Want to learn more about what SHIFT can do for you?
Contact partnerships@shiftretail.com or call 0800 302 9464

Want to learn more about what SHIFT can do for you?
Contact partnerships@shiftretail.com or call 0800 302 9464

Request a brochure

Insights

Brands and marketplaces: The relationship that can't be ignored

After responding to the rise of ecommerce and social media, plus the changing high-street landscape, brands are once again evolving in line with millions of customers, who are overwhelmingly turning to marketplaces for their retail needs.

Icon read pink Read 5 mins
Brands and marketplaces: The relationship that can't be ignored

In the early years of Twitter’s existence, very few brands considered it a viable way to meet specific consumer demands. In 2019, it’s used by thousands of companies as a primary means of communication.

Now, brands are once again evolving in line with millions of customers, who have overwhelmingly turned to marketplaces for their retail needs.

Since its inception in 2006 as a microblogging service, Twitter has morphed into a social media giant with 330 million active users; what was once a means of recording day-to-day lives has turned into a key marketing channel for thousands of companies, with many putting it at the heart of their brand strategy.

When looking at the changing relationship between brands and marketplaces, parallels with Twitter’s evolution cannot be clearer. Brands have long been wary, and cynical, about marketplaces. Many initially viewed them as glorified jumble sales, and in the early stage of their existence, this was a fair perspective to have.

However, marketplaces have now entirely reshaped the ecommerce landscape and, just as Twitter has changed the way people communicate online, marketplaces have fundamentally changed the way consumers shop.

Big businesses leading the way

Until recently, the common belief shared by the majority of brands was that selling via marketplaces would weaken brand identity, affect the legitimacy of their offering, and ultimately surrender control of the customer to a third party. Although some of these are understandable concerns, brands are now having to weigh them up against the countless benefits that come with trading via marketplaces.

A recent UPS survey found that 96% of US and Europe consumers shop on marketplaces. It’s higher still in Asia, where 98% of customers use them. Brands are now waking up to the realisation that they need to be where the customer is and, as such, marketplaces are fast becoming an integral part of their growth strategy.

BMW was one early adopter, launching its BMW Direct store on eBay way back in 2011. The brand understood there was an existing, yet untapped, customer base searching for its products on eBay, but it couldn’t access them. BMW is a clear example of a leading global brand which has a successful marketplace strategy as an integral part of its broader ecommerce model, and now sells across multiple marketplace channels, including a branded store on Amazon.

sm0041-bmw-ebay

Another standout example is Nike, the world’s biggest sports brand, which decided to launch its brand directly on Amazon.com as part of a pilot initiative in 2017. Rather than a desire to capitalise on the huge traffic levels, Nike’s decision was driven primarily by a desire to re-exert control over its brand, as thousands of Nike items were already being sold by third parties on the site.

Nike ended this pilot program in late 2019, but its two-year commitment to the platform proved that even the world’s most recognisable sports brand could no longer deny the power of marketplaces.

These powerhouse brands are certainly not alone. A recent survey by Feedvisor found that over half of US brands are selling on Amazon and over 80% of these are looking to expand to other third-party marketplaces.

Indeed, an increasing number of companies are shifting their entire ecommerce offering to a marketplace-led model. A good example is the long-established Hallmark, which has a non-transactional UK site that directs customers to its branded Amazon store.

A change of tack

Brands that previously exhibited reluctance to explore marketplaces are now looking beyond outdated perceptions and facing up to the reality they need to use them to succeed in the long term. Ultimately, they have little choice. In 2018, the top 100 marketplaces sold $1.66 trillion in merchandise globally, accounting for over 50% of global web sales. This figure is up 19.6% from the previous year, and shows no sign of slowing.

Accelerating this growth is the fact that major marketplaces are working hard to remove the last remaining barriers to adoption by brands of all sizes and offerings. For example, Amazon now offers an array of brand-building tools and services, with a large degree of success. These include Amazon Brand Registry, which is designed to help sellers protect, control and promote their brands, as well as the recently launched Transparency program, an item-level authentication service aimed at preventing counterfeit products.

sm0041-hallmark-amazon

Asian competitors are also taking note, specifically in the ways to attract investment from Western businesses and consumers. Earlier this year, Tmall Global unveiled key initiatives aimed at supporting brands of all sizes to enter the Chinese market and access the company’s 307 million active buyers.

Tmall Overseas Fulfilment is a new solution for brands that want to test their products on the largest cross-border platform in China. Additionally, the marketplace launched an English language website aimed at expediting the process for brands looking to introduce their products to Chinese consumers, further removing the hurdles that once prevented brand entry into the market. Indeed, the marketplace plans to bring in $200 billion worth of branded goods into China over the next five years.

There for the taking

While it’s true to say the customer is the major factor driving brands to marketplace selling, marketplaces themselves are catering to business requirements in order to accelerate and facilitate uptake.

The leading players across the world now offer the infrastructure, reach and scale for brands to grow and develop their entire offering. Every major marketplace is launching payment models, warehousing options, fulfilment services, advertising solutions and even lending opportunities for selling partners, giving them all the more reason to work with them.

Those remaining businesses resisting these undeniable positives of marketplace selling simply need to remember that, as was the case with Twitter, they need to be where their customers are.

In other words, they know they can’t beat them, so why not join them?

Learn more about the incredible opportunities that marketplaces can provide brands by downloading our State of Marketplaces Report.

Insights

Oxfam Superstore: Leading the charge to change charity retail

Combining the best of old and new practices, the Oxfam Superstore – based in an out-of-town park just a stone’s throw from the charity’s head office – is meeting the demands of the increasingly conscientious modern consumer, while pioneering a new and excellent concept for its sector.

Icon read pink Read 7 mins
Oxfam Superstore: Leading the charge to change charity retail

The UK has always been a country that’s keen to give to charity. Now, it appears that charity is returning the favour, giving something back to the world of retail.

Oxfam, one of the most recognisable names in the world of British charity, has developed a superstore concept that may change the way retail stores operate both in and out of its sector – and make use of the ever-growing number of large, disused units found on and off the high street.

An organisation like Oxfam is one of the few charities with enough money to explore, test and demonstrate the power of an experiential retail space. As it stands, Oxfam is the UK’s fifth largest charity in terms of income, as well as the country’s seventh-most marketable brand according to Savanta’s most recent index. If it works, it could pay massive dividends for the charity and those people it supports with its worldwide fundraising efforts.

However, the sector at large is one of incredible power – and for that reason, the great strides made by Oxfam could have a huge effect on the state of British retail at large, and be all the better for it, meeting the demands of the modern consumer – one that’s ever-increasingly conscientious on moral and environmental levels.

sm0040-oxfam-2

Charity’s big wins at home

A common criticism of charity shops is that there are “too many” of them – a weirdly popular gripe that the Charity Retail Association calls out as its number-one myth. While approximately 4% of retail units are occupied by charities, the national vacancy rate stands at 10%. All in all, the CRA estimates there are 11,200 charity stores in the UK. Approximately 650 of these are operated by Oxfam.

Another curious myth the CRA points to is that charity shops “bring down the high street”. Those complaining should think again; according to the Office for National Statistics in July 2019, second-hand goods are actively powering the market, with charity and antique shops maintaining retail growth.

Partly because of the finance streams from charity retail, £10.1 billion was donated to worthy causes by the British public in 2018; while this figure has slightly dropped since 2016, there’s no sign it will drop markedly, even in the current economic climate. If anything, people will explore bargains even more in the coming months and years.

As such, Oxfam’s home-based superstore might be the first of many. After all, it’s more than just a big shop.

What does the Oxfam Superstore offer?

Combining the best of old and new practices, Oxfam’s superstore – based in an out-of-town park just a stone’s throw from the charity’s head office – is open to the public for four days a week. Its opening has been timed perfectly, as it pairs nicely with Oxfam’s “Second Hand September” initiative: an effort to end the “unsustainable” effects of “throwaway fashion”, which is “putting increasing pressure on our planet and its people”.

sm0040-oxfam-3

The superstore, which specialises in furniture, is the closest to a big-box store that a UK charity has ever really been. It’s something a little more popular in the US, particularly with Goodwill, which regularly operates huge out-of-town units. Oxfam looks like it effectively wants to combine its name with a TK Maxx-style experience, where something special can be found cheaply, but with the promise that a return visit at a later date will offer a whole new selection of items.

It’s just as well that it’s actively encouraging people to go out of their way to return regularly. Its location, while understandable due to its closeness to the Oxfam HQ, isn’t near any complementary retail experiences. Only car and motorcycle dealerships are in the immediate vicinity, alongside the Mini Cooper plant; a ten-minute walk away offers a Tesco Extra, M&S, Next and others.

In order to make a visit that little bit more worthwhile, the Oxfam Superstore has diversified. Inside is the charity’s first on-site café – cleverly housed inside an old Oxfam water tank – which serves a changing menu of “world foods”, taking inspiration from the areas it supports. But it’s more than just food and drink.

sm0040-oxfam-5

Explaining the café’s ethos, Oxfam’s trading director Andrew Horton said it “will be at the heart of a new community space where we will host free talks and events for school groups, for example.” Social enterprises and local businesses are also given access to free, in-store meeting rooms, bringing in another stream of custom in much the same way as Santander’s Work Café, which we visited recently.

Horton continued: “Our aim is for this to be an enjoyable and fun ‘destination’ shopping experience. Customers will be able to shop ethically, but we want this new store to have the wow factor. We want people to linger, to chat over coffee. We have a ten-year lease on this unit and if it is successful we will roll it out in other locations.”

Combined with the ever-popular pastime of charity shopping, these additions bring a remarkable number of benefits to charity shops in particular, as well as retail at large.

A big future for big-box retail?

Firstly, the big-box mentality is surprisingly well-suited to charity, and at a time when large retailers like Marks & Spencer, House of Fraser and Debenhams are actively withdrawing from large units. Oxfam’s ability to regularly cycle stock is a fantastic means of evolving the experience on a regular basis, while it can also provide its core catalogue of regular new products, such as greetings cards, stationery, sustainable food products (such as Fairtrade chocolate).

sm0040-oxfam-4

On a human level, charity shops attract very specific types of customers, with shared interests and goals. The idea of introducing a real social element to these stores therefore works, while businesses will likely want to demonstrate their dedication to good causes by organising meetings there – benefiting from free parking and easy access via motorways, removing even more barriers to purchase – therefore bringing more newcomers into store.

What’s more, just days after the store opened, the BBC visited to interview those exploring the aisles and received nothing but unanimous positivity from consumers – something that business landlords will undoubtedly see potential in, should they have large units in need of a sizeable tenant.

With such a big presence, these organisations can effectively run themselves; in the same report, it was revealed that 650 bags and boxes of donations had been gratefully received by the store’s staff in the first few days of operation, refreshing stock and giving customers countless reasons return.

A great start, but it can be better

While it’s hard not to have a positive opinion of a charity initiative with such big early successes, Oxfam, its contemporaries and the high street at large shouldn’t see this as the silver bullet for their problems. So long as units like this exist in out-of-town shopping parks and on high streets around the country, they’ll be judged on the same principles as every other store – and falling behind on expectations will only hold them back, or potentially doom them to failure.

sm0040-oxfam-6

Each charity, especially those like Oxfam already operating an online store, must explore the opportunity to become truly omnichannel by testing the likes of click and collect or in-store stock check, and ensuring the basics like returns policies and delivery are up to scratch.

On top of this, Oxfam must do everything in its power to open several more concepts like these as soon as possible. While the ten-year lease at its Superstore debut shows commitment to the cause, pushing the idea out to other areas of the UK is the only way to give it a fairer and fuller test.

With no shortage of huge, empty units up and down the country, it’s not a case of charities like Oxfam improving their own fortunes; it’s a matter of life and death for these retail spaces and the communities around them.