Marketplace Talk: December's ecommerce news

👗 Shein's impact: Amazon US slashes seller fees in the apparel segment

In a strategic move responding to rising competition from Shein, Amazon is adjusting its referral fees for clothing items, one of the most expensive Amazon categories to sell in. The transaction fee, notably for apparel under $15, drops from 17% to 5%, aiming to counterbalance Shein's dominance in the online fashion market, starting January 15, 2024.

While Amazon maintains its fast shipping advantage, the fee reduction addresses the price disparity, enhancing the platform's competitiveness. The move to slash fees highlights the competitiveness of the fashion category in ecommerce, and underscores the pivotal role pricing plays in the evolving landscape.

📱Metaverse impact: Fashion's digital shift reverberates in real-world sales

A new report by Roblox unveils the influence of metaverse activations on Gen Z's buying behavior, indicating a significant shift in marketing strategies for fashion and beauty brands. The report emphasizes that digital fashion adoption correlates with real-world brand loyalty, creating a bridge between the virtual and physical realms. 

Gucci's success in The Sandbox and the soaring demand for digital beauty items are examples of the metaverse's potential to reshape the beauty and fashion landscape. As brands continue to explore metaverse opportunities, the report underscores the need for a holistic approach to bridge the gap between digital and physical experiences and the importance of staying up to date with the most innovative ecommerce technologies.

🇮🇩 TikTok's resurgence in Indonesia: $1.5 billion investment in GoTo in an attempt to overcome regulatory difficulties

TikTok’s parent company Bytedance has invested $840 million to acquire a majority stake in Indonesian Conglomerate GoTo, and plans to invest $1.5 billion in Tokopedia, Indonesia’s biggest ecommerce platform. 

This is an attempt to relaunch their ecommerce activity in the rapidly growing and highly competitive Indonesian market. 

In October, Indonesia banned TikTok Shop from operating in the country, with President Joko Widodo saying "We need to be careful with ecommerce. It can be very good if there are regulations but can turn bad if there aren't any regulations." 

The Indonesian government’s main concern was around the need to separate ecommerce from social media. TikTok's controlling stake in GoTo’s Tokopedia provides a potential work around, but time will tell if TikTok can remain on the right side of regulators in the country once they restart their selling operations. 

"The ubiquity of social commerce in Southeast Asia has planted TikTok as one of the industry's game changers, and I couldn’t imagine a market so big in internet penetration like Indonesia not having it. While e-commerce giants like Lazada and Shopee, or even Tokopedia, have long tried to also win in social commerce—it was only TikTok that solidly captured the market. ByteDance acquiring a majority stake in GoTo will fill each other’s missing pieces in their ecosystems—Tokopedia will now be strengthened by TikTok’s advanced live streaming and content-creation technologies while also benefitting from the former's expertise in providing Indonesians an efficient digital shopping experience."

 

Louie Florentine Sanchez
Channel Partner Manager, APAC

💲Amazon's profit quest: Suppliers face delisting threats amid 'Profitability' demands

Amazon faces backlash as it demands one-off payments and cost reductions from suppliers, with potential delisting threats. The retail giant's push for increased profitability has ignited controversy, challenging the Groceries Supply Code of Practice (GSCOP).

Suppliers express shock and anger at Amazon's tactics, highlighting the broader issue of power dynamics between ecommerce giants and suppliers. This latest development raises questions about fair business practices and the extent to which retailers can demand retrospective payments from suppliers.

"In today's market, where interest rates are climbing and retailers prefer lean inventories, brands in the vendor model are receiving less purchase orders and feel the squeeze on their margins. It's a clear sign – it's time to switch to hybrid and activate the seller mode. Brands not jumping on this opportunity are massively missing out on revenue."

 

Jorrit Steinz,
Founder & CEO

🔻 Etsy: 11% workforce cut signals strategic shift amid market challenges

Etsy announced a workforce reduction of 11%, affecting around 225 jobs, as part of a strategic plan to streamline operations and cut costs. The move follows two years of essentially flat sales, prompting the need for a more focused and agile approach. 

A particular concern for Etsy is the declining activity of its most loyal customers. Habitual buyers, who have made purchases on at least six days in a 12-month stretch and spend at least $200 in total, have declined for six straight quarters (on a sequential basis) before holding steady at 7.1 million in Q3 2023.

CEO Josh Silverman said the cuts were part of a drive to “make us an even more focused, agile company, positioning Etsy for growth”.

💥 Farfetch's lifeline: Coupang's $500 million deal averts bankruptcy threat

Facing a precarious financial position, Farfetch secures a $500 million deal with South Korea's Coupang, narrowly avoiding bankruptcy. The complex deal with Richemont to acquire a stake in Yoox-Net-a-Porter is terminated, signaling a critical turning point for the luxury online marketplace. 

Coupang's intervention highlights the vulnerability even high-profile ecommerce platforms face, emphasizing the impact of market shifts on players across the industry.

🖥️ Vertical models propel online marketplaces beyond generalists

A new report by OC&C Strategy Consultants reveals the dominance of online marketplaces, representing over 60% of global ecommerce spending. Specialist models, focusing on verticals, second-hand, and hyper-local segments, drive market growth by addressing specific customer needs.

"More and more companies are recognizing that marketplaces are the future and are becoming more dominant, even the niche ones. If you’re not, you don’t, or if your products aren’t on marketplaces, then you may have issues expanding your customer base very soon.” 

 

Jorrit Steinz,
Founder & CEO

The shift toward tailored experiences and curated inventory challenges generalist marketplaces, emphasizing the importance of adapting to evolving consumer preferences. The rise of mid-sized specialist marketplaces signals a transformative phase in the ecommerce landscape, demanding strategic considerations from brands and retailers.