at their B2C side, the backdrop is an interesting array of retail marketplaces worldwide. There are some you may have heard of such as Kroger (US), Urban Outfitters (US), Carrefour (Brazil/Spain), and Best Buy (CA); and some you may not have, like Super-Pharm (IL), Metro (FR), and H&M Home (SE). Looking over their portfolio, it’s easy to see that the big players aren’t here – it’s actually rather niche-y. And maybe that’s the point.
Considering the massive online sales increases through marketplaces, it’s clear we’re watching a supernova explosion in slow motion. Digital Commerce 360 notes that the top three marketplaces – Amazon, Tmall, and Taobao – accounted for 62.6% of the top 100’s GMV in 2020. That’s about $1.67 trillion, which means all the smaller marketplaces combined created almost $1 trillion in sales – more if you add in those outside the Top 100. This is no small chunk of change.
The proliferation of technology like Mirakl’s will lead to more and more established retailers creating their own marketplaces, eager for a piece of Amazon-flavored pie. With the ecommerce genie firmly out of the bottle for consumers worldwide, the number of marketplaces and amount of sales revenue is only going to increase.
If you’re a third-party marketplace seller reading this article, we will forgive you for salivating on your keyboard at this point in the article – especially if your bread-and-butter is Amazon. We all know selling on Amazon is tough. There’s a lot of competition, many Byzantine rules, ever harsher performance requirements that sellers have to meet, and the constant threat of being suspended (even through no fault of your own). It’s a fragile kind of existence.
But if you can diversify and sell through multiple channels, different online marketplaces, in different parts of the world, your own website, or even on social media, you greatly reduce the risk of losing your main source of sales if something goes wrong with your Amazon account.
The true miracle of Mirakl is this: third-party marketplace sellers are going to have more opportunities than ever to sell their products, particularly in smaller retailer-operated marketplaces that are in their product’s niche, as ecommerce continues to grow and grow. We live in exciting times.
Read more at Digital Commerce 360.
Amazon finally speaks on Chinese seller bans
After months of speculation, there is finally a statement on the long-discussed ban of hundreds of Chinese brands by Amazon. The Verge has tipped off the public to reports from the South China Morning Post, where an Amazon Asia spokesperson has confirmed that 3,000 seller accounts and 600 brands were banned as part of an investigation into review fraud.
Amazon’s vice-president for Asia Global Selling, Cindy Tai, stated in an interview that the crackdown was part of Amazon’s larger campaign against review fraud and abuse, but was not targeting China or Chinese sellers specifically. She then went on to note that the overall growth of Chinese sellers and brands on Amazon had not been impacted by the ban.
As you may recall, whiffs of this scandal began to arise in May, and the fire got hotter after The Wall Street Journal’s June 2021 investigation into how consumer electronics companies like RAVPower were violating Amazon policy by offering gift cards in exchange for positive reviews.
In July, Marketplace Pulse analyzed Amazon’s suspension activity, which included well-known brands such as Aukey and Mpow, apparently for review manipulation. In August, there was more news on the purge, this time out of China. The Shenzhen Cross-Border E-Commerce Association announced that more than 50,000 Chinese retailers were booted by Amazon, accounting for $15.4 billion in total sales.
Review abuse is a serious issue on Amazon, which not only results in low quality products being sold to unwitting consumers, but also creates a lack of trust in the marketplace that affects all sellers.
It took some time, but at least we finally have official confirmation as to the who, what, and why of Amazon’s enforcement actions. While no doubt US sellers are jubilant today that a significant number of bad actors have been removed from competition, the struggle isn’t over yet. Sellers have reported that a number of banned brands are selling products on the marketplace under new, word-salad names like Deegotech, LYBFZ, or QIRUOZ. Clearly, Amazon still has work to do.
Read more at The Verge.
Shipping rate hikes are stacking up
Higher Q4 shipping rates have been announced by major freight carriers FedEx, UPS, and the USPS. These holiday surcharges might be the lump of coal in a seller’s stocking that ends up sticking in their shoe all year long – because shippers also announced big rate increases for 2022.
All three carriers are responding to the global shipping crisis, brought on by the pandemic, and the inflation that it is causing is now carrying over to home package delivery. The pandemic caused a sharp drop in retail purchases, followed by a massive surge, leading to a domino-like situation of container ships stacked up outside ports, ports closed due to COVID-19 outbreaks, labor shortages, truck driver shortages, high gas prices, and dogs and cats living together.
Ok, it’s not quite that level of widespread panic yet, but it’s a concerning situation, and sellers who self-fulfill their orders will be paying higher prices. Even those who exclusively use FBA have to pay for shipping to Amazon’s fulfillment centers, and they might also see carrier rate increases trickle down into Amazon’s own fees.
eBay has released a helpful peak season rate and surcharge update that provides all the details, including such charges as FedEx adding $1.50 per economy package and the USPS increasing Priority Mail by $0.75 per shipment. eBay sellers can avoid UPS surcharges for Q4 if they use eBay labels, so at least there’s some light shining into the coal-filled shipping stocking.
Unfortunately, next year sees FedEx implement its largest increase in a decade of 5.9% on Express and Ground deliveries. In contrast, UPS will also be raising prices by an average of 2.8%, which is below its 10-year average.
Until the pandemic has ended, and supply chains are back in order, it seems everyone is going to be paying more for logistics. The trick for sellers will be to constantly monitor the situation and find the best options to satisfy not only their customers and their marketplaces, but also their bottom line.
The real reason people shop on Amazon
Why do people shop at Amazon? That’s a good question, and there are a number of compelling answers that make sense. Digital Commerce 360 wanted to know what the most important answer was for shoppers, and they got some interesting results in their second annual survey of buyer motivation.
The capacity to find almost any product on Amazon is the most important reason customers shop there, surpassing even the free shipping included with Amazon Prime membership. “I can find almost anything I need” was the top choice of 66% of Biz Insight survey participants.
Indeed, the marketplace’s role as a store that has virtually everything has led to changes in how customers shop. A telling statistic perfectly encapsulates this idea. “Customers complete half of all purchases on Amazon in 15 minutes or less, and 28% check out in three minutes or less.”
People essentially shop at Amazon in an impulsive, stream-of-consciousness way. They want or need something, they go on Amazon and find it, they buy it fast, then resume their day. It’s as if there’s a store next door that they go to pick up anything they desire, then come back and finish making dinner.
Coming at No. 2 in the survey and being picked by 56% of respondents was, as you might already suspect, “I’m a Prime member and receive free shipping on most items.” Prime is continuing its enrollment expansion, adding yet another 50 million members this spring since last year.
When free shipping is combined with the ability to quickly purchase whatever one needs, it’s no wonder that Amazon is the dominant global ecommerce marketplace.
Read more at Digital Commerce 360.
Also in the news
- eBay’s CPC ads program Promoted Listings Advanced now in beta. Read more at eBay Community.
- New page for Amazon sellers showing payment reserves at the order level. Read more at Amazon Seller Forums.
- eBay lowers fees for high-value auto parts. Read more at eBay Community.
- Amazon partners with Lendistry on a new community lending program. Read more at About Amazon.
- Amazon is reportedly working on a point-of-sale payment app. Read more at American Banker.
- Merchant registration opens for 11.11 (Singles’ Day) sales on Tmall. Read more at Alizila.
Webinars in the week ahead
September 30: eBay Seller Check-In for September (eBay).
Various dates: Amazon advertising’s global webinar program rolls on with 20+ webinars scheduled, covering Sponsored Products, Sponsored Brands, reporting, optimization and tips (Amazon).
For US sellers
Various dates: Amazon Small Business Academy Pathways series (Amazon).
For UK sellers
September 28: Selling on Bol.com in the Netherlands (ChannelAdvisor).
September 29: How to Win at Marketplace Growth (eDesk).
September 30: 5 ways to maximize your Global Selling Account success (Amazon).
September 30: Help grow your brand with Amazon Launchpad (Amazon).
September 28-30: eBay Open UK (eBay).
Etsy gets uplifting
This week, we’re going to put away our usual snark and share some good news – because we all could use more of that these days.
Etsy has a strong history of promoting economic justice and providing opportunities to historically underserved groups. Now, they are stepping up their efforts with the launch of the Etsy Uplift Initiative, a series of programs that help creative businesses all over the world open doors and expand their horizons.
This program aims to help traditional artisan communities who are often faced with financial difficulties, while also recognizing and appreciating their artistic contributions to culture and history. Through this program, makers are set up with their own Etsy shops, allowing many of them for the first time to share their crafts with shoppers around the world.
The Gullah weavers of South Carolina, a culture famed for their distinctive basket-weaving method that has been passed down for hundreds of years, are part of the program launch.
Etsy has committed a $75,000 grant to help the Gullah weaving community succeed. The funds will go to providing services needed for a successful Etsy store, including photography, design and merchandising, content creation, management training, logistics assistance, and mentorship.
The Uplift Initiative furthers Etsy’s objective to “Keep Commerce Human” by demonstrating the platform’s commitment to creating fair opportunity for creative entrepreneurs from all communities. It also helps ensure that more people have access to the growing world of ecommerce, creating a more equal playing field for all. That’s something we can all get behind.
Read more at Etsy News.