Synergies between brick-and-mortar stores and online marketplaces

While online shopping became a solid habit during the COVID-19 pandemic, we now see, four years later, that society desires a blend of online shopping and retail stores. Major fashion chains such as C&A or H&M are therefore expanding their business landscape. Many new brands from across Europe are also internationalizing both their retail operations and their presence on online marketplaces. A good example of this is the Spanish fashion brand Blue Banana.

The main reason for this trend lies in the recognition that physical stores offer unique advantages. They allow customers to experience products directly, which is particularly advantageous for products that require explanation or where tactile experience is important. Furthermore, brick-and-mortar stores foster customer loyalty through personal interactions and offer opportunities for cross-selling and up-selling.

Successful strategies for integrating online and offline sales are evident in concepts like "showrooming". Here, customers can try out products in a physical store and then make their purchase online. Another example is the "click & collect" model, where customers order online and pick up their items at a store. This combines the convenience of online shopping with the quick availability of brick-and-mortar stores.

Some companies have implemented this trend particularly successfully. For instance, IKEA has integrated its traditional brick-and-mortar model with a strong online presence. Customers can place orders online and choose either home delivery or pick-up at one of IKEA's numerous stores. Currently, the home improvement sector, including stores like OBI, Bauhaus, and others, is pursuing similar goals by expanding their presence on online marketplaces alongside their physical stores. This trend offers opportunities for small newcomers and niche brands to increase their sales. Even fashion retailer Zara has adjusted its strategy by using its physical stores as pick-up and return centers for online orders.

The dominance of marketplaces in online commerce

Parallel to the return of brick-and-mortar stores, we observe an unstoppable dominance of online marketplaces. Leading the way, Amazon's marketplace continues to grow significantly. The combined market share of all marketplaces now stands impressively at 54 percent of total online commerce. This clearly indicates how significantly consumer shopping behaviors have changed.

The success of marketplaces can be attributed to several factors. Firstly, they offer an immense range of products that far exceeds what individual retailers can provide. This creates a "One-Stop-Shop" experience for customers, where they can find everything they need. Additionally, marketplaces benefit from economies of scale, enabling them to offer competitive prices.

Amazon remains the undisputed market leader. With its extensive offerings, fast delivery services, and strong focus on customer satisfaction, Amazon continues to set standards in online commerce. Other marketplaces like Zalando and About You are striving to emulate this example but with a stronger emphasis on sustainability and curated selections.

Another aspect that strengthens the dominance of marketplaces is the integration of smaller retailers. For many of these retailers, marketplaces are an indispensable distribution channel that provides them access to a broad customer base. However, this also means a dependence on large platforms that often impose high fees and strict guidelines.

The return of brick-and-mortar stores and their impact on wholesale business

It is interesting how brick-and-mortar retailers are increasingly leveraging online marketplaces to expand their reach. By selling their products on platforms like Amazon or Zalando, they can reach a wider audience. These synergies create a win-win situation: marketplaces benefit from a larger product range, while brick-and-mortar retailers can increase their sales. However, implementation is not easy and typically requires significant resources in terms of personnel and expertise. Therefore, the use of an enabler like P4M is highly beneficial, as it minimizes the effort for the brand itself while simultaneously boosting sales.

Wholesale & online marketplaces - the development of retail

Current developments in retail showcase an intriguing dynamic. The return to brick-and-mortar stores and the unstoppable dominance of online marketplaces are not contradictory trends but complement each other in diverse ways. While physical stores offer unique experiences and personal interactions, marketplaces leverage the advantages of the digital world to provide a wide range of products and convenient shopping options.

For the future of retail, it will be crucial to integrate these two worlds effectively. Companies that can adeptly utilize both brick-and-mortar and online channels will be able to meet the evolving needs of consumers and achieve long-term success.

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