Consumer spending in marketplaces hit $4.1t in three years

Increase in global consumer spending is driven by strategic innovations and COVID-19.

Consumer spending in marketplaces has surged to $4.1 trillion over the past three years driven by the pandemic significantly accelerating marketplace usage, capturing close to 50% of all ecommerce spend.

OC&C Strategy Asia’s Associate Partner Ankul Wangoo said that marketplaces like Amazon, Flipkart, Alibaba, and JD.com have seen an increase in take rates, resulting in revenue growth outpacing sales. 

"This has primarily been driven by the marketplaces' ability to serve consumers particularly well during this period," Wangoo explained, highlighting their rapid fulfillment capabilities and broad selection as key factors.

Claire Chen, also an Associate Partner at OC&C Strategy Asia, added that in China, the ecommerce ecosystem is predominantly marketplace-oriented, with direct-to-consumer models playing a lesser role. 

She said that the robust growth in China is attributed to COVID-19 impacts and strong fundamentals, including consumer acculturation to online shopping and supply-side initiatives by marketplace platforms and brands. 

She noted, "Chinese consumers are already very much accustomed to buying things online," pointing out the ongoing investment in infrastructure by major platforms as a growth driver.

Specialist marketplace models, focusing on verticals and second-hand goods, have outperformed generalist platforms by offering curated inventories, tailored experiences, and trust-building services such as return policies and warranties.

"What they've been able to do is create a buyer experience that is superior to that of a broad generalist display," Wangoo said, emphasizing the successful attraction of both sellers and brands to these platforms.

However, the story in China diverges, where the generalist model remains dominant, and specialist platforms account for a smaller fraction of the market. Chen highlighted the challenges specialist models face, including difficulties in customer acquisition and operational capabilities. 

Despite these challenges, the ecommerce landscape in China is dynamic, with new models like live streaming and social commerce gaining traction among consumers.

Looking ahead, Wangoo pointed out AI's potential to enhance search flexibility, improve customer service, automate content creation, and streamline backend integration for sellers. 

"AI has the potential to significantly change and improve marketplace propositions," he stated, noting the democratizing effect on visibility for both small and large sellers.