No one really knows where the first marketplace was and what was sold there. It’s possible, of course, that cavemen and women set up marketplaces in prehistoric caves and traded various paleo protein fare for clubs to beat away the giant dinosaurs that roamed the earth at that time. What we do know is that marketplaces played very important roles in the evolution of commerce throughout history, and uncovering the artifacts from those early places of commerce in Ancient Rome and Babylonia have given us great insight into the important role that they played in the life of people at that time.
Fast forward a few thousand years and marketplaces remain important commerce hubs. Technology, however, has expanded their role and their impact significantly. Physical marketplaces still exist but they have been eclipsed over the last decade or so by powerful online marketplaces that can reach anyone anywhere in the world with a vast array of products.
Some of the names are very familiar. Amazon, in the U.S. got its start by selling books, and today sells well over 200 million products a year. eBay got its start by enabling people to sell things they no longer wanted to each other and has evolved into a commerce hub for people and business with a market cap of ~67 billion. China’s Alibaba got its start in 1995 as a directory of businesses and has, in ten years, a gross trading volume annually that is bigger than that of eBay and Amazon combined, according to analysts. Its IPO Road Show which began on September 8th, is expected to result in the selling of shares that will raise $21 billion and value the company at ~$168 billion dollars, the largest in history. There is no doubt about Alibaba’s ambitions to become a leading global player.
But those are only 3 of several important online marketplaces around the world whose impact is significant and growing. Rakuten, in Japan, has expanded to other regions, and made a bid very recently to acquire another online consumer portal, eBates. India has Flipkart and SnapDeal, Latin America has MercadoLibre, South Korea has GMarket.
What’s fascinating about all of these is how they have evolved and grown, how they make money and where they view their unique set of assets and capabilities to be.
What follows is an overview of where each of these players fit in the global marketplace of marketplaces. We’ll be keeping this updated as their strategies, and reach expand.
A Quick Snapshot
Alibaba is by far the biggest of the sites reviewed by PYMNTS.com in terms of GMV. Ex US, Rakuten follows but is 15x smaller. The next player’s (MercadoLibre) GMV is inflated by conversion rates used when reporting Argentina and Venezuela’s sales, but is still bigger than India’s sites which are in an embryonic state.
In terms of buyers, Alibaba is also the biggest but difference with Amazon isn’t huge (255 M vs. 237 M). eBay also has more than a hundred million users. All other sites have between 10M and 20M buyers.
As for the number of sellers, it is hard to make an apples to apples comparison. Some operate as B2C marketplaces only and others also allow C2C transactions. That explains, for example, why MercadoLibre has more than double the number of sellers of Amazon (5.1 M vs. 2 M). Alibaba, which runs popular B2C and C2C site Taobao has 8 M sellers. In contrast, Rakuten and Indian Snapdeal and Flikpart all operate as B2C marketplaces and have thousands – not millions – of sellers.
Geographic segmentation is still present in e-marketplaces. China is dominated by Alibaba, India has two players which vie for market share, in LatAm MercadoLibre is the leader in most of the countries where it operates, US is dominated by eBay and Amazon, in Japan there is Rakuten. Europe may be the exception as many players are competing for this important: Rakuten, Amazon, eBay and Alibaba are present there and many other local players are pervasive.
Most sites offer a wide selection of categories. Although there isn’t available public information about all of them, most commoditized categories such as electronics and toys are the most popular types of items sold. Amazon and Flikpart also offer digital merchandise which adds to their top line margins.
Alibaba is not just a site but a group which offers its customers (buyers and sellers) different platforms according to their needs. Taobao.com focuses on C2C and B2C for value-minded consumers. Tmall.com focuses on B2C for sophisticated consumers. 1688 is a B2B platform for SMEs. Alibaba.com focuses on B2B worldwide. Juhuasuan is a group buying site.
Amazon centers on having a customer-centric logistics service which includes owing warehouses and focusing on fast shipping and also in having an easy-to-understand site. eBay stands out by letting users buy and sell items easily in auction or buy-it-now formats. It also rewards good sellers and provides guarantees to buyers. The other minor sites replicate, to greater or lesser, extent some of these business models but are unmatched at tailoring them to local culture and regulations and more importantly, getting them to scale.
All of the players researched have a proprietary payment system (Gmart is the only one that doesn’t but is part of eBay).
Regarding payment systems, very well-known eBay’s Paypal was acquired by the e-site in 2002 and has grown active users from 20 M then to more than 160 M. Paypal represented 45percent of eBay’s revenues in 2014 Q2.
Alibaba’s Alipay was launched in 2004 and is one of three third-party “digital payments” providers in China. (The other two are UnionPay online and Tenpay, which is operated by Tencent, the big dog of Chinese Internet firms.) With its 800 million customers, Alipay owns nearly half the online transactions in China.
Alipay actually escrows the funds until the buyer and seller have agreed that that the transaction has been completed and the buyer is satisfied. As a result, Alipay has had no trouble getting consumer and merchant adoption (more than three-quartersof Alibaba group’s GMV is transacted through Alipay) and is why it is most widely used online payment system in China.
In October 2013 Amazon launched Amazon Login and Pay option for online merchants off of Amazon. Of course, it was Amazon that pioneered one click payments when it launched in 1995. Merchants that wish to leverage its online payment method will enable their customers to go from browsing to buying in just a few clicks using their Amazon account information. The service allows payments on any device and allows adding payment options like pre-orders, split-orders and in-store pick-up.
The site also offers a peer-to-peer money transfer service called Amazon Payments. This allows users to send or receive money online similar to a service also provided by PayPal.
india’s Flipkart launched its PayZippy’s customer-facing online payment solution in December 2013 while Snapdeal did the same with its payment system KlickPay in January 2014.
Mercadolibre’s MercadoPago enables to send and receive payments online to pay for purchases in Brazil, Argentina, Mexico, Venezuela, Chile and Colombia. $2.5 Bn were made in payments in 2013 (34.2percent of MELI’s GMV). It was used in 31.3percent of MELI’s transactions, but also serves for off-MELI transactions.
Rakuten Card members grew by a net 54.7percent year over year in 2013. Rakuten Card shopping transaction value reached ¥2.5 trillion ($25.3 Bn, with 41.7percent year over year growth and represents 147percent of Rakuten’s GMV). It is the fifth credit card in Japan carrying Visa, MasterCard and JCB brands. Director of Finance Business Masayuki Hosaka says Rakuten aims to be #1 card in the country.
In terms of inorganic expansion, PYMNTS.com has already covered many of the Alibaba deals, which was in buying mode before its IPO. Amazon has historically been more focused on organic growth. In 2013 it acquired Goodreads, a book recommendation service. eBay’s last big acquisition was focused on the payments segment (Braintree). It also made four other small acquisitions in the marketplace unit. Flikpart acquired another big Indian player Myntra in May 2014 while SnapDeal did so with Doozton.com to expand to fashion categories. Rakuten concentrated on mobile when acquiring Viber Media.
Apart from obvious competitive threats, which are turning more international each second, e-marketplaces face competition from brick-and-mortar stores and also regulation as they become a bigger part of the economy.
“In three years we hope to be the No. 1 retail network in the world – larger than Wal-Mart,”
Jack Ma, Founder and Chairman (October 2013)
Overall size/volume:$ 270 Bn (2013)
Number of consumers, items purchased, types of items purchased:
255 M buyers, 8 M sellers in 2014 Q1.
Major categories of products purchased on Alibaba.com include consumer electronics, machinery and apparel.
Business model – how are merchants paid:
Alibaba is not just a site but a group which offers its customers (buyers and sellers) different platforms according to their needs. Taobao.com focuses on C2C and B2C for value-minded consumers. Tmall.com focuses on B2C for sophisticated consumers. 1688 is a B2B platform for SMEs. Alibaba.com focuses on B2B worldwide. Juhuasuan is a group buying site.
Key competitors and big threats
Key competitors (retail): JD.com.
Big threats: Regulation in China and government intervention and support.
Need that it fills:
Alibaba is the global gateway for access to cheap Chinese merchandise as well as the way that the Chinese consumers can access goods and services.
Plans for expansion globally or by type of merchandise:
Alibaba expects to continue to make strategic investments and acquisitions relating to mobile, O2O services, digital media, category expansion as well as logistics services. Alibaba has recently taken initiatives to launch or expand offerings in specialty categories such as groceries, digital entertainment and local services.
Big Moves:
March 2014. Intime Retail. Department stores. USD 692 M (35%).
October 2013. ShopRunner. Offers unlimited two-day shipping from retailers. USD 206 M (30%).
In 2012 launched Tmall Global, which is a platform for international brands to offer products directly to consumers in China.
“We have the good fortune of a large, inventive team and a patient, pioneering, customer-obsessed culture – great innovations, large and small, are happening everyday on behalf of customers, and at all levels throughout the company. This decentralized distribution of invention throughout the company – not limited to the company’s senior leaders – is the only way to get robust, high-throughput innovation.”
Jeff P. Bezos, Founder and CEO, April 2014
Overall size/volume:
We estimate Amazon’s GMV to be $111 Bn.Amazon had $74.5 Bn in revenues in 2013. Substract $3.5 Bn (estimated) for ASW (digital business) to get $71 in non-digital revenues. Amazon disclosed 40% of its GMV comes from 3rdP, which leaves 10% in sales. This means that 1stP Sales + 3rdP Sales = $71 Bn. 3rdP Sales is only 10% of 3rdP GMV (Amazon records about 10% of GMV as sales). 3rdP GMV represents 40% of GMV. As a result, $71 Bn sales are composed of $66.55 Bn in 1stP GMV and $4.45 Bn in 3rdP. This means 3rdP GMV is $44.5 Bn. Adding $66.55 Bn + $44.5 Bn makes $111 Bn in GMV.
Number of consumers, items purchased, types of items purchased:
237 M buyers and 2 M sellers. Electronics & Other ($ 48.8 Bn), Media ($21.7), Other ($3.9).
Business model – how are merchants paid:
Amazon centers on having a customer-centric logistics service which includes owing warehouses and focusing on smooth shipping and also in having an easy-to-understand site. Amazon generally has payment terms with its retail vendors that extend beyond the amount of time necessary to collect proceeds from its consumer customers.
Key competitors and big threats:
Key competitors:
Wal-Mart, Alibaba.
Big threats:
Sales taxes: Currently, 19 states require Amazon customers to pay sales tax and this could extend to others.
Need that it fills:
Customer need for selection, price, and convenience. Customers access Amazon websites directly and through mobile websites and apps. It also provides easy-to-use functionality, fast and reliable fulfillment, and timely customer service.
Plans for expansion globally or by type of merchandise:
Amazon has recently expanded Amazon Fresh (a delivery service for groceries) to LA Bay Area and Kindle Stores to new geographies.
Big Moves:
In 2013 it acquired 150 M for Goodreads, a book recommendation service.
In 2013 it launched Fire TV, a streaming media player.
In 2014 1Q it launched Prime Pantry, a new option available only to Prime members offering exclusive access to everyday essentials in non-bulk sizes.
In 2014 2Q it launched Fire smarthpohe, Amazon Dash for delivery of groceries, an unlimited e-book subscription service.
“We will continue to compete aggressively across all of our businesses, and in 2014 we’re stepping up our investments, particularly in Paypal. We’ll take a very disciplined approach about how we make these investments, but we intend to capitalize on our strengths and seize the opportunities before us.”
John Donahoe, President and CEO, 22nd January 2014
Overall size/volume:$76.5 Bn
Number of consumers, items purchased, types of items purchased:
A variety of merchandise from previously owned goods to new items, including from brands themselves
Active users: 140.3 M
Business model – how are merchants paid:
Light model based on GMV generated by sellers. Global on-eBay penetration of Paypal is over 75 percent.
Key competitors and big threats:
Amazon, Wal-Mart, Rakuten, Vente-privee, Alibaba, Naspers.
Need that it fills:
A leading commerce platform for users and merchants anywhere, anytime.
Plans for expansion globally or by type of merchandise:
Big Moves:
December 2013 $713 M for Braintree, provides an online and mobile payments platform.
“Technology, supply chain and human resources are three major areas where we are investing massively. We are also hiring from overseas. The investment depends a lot on how fast the market grows. If we see bigger potential, investments will go up. For example, if 4G takes off, we might also have to ramp up our expansion plans.”
Sachin Bansal, CEO, 19th December 2013 (The Hindu Business Line)
Overall size/volume: (fiscal years end in March)
2014: Hit USD 1 Bn milestone in annual GMV, a goal the founders had forecast to achieve only by 2015
2013: USD 217.4 M
2012: USD 78.2 M
Flipkart acquired Myntra in May 2014. Myntra was on track to have GMV of $100 M for 2014.
Flipkart is a private company.
Number of consumers, items purchased, types of items purchased
Registered users: 10 M
Active users (in the last year): About 5 M
Flipkart began by selling books online (80% market share). Today the company has a large online market of products across more than 17 retail categories from leading brands.
Business model – how are merchants paid
Flipkart started as an online bookstore as an inventory-led e-commerce company, but is now present across numerous categories, including fashion and electronics and is beginning to get into white goods and furniture. It also now operates a marketplace model under which it allows retailers to offer their products on their platform, similar to how Amazon started in India last year.
Buyers can choose to pay cash on delivery (50% of sales), use their debit cards, or use net banking accounts for payment processing and also decide to pay through interest-free EMI options.
PayZippy is the site’s online payments solution for merchants and customers.
Key competitors and big threats
Flipkart’s closest competitor Snapdeal.
India’s e-commerce market (sans travel sites) is currently worth USD 3.1 Bn annually — just 1.5% of the value of China’s e-commerce sales, which are approaching USD 200 Bn.
Clearly, the biggest challenge facing Flipkart, Snapdeal and others will be to increase the number of transacting users. Many of these fresh online shoppers are likely to come from mobile, which is already contributing over 30% of Indian e-commerce traffic.
Need that it fills
The goal is competitive prices and a hassle-free shopping experience. Tailored with the Indian consumer in mind, the site offers features such as free home delivery for some products, a 30-day replacement policy and additional payment options besides credit cards.
Plans for expansion globally or by type of merchandise
Sachin Bansal, CEO :
“We are a horizontal player. We will eventually sell everything. Less than a year ago, we started developing clothes and shoes as a category. However, the skew is more towards electronics. But from about a third of the total market, shoes and clothes could be bigger than electronics”.
“We have six warehouses, out of which three are large ones in Bangalore, Mumbai and Gurgaon. We are expanding our warehouse infrastructure as the current capacity will not be enough, given the kind of growth we are projecting. “
“We have aspirations to be a global point.”
Big Moves:
Flipkart acquired Myntra in May 2014. Myntra was on track to have GMV of $100 M for 2014. Deal was about $300 M.
In April 2014 it launched ‘Same-day Guarantee’ delivery in 10 cities. In July 2014 it launched a smartphone and a tablet.
Note: In June 2009, eBay acquired Gmarket for the USD 1.2 Bn. This subsidiary is now known as eBay Korea Co., Ltd. Young Bae remains as the CEO of Gmarket and headed expansion plans into Japan and Singapore.
eBay Korea Co maintained its leading position within internet retailing with a 22% value share in 2013. The company operates the two largest internet retailing brands, G Market (PP) and Auction (PP).
Overall size/volume:
G Market recorded a 13% value share of a market estimated by Euromonitor to be (in 2013) KRW 29.9 Tr (USD 27.4 Bn) = 13% * USD 27.4 Bn = USD 3.56 Bn.
eBay Korea Co total size = 22% * USD 27.4 Bn = USD 6.02 Bn
Number of consumers, items purchased, types of items purchased:
20 M users
aBusiness model – how are merchants paid:
They are classed as open markets in South Korea because anyone can sell their products if they pay a fee to the company; however, the fee reaches up to 12% depending on the product category, so private consumers rarely use open market internet retailing to sell only a few items. It is good resource for small-sized manufacturers that do not have particular distribution channels.
Key competitors and big threats: Lotte, Naver and 11th Street
Need that it fills
Plans for expansion globally or by type of merchandise
Gmarket Global is continuously expanding goods categories hoping to provide wider range of shopping experience to more global customers.
“MercadoLibre’s e-commerce ecosystem continued to strengthen in the first quarter of 2014. Solid first quarter results showed progress in key initiatives such as payments, mobile and customer experience, encouraging us to keep innovating, executing and seizing the huge potential of our region’s e-commerce.”
Marcos Galperin, President and CEO, May 8th 2014
Overall size/volume: GMV USD 7.3 Bn in 2013 in 83M transactions.
Number of consumers, items purchased, types of items purchased:
Total confirmed registered users at the end of period: 99.5 M
It has a strong presence in the region with high market share in Brazil (23%), Argentina (24.4%) and Venezuela (20.7%) and Mexico (12.9%).
Business model – how are merchants paid:
MELI offers include an eco-system of six related e-commerce services: the MercadoLibre Marketplace, The MercadoLibre Classifieds Service, the MercadoPago payments solution, the MercadoLibre Advertising program, the MercadoShops on-line stores solution and the Mercado Envios shipping service.
Revenues from the MercadoLibre marketplace are generated from listing fees, optional feature fees, final value fees and online advertising, and from MercadoPago from commissions for use of the service.
MercadoPago is MELI’s payment solution. All other payments are agreed between merchant and consumer. See below statistics on MercadoPagos (34.2% of value and 38.0% of transactions were done through MercadoPagos in 2013).
Key competitors and big threats:
Key competitors:
AMZN has a strong market position in Venezuela and Peru, with a share of 45% and 25% respectively, but in all other markets, AMZN’s share is at or below 5% of total e-commerce value.
B2Wis the leader in online retailing in Brazil, and with an ecommerce market share of 21%. Chilean retailing conglomerate Falabella is the market leader in Chile (c.20% share), Wal-Mart de Mexico is investing in Mexico and Exito (Colombia) recently launched cdiscount.com.co in a JV with its controlling shareholder Casino.
EBay acquired Alamaula.com, a classifieds site in 2012.
Smaller marketplace operators: Mas Oportunidades in Argentina and Rakuten in Brazil.
B2C e-commerce services: such as pure play Internet retailer Submarino (a website of B2W Inc.), NovoaPontocom, or others with a focus on specific vertical categories, such as Netshoes, which focuses on sports & apparel and Dafiti, which focuses on fashion.
Bricks and mortar retailers: Have launched on line offerings such as Americanas (a website of B2W Inc), Casas Bahia, Walmart and Falabella.
Big threats:
MELI is exposed to Argentina and Venezuela currencies which are set to devaluate as inflation is going up at high double digits and also to interest rates in Brazil.
Need that it fills:
MELI provides buyers and sellers with an e-commerce platform that fosters the development of a large and growing e-commerce community in Latin America, a region with a population of over 598 million people and one of the fastest-growing Internet penetration rates in the world. It offers a technological and commercial solution that addresses the distinctive cultural and geographic challenges of operating an online commerce platform in Latin America.
Plans for expansion globally or by type of merchandise:
MELI intends to achieve growth through organic expansion, by introducing its business in new countries and entering new category segments, by launching new transactional business endeavors, and through potential strategic acquisitions of key businesses and assets.
Its focus is to enable on-line transactions of multiple types of goods and services throughout Latin America. These new transactional offerings include, but are not limited to, efforts involving: (a) the offer of additional product categories in the marketplace business, (b) the expansion of MELI presence in vehicle, real estate and services classifieds, (c) the penetration of MELI on-platform payments services and the expansion of its off-platform payments services, (d) the increase of MercadoClics and on-line advertisement services (e) the penetration of on-platform shipping service and (f) the offer of on-line software as e-commerce service solutions. The firm believes that a significant portion of its growth will be derived from these new or expanded product and service launches in the future.
Big Moves:
In 2013 acquired Argentinean software firm Neousur for $ 3.5 M.
“To close out our suite of e-commerce services, during 2013, we launched the MercadoEnvios shipping solution in Brazil and Argentina. Through this solution, we offer cost efficient integration with existing logistics and shipping carriers to sellers on our platforms. Sellers opting into the program are able to offer a uniform and seamlessly integrated shipping experience to their buyers.” (Annual Report 2013)
“We are going to become much, much bigger in the next 24 months. We are expecting to cross $400 mn in sales in the coming year with our assortment size increasing to over 25,000 brands and 20 million products. Further, in next 12-18 months, we are expecting 30% of Snapdeal’s sales to be via mobile devices. This is a big focus area for our company. We expect our sales over the mobile to cross PC sales in the next 3 years. Philosophically we are super committed to solving the problem of facilitating commerce by enabling hundreds of thousands of SMEs and brands in India to directly connect to the hundreds of millions of consumers across the country. This is our mission.”
Kunal Bahl, Founder and CEO, September 10th 2013 (The Wharton Journal)
Overall size/volume:$ 335 M
Number of consumers, items purchased, types of items purchased:20 M registered users. 50k sellers. Mobiles, Electronics, Fashion accessories, Apparel and Footwear, Automotive, Kids, Health, Home and Kitchen, Sports & Books
Business model – how are merchants paid:
In early 2014 eBay led a $134 million (20% stake) investment SnapDeal has been a marketplace from the very beginning.
Key competitors and big threats:
Flipkart
Clearly, the biggest challenge facing Flipkart, Snapdeal and others will be to increase the number of transacting users. Many of these fresh online shoppers are likely to come from mobile, which is already contributing over 30% of Indian e-commerce traffic.
Need that it fills: Snapdeal provides a platform for vendors across the country to connect with millions of customers. 50% of their sales come from mobile.
Plans for expansion globally or by type of merchandise: The company has opened 40 fulfillment centers across 15 cities in the country and plans continuing doing so.
Big Moves:
In April 2014, SnapDeal acquired Doozton.com which is an online product discovery technology website focused on the fashion and lifestyle categories that help consumers discover trending products and designs from online stores.
“Rakuten is entering a new growth stage from 2014 along with an expected acceleration in the evolution of the Internet industry, as we construct a truly global Rakuten Ecosystem based on our 3 core pillars; e-Commerce, Internet Finance, and Digital Contents.”
Hiroshi Mikitani, Chairman and CEO, March 2014
Overall size/volume
2013: JPY 1,7 Tr (USD 17.2 Bn)
2012: JPY 1.4 Tr (USD 11.7 Bn)
Number of consumers, items purchased, types of items purchased:
40k merchants sell products to 14% of the domestic internet users
Business model – how are merchants paid:
The Internet Services segment consists of the e-commerce business, travel business, overseas
e-commerce business, e-book business, and other domestic and overseas Internet services.
Key competitors and big threats:
Yahoo! Japan is well positioned to benefit here with their new free-to-charge strategy the major focus. We believe Yahoo Japan will benefit by, (1) introducing an easy selling/package/delivery platform for beginners, (2) gathering major brand merchants and retailers onto the Yahoo! Shopping site, (3) encouraging manufacturers to sell products directly to customers on their LOHACO platform.
Need that it fills
Rakuten is working to provide a safe and secure shopping environment, working together with merchants to establish a premium mall where users can shop with peace of mind.
Plans for expansion globally or by type of merchandise
Rakuten opened Internet shopping malls, Rakuten.es Shopping in Spain in October 2013 and Rakuten.com.sg in Singapore in January 2014, spurring additional organic growth.
In addition to opening up new markets through digital content services, Rakuten will pursue expansion of a global Rakuten Ecosystem by leveraging group synergies.
In March 2014, Rakuten acquired a wholly owned subsidiary Viber Media, operator of mobile messaging and VoIP services around the world, as a platform for global content business. Rakuten believes that it can grow both Viber, as a stand-alone business, and our existing businesses by implementing three major stages of growth. First, growing Viber’s stand-alone business such as voice (Viber Out), stickers, and games. Second, realize business potential through synergies with Rakuten. And third, full integration of Viber into the Rakuten Ecosystem, with Rakuten making full use of Viber’s product advantages.
Global Development of the Digital Content Business Rakuten proactively developed e-book services as well as video streaming services in Japan and abroad with the aim of strengthening digital content services, which are positioned as one of the pillars of our future growth strategy.
July 2014: Japanese ecommerce titan Rakuten announced its entry into India.
Big Moves:
In March 2014, Rakuten acquired a wholly owned subsidiary Viber Media, operator of mobile messaging and VoIP services around the world, as a platform for global content business.
Rakuten Denwa, a low-price voice calling service for smartphone users launched in December 2013. In April it launched a credit card and loyalty scheme in US.
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