Evolution of Online Marketplaces - eBay and Facebook are rising to challenge Amazon’s dominance

Evolution of Online Marketplaces - eBay and Facebook are rising to challenge Amazon’s dominance

Summary

As 2020 draws to a close, the battle on online marketplaces for consumers who have been unable to reach physical shops during lockdowns is coming to a head. The Christmas holidays bring peak demand for consumer goods, and many customers have turned to the comprehensive selection of Amazon’s marketplace. The world’s biggest retailer saw sales soar by 37% year-on-year in Q3, suggesting that its dominance in ecommerce might have been cemented in 2020. However, loyal customers wanting to support local commerce are being provided with more options than ever to shop online without going through Amazon, with the world of ecommerce accommodating several business models. Social ecommerce marketplaces are a rising alternative to Amazon’s model, which had an eventful 2020 as well and face an equally decisive 2021.

Key Highlights

- Amazon is the undisputed king of ecommerce, and has relied on a powerful, hybrid business model for its success. It is a platform for third-party sellers which offers them a vast consumer audience across multiple countries and a slick logistics network. It is also a retailer in its own right, stocking its own goods for sale on its platform and therefore competing directly with the sellers it hosts. There are other hybrid marketplaces like it around the world, but Amazon’s treatment of its sellers is unique.
- However, there are problems with the Amazon model. Chief among these is its aggression towards its third-party sellers, who are still essential to its business but who are seeing an increasing range of more accommodating options in the online marketplace sphere. The biggest of these is eBay, which has a great deal to offer but still has growth to reach for in the form of improved technology and a clear marketing strategy. Meanwhile, Facebook is bringing the social marketplace to prominence in most markets outside China, and practically single-handedly. Its Marketplace and Shops platforms are defying expectations of what an online marketplace monetized purely by advertising revenue can achieve.
- As 2020 draws to a close, the battle on online marketplaces for consumers who have been unable to reach physical shops during lockdowns is coming to a head. The Christmas holidays bring peak demand for consumer goods, and many customers have turned to the comprehensive selection of Amazon’s marketplace. The world’s biggest retailer saw sales soar by 37% year-on-year in Q3, suggesting that its dominance in ecommerce might have been cemented in 2020. However, loyal customers wanting to support local commerce are being provided with more options than ever to shop online without going through Amazon, with the world of ecommerce accommodating several business models. Social ecommerce marketplaces are a rising alternative to Amazon’s model, which had an eventful 2020 as well and face an equally decisive 2021.

Scope

- Learn what dominance in the market Amazon holds
- See how some consumers are turning to other platforms
- Understand, which platforms are competing well against Amazon

Reasons to Buy

- How does the Amazon business model work?
- In what areas does it have noticable flaws?
- What firms are exploiting these weaknesses?
- What trends are encouraging consumer away from Amazon?

1. OVERVIEW
1.1. Catalyst
1.2. Summary
2. NEW BUSINESS MODELS ARE RISING TO TAKE ON AMAZON
2.1. Amazon revolutionized the marketplace model by competing aggressively as a retailer alongside its third-party sellers
2.2. More traditional marketplace models are still going strong
2.3. Social marketplaces could be the next big disruptors
3. AMAZON’S SERIAL DISRUPTION HAS GIVEN IT A BAD REPUTATION
3.1. The key strength of Amazon.com is its aggression towards its sellers
3.2. Amazon’s ecommerce strategy is rapidly moving away from a marketplace-driven model
3.3. Amazon’s aggression is also a weakness, and leads to outside threats
3.3.1. Weakening of its third-party seller base is a threat as well as an opportunity
3.3.2. The threat of regulation in Amazon’s biggest markets has intensified in 2020
3.3.3. Geographical expansion could face hostility in emerging markets
4. EBAY IS WELL-POSITIONED TO MARKET ITSELF AS AN AMAZON ALTERNATIVE
4.1. Unlike Amazon, eBay’s strength is its hands-off business model
4.2. eBay has abundant opportunities for growth
4.2.1. Support for local businesses and green goals in 2020
4.2.2. Taking control of payments and improving automation
5. FACEBOOK IS BUILDING DIVERSE SOCIAL MARKETPLACES THAT DRIVE AD REVENUE
5.1. Facebook has multiple integrated ecommerce channels
5.2. Facebook Marketplace and Shops take sellers beyond ads and followings
5.2.1. Apparent weaknesses belie Facebook Marketplace’s potential
5.2.2. Shops will become far more than a well-timed PR move
6. APPENDIX
6.1. Abbreviations and acronyms
6.2. Further reading
7. ASK THE ANALYST
8. ABOUT MARKETLINE

List Of Tables

Table 1: Top ten online marketplaces globally, by estimated monthly visits in February 2020.

List Of Figures

Figure 1: Q3 2020 revenues and margins of eBay and Amazon ($bn, %)
Figure 2: Facebook Marketplace’s monthly visits versus Craigslist, July 2017-June 2018
Figure 3: Facebook’s ad-driven social marketplaces

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