Marketplaces: this is how LinkedIn challenges Fiverr and Upwork

Marketplaces

The team working on LinkedIn seems to have put its next novelty in the pipeline: it takes the name of Marketplaces and the best possible description is that of a platform with very similar characteristics to what alternatives such as Fiverr and Upwork already offer today. It will allow you to recruit freelancers and professionals by entrusting them with specific tasks and consequently paying them a pre-established remuneration.

LinkedIn Marketplaces: where to recruit freelancers

Microsoft, which controls the social network (with 740 million users at a global level), therefore seems to have definitively targeted the dynamics that regulate the so-called gig economy. According to the source of the indiscretion, the debut could take place as early as September. The focus will be on activities such as consulting, marketing and writing, but also development and accounting.

A business model that has proved successful in the last period, in particular since the explosion of the health crisis onwards , so much so that the profits of companies such as Fiverr and Upwork in 2020 recorded double-digit growth (up to 37%) compared to the previous year. For the moment, no official confirmations have been received from Microsoft and LinkedIn, but the brief statement entrusted by the spokesperson of the social network Suzi Owens to the editorial staff of the site The Information seems to go in this direction.

In the future we will introduce new methods to do so that users can share more about the services they can offer directly through their LinkedIn profile.

It is entirely probable that LinkedIn will retain a commission on generated transactions, similar to what happens on the aforementioned platforms of the same type. Nor should the hypothesis be excluded that to manage the movement of money, the Redmond group could introduce a dedicated digital wallet, thus setting a foot also in the Fintech territory.

Source: The Information

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Marketplace Models Find Growth Opportunities Amidst The Power Of Amazon And The Pandemic

Man offers marketplace icon on virtual screen.

wladimir1804 - stock.adobe.com

The pandemic has put a huge strain on retailers over the past year, and businesses, big and small, have been rethinking their ecommerce strategies. Meanwhile, those leveraging the marketplace model have been growing steadily upward: Etsy’s stock tripled at the height of the pandemic as millions of users hopped online to sell custom masks, and community platform Airbnb managed to go public this year, even after some heavy losses at the beginning of the virus outbreak. Now, more and more mainstream retailers are finding ways to incorporate the marketplace model into their own operations, opening the doors for dozens or hundreds of merchants to be featured to a wider consumer set. However, can these retailers size up to the biggest marketplace of all - Amazon? To help discuss this growing phenomenon, I connected with Tom McFadyen, published author of Marketplace Best Practices and CEO of McFadyen Digital, a leading marketplace advisor and implementer for brands like Neiman Marcus, Lego, and American Eagle Outfitters.

In our conversation, we discussed emerging trends including ecommerce expansion, pickup and delivery and other operational changes that we can expect in the months to come. We also dive into Prosper Insights & Analytics January findings that reveal some interesting behavior changes since the tail end of 2020.

Gary Drenik: For people who haven’t heard of McFadyen Digital, can you tell us a little bit about what you do?

Tom McFayden: McFadyen Digital is a global strategic commerce agency that creates top-notch ecommerce experiences for brands predominantly across the retail, grocery, and B2B spaces. To explain this in simpler terms, we help our customers develop the best online experiences for their shoppers, creating touch points for recurring engagement while minimizing any friction that could dissuade shoppers from sticking around. A vital part of this brand experience now lies in the online marketplace model of commerce, a curated catalog that can feature products or services from other third-party sellers that align with the main brand’s niche.

Marketplaces already account for more than 50% of global online sales, and that number is growing rapidly, especially thanks to the pandemic. As more people stay at home, they have grown comfortable with shopping from their couch, and more and more U.S. merchants are planning to start their own marketplace businesses this year, which is a huge reason why we just produced our recent book, which is a breakdown guide that explains how these marketplaces can be built. As more retailers and business merchants start the process, they can run into a lot of obstacles during the building stage, and then even more competition from surrounding marketplaces once launched.

Drenik: Covid-19 has definitely forced Americans to stay away from their usual stomping grounds in lieu for more online shopping. However, our data found that 55% of February shoppers have an Amazon Prime Membership (Annual, Monthly or Monthly Video), versus 52% in February 2020. Is this a smaller or bigger percentage growth than you expected, and why do you think that is? Are more shoppers testing out different marketplaces?

Prosper - Amazon Prime Membership

Prosper Insights & Analytics

McFayden: Keep in mind, Amazon Prime reported that it had 150 million members enrolled last year, which is comparatively around 45% of the U.S. population. That’s already a ton of people! Amazon is still reaping a large chunk of total marketplace sales, with 36% of consumers admitting that they bought from Amazon, eBay, or Walmart’s marketplaces in the past year (according to Digital Commerce 360). However, 43% purchased something this year from other US marketplaces, which means that more and more marketplaces are starting to grow and catch steam.

Also, there is a growing emergence for hybrid marketplaces. While pure marketplaces like Etsy, Airbnb, and eBay solely connect platform sellers to consumers, hybrid marketplaces sell their own branded products to customers as well. Amazon itself is a hybrid marketplace, offering its own products and affiliated brands while also providing a platform for thousands of buyers and sellers to connect through the Amazon site. Walmart is the second-largest hybrid example, following a similar model. Now, more vertical specific companies have developed marketplaces in addition to their own product lines, including Kroger for grocery and Wayfair for furniture. These marketplaces are becoming beneficial for many brands, especially since inventory becomes dependent on the individual sellers, not the brand. With that in mind, we can expect a lot more of these product-specific marketplaces to pop up in 2021, which could slowly chip away at Amazon’s numbers if they are successful.

Drenik: That makes sense that these marketplaces are growing, especially as more people stay away from brick and mortar anyway. Unsurprisingly, 60.2% of Adults 18+ are shopping in stores less compared to 57.6% who said the same last month and 55% in November. This month, 46.5% are shopping more online compared to 45.8% last month. As people continue to predominantly shop online, what is the biggest appeal to the marketplace model from the business perspective? Is it too late to test it out?

Prosper - Shopping Behavior

Prosper Insights & Analytics

McFayden: No, it’s not too late to test out a marketplace model, even after the pandemic wanes. Like many people have suggested, buyers are getting accustomed to shopping for groceries, housewares, and even B2B products solely online - and the end of the pandemic likely won’t slow this progression down. Now more than ever, platform businesses are disrupting and displacing legacy ecommerce, retail and distribution businesses that depend on a pretty labor-intensive pipeline model.

In a regular pipeline model, there is a sequential order of tasks that have to happen between a brand and its distributors. This can include product design, contract negotiation, merchandising, price setting and inventory planning, with many more steps in-between before the items even end up on shelves and web pages. Once customers begin to shop, the brand has to fulfill orders, provide customer support, and continually update its pages. This is a lot more work compared to the platform business model, where there is an open and regulated network of sellers providing their own products to customers. This eliminates a lot of the above steps for the brand, like housing additional inventory and negotiating prices, because that’s up to the third-party sellers. That said, building a brand’s hybrid marketplace platform on top of its normal operations takes time with a lot of lessons to be learned on-the-fly, so if a brand wants to test it out, it should expect this process to take a few to several months to complete.

Drenik: This month, 32.5% of Adults 18+ mentioned that they are stocking up on basic and household supplies in preparation compared to 27% who said the same last month. It seems that panic buying hasn’t completely subsided just yet, which continues to put a strain on retail supply chains. That said, why do you think Amazon Pantry was discontinued when it seems like it’s an optimal time to keep the offering?

McFayden: Even with the deprecation of their Pantry offering, Amazon remains all-in on the grocery segment. Amazon Pantry, initially called Prime Pantry, was created to help Amazon compete with more traditional grocers and their physical retail presence. The service deviated from the typical Amazon way of ad-hoc ordering where customers had to add a certain amount of items and pay an additional fee for delivery. This added rigidity to the process that made it less appealing to many customers and hurt it’s wide adoption. Some customers were also frustrated with the inability to order Pantry-exclusive items in the ad-hoc manner that they were accustomed to. Folding those items into the typical Amazon product offering flow will help alleviate those prior frustrations.

Amazon has also bolstered its physical store presence with the acquisition of Whole Foods and the launch of its Amazon Fresh and Amazon Go branded stores in select markets. These physical grocery presences also offer Prime delivery, making the Pantry option duplicative.

Drenik: Shoppers have peeled back on impulse purchases, with 39% of Adults 18+ focusing more on what they need instead of what they wanted (as compared to 36% last month). How does this challenge the success of marketplaces and do you think some of them have been hurting?

Prosper - Need vs Want

Prosper Insights & Analytics

McFayden: With this trend in mind, marketplaces for groceries and other commodities are prime for significant growth. People are looking for safe, convenient ways to purchase their usual necessities, like groceries and household items, and marketplaces like Amazon Fresh and Instacart are making that possible for consumers.

For marketplaces who fall into that “want” category, some are finding success by pivoting strategy to entice customers with unique offerings. Consider our customer Thoughtfull.co by Indigo, operating in Canada. They have leveraged the online marketplace model to create a “guided gifting” site, where a customer can enter information about the person they are purchasing a gift for. Then the site suggests a range of options, from physical items to experiences. This model not only helps customers select a thoughtful (pun intended) gift, but allows Indigo to support small businesses during a difficult time.

This shows that marketplaces are still a strong business model even if it’s selling items that are considered “wants” instead of “needs.” The advantage of marketplaces, as a consumer, is being able to easily find the exact items you’re looking for, from a variety of vendors. People like having a number of options available so they can find items that fit their unique needs. It’s also a one-stop-shop that makes shopping easy and efficient. This then benefits the marketplace because they collect more revenue. Consider this example: You need to buy your dad a birthday gift, a new pair of headphones and a jug of milk. You could go to three separate stores, or you could go to Target and call it a day. It’s the same concept with online marketplaces. In the previous example, Target is now collecting on money that would have otherwise been spent at three separate stores.

Drenik: Thanks Tom, it looks as if being agile and able to respond to the trends such as ecommerce growth, pickup and delivery and other operational changes is now fundamental for retail success. In the future, mainstream retailers will also need to anticipate, and answer challenges posed by new trends in order to succeed.