From web store to fancy marketplace warehouse

Bjørn Hascher •  27 May 2019

No less than five years ago, retail media labeled brick stores as fancy warehouses. Traditional stores had lost their relevance and there was always someone cheaper to find on the web. Today you could say the same of many retail web stores. They turn rapidly into nothing more than fancy warehouses for a handful of marketplaces.

The monopoly position and the huge concentration of money and power of a few marketplaces is growing fast. With a winner takes it all strategy, marketplaces take over whole markets, or even whole market chains, before we even understand the impact of this. Web stores are more and more ‘forced’ to put their products on a marketplace in order to compete and to compensate the loss of revenues. But on a marketplace only one thing counts: price. Whoever buys in cheapest and is the most efficient with stock and deliveries, can sell with the lowest price.

Web stores lose margin and ownership of customers and data

To compensate the loss of margin that marketplaces are asking, you will have to sell a lot of products. And even when you are able to do so, the downside of selling on a marketplace is huge. You will lose ‘ownership’ of the customer, the data and all other instruments to differentiate in a market. A fancy warehouse for marketplaces like Amazon and is what’s left. Is there someone else with a lower price? You’re gone. When finally the marketplace has taken over the entire retail market chain of brands, production and distribution, the fancy web store warehouses will be gone aswell.

Will real web stores remain?

Will there be room for digital commerce in retail besides a few marketplaces? Certainly! Tomorrows buyers, generation Z for example, value authenticity or brands with social responsibility. There’s no room for this on marketplaces. Also web stores with their own, unique, or complex products will be able to sell on their own web store or mobile app with good margins.

As with all market waves, the power of marketplaces will diminish again in the long term. Politics will intervene to break down and regulate market and market chain monopolies. New business opportunities will appear, new digital commerce technologies will be available, new entrepreneurs will arise.