Whether a brand is looking to set up its own firstparty marketplace or enter an existing third-party marketplace, there are a number of obstacles they may encounter. For those wishing to set up their own marketplace, there are many things to consider when it comes to time and cost needed just to set up.
In terms of cost, almost 60% of businesses launching a marketplace have spent at least USD 3 million or more in doing so. 2% have even spent around USD 24 million, highlighting the incredible initial investment needed when heading down this route.
Furthermore, over 80% also said that it took them longer than they thought to launch their marketplace, with 61% saying the most challenging issue was the lack of internal skills and
knowledge gaps. It therefore poses the question as to whether it is more efficient and cost-effective to integrate into an existing marketplace, rather than set up your own, but integrating into an existing system isn’t without its challenges either.
For example, there is the question of the complexity of integrating into an existing platform, potential logistics challenges in terms of returns and taxes, and the time it actually takes to integrate within such a system. Particularly when selling items on a third-party marketplace, how the marketplace handles business can have a direct impact on the fashion brand.
For example, if a customer is dissatisfied with the marketplace, this could affect loyalty to a particular brand too. There could also be issues with data security if the marketplace isn’t investing in keeping systems up to date and adhering to compliance regulations.
That being said, marketplaces of course have to adhere to the local regulations and guidelines in the countries they operate in, making it less of a headache for the partners they work with and, while the challenges may seem difficult to navigate, there are a number of benefits to expanding into an existing marketplace that outweigh the initial hurdles.
