People aren’t shopping online like they used to. Our ever-growing digitally connected world is dramatically bolstering online commerce, which is expected to hit $5.5 trillion by the end of 2022. But the ecommerce paradigm is again shifting, and the most prominent players in search are taking notice.
For the past two decades, Google has been the defacto search engine for people to find products and services online. Several years ago, that changed thanks to companies that embraced the marketplace model, catalyzing growth beyond the catalog.
By 2018, Amazon had surpassed Google, with 54% of online product searches originating on the massive multi-vendor marketplace. Then, the pandemic ushered in a drastic rise in ecommerce activity during lockdowns, and more consumers continued to start their sales journeys with Amazon and other marketplaces. As the dust settles on these transformative years, marketplaces have established themselves as legitimate search-engine contenders, a great case study for businesses looking to add a marketplace alongside their existing business.
Of course, it’s not that consumers don’t like search engines. Instead, they prefer using marketplaces as search engines, ushering in the marketplace search engine era. So what’s shifting consumer behavior away from traditional search engines?
Marketplace Search Functions Provide Better Experiences for Online Shoppers (and Sellers)
Any successful marketplace draws on the flywheel effect. That’s the idea that more sellers coming on board attracts more buyers, bringing new sellers — and so on.
Similar dynamics are driving the popularity of marketplaces as a starting point for online shopping. For shoppers, the marketplace search engine has at least three very appealing traits compared to the Googles of the world:
- More convenience: Shopping on a marketplace skips a step by going direct to the source. On Amazon, eBay, or any other marketplace, you’re starting at the point where a transaction can be processed — especially with “buy now” options — instead of having to sift through Google results first.
- Personalization: No matter how tailored search-engine results get, they can’t compete with the level of personalization found, for example, on a niche vertical marketplace, which more than a third of consumers say they shop on already. (Vertical marketplaces have a specific focus, like Etsy, which has a policy to only deal with items that are vintage, handmade, or craft supplies.) General search engines have to be a resource for everything, but marketplaces can serve niche communities, big and small.
- Quality: Marketplace operators spend a lot of time curating their catalogs — and it’s in their own best interest to do a good job of it. They’re the ones on the hook for a negative experience, not their vendors. Marketplaces that excel in customer service and experience become highly trusted resources for consumers, which is becoming increasingly important in ecommerce.
As traditional search engines lose consumers’ loyalty and online marketplaces each act as their own marketplace search engine, new opportunities open up for businesses to leverage (and participate) in the collaborative multi-vendor model.
Here are three reasons ecommerce companies — whether they’re distributors, advertisers, retailers, or anything between or beyond — are paying more attention to marketplaces:
- Better value: Ecommerce companies can dump hundreds of thousands into ranking higher on Google — or they can hand over a commission per transaction to get in front of marketplace customers with a high intent to buy. According to a 2022 Statista report, advertising spending in the United States alone during 2019 reached $12.5 billion. Ecommerce brands spend anywhere between 10%-24% of their budget on SEO and paid advertising alone.
- Growth potential: Marketplaces facilitated $1 trillion worth of transactions in the retail and travel segments alone in 2020, and that’s expected to grow by 15% annually through 2025. Consumers are making their preference for the model clear, and businesses that can capture some of the exuberance have lots of room to scale.
- Higher conversion: Marketplaces are also much closer to the bottom of the sales funnel than traditional search engines. Most people visiting a marketplace demonstrate some degree of buying intent. They’re ready to start filling their carts, but the same can’t be said of the average search engine query. Even versus other ecommerce sites, successful marketplaces boast impressive stats. Consider that the conversion rate for Amazon’s non-Prime members is 13%, compared to an average of 3.3% across the top 500 internet retailers. (An effective loyalty program can boost these numbers significantly, as the conversion rate for Prime members soars to 74%.)
How Will Traditional Search Engines React?
Google, Microsoft Bing, Yahoo!, DuckDuckGo, Ask.com — they’re all faced with the question of how to respond to competition from marketplaces and, to a lesser extent, retailer and brand websites, which garnered 15% of product searches.
Google is trying to make inroads in ecommerce with Google Shopping and other products, a direct response to the search engine marketplace phenomenon.
However, in more than one way, headwinds are higher for a traditional search engine looking to operate more like a marketplace than they are for an ecommerce business becoming a bona fide marketplace search engine:
- More regulation: Marketplace operators face stronger regulations by acting as the merchant of record. They require significant investments in compliance to address fraud, money laundering, and more. A multinational tech company has the resources to throw at these challenges, but do they have the appetite to do so?
- Higher touch: Marketplaces are also accountable to customers in a way that search engines aren’t. Search engines rely on high traffic volumes, but the bulk of their users on the consumer side isn’t buying anything directly from them. If anything goes wrong during a marketplace transaction, shoppers approach the operator, who has to solve the problem. It’s a much higher-touch proposition that Amazon, eBay, et al. have spent years navigating. In contrast, Google more or less operates as a B2B company today, selling ads to other businesses.
What’s Next for the Marketplace as a Search Engine Trend?
Marketplaces generate incredible user data. Everything from average time spent on the marketplace, to transaction volume, and repeat purchases are great ways to qualify future catalog growth based on your customers’ needs.
It not only makes them search-engine competitors today, but it also shows strong promise for the future. We’re just now beginning to see the potential of unlocking marketplace search engine data.
Marketplace businesses already see higher conversion rates than their traditional ecommerce peers. While we’re already seeing this for B2C marketplaces, B2B operators have an unprecedented opportunity to capitalize on the undigitized ecosystem of B2B commerce.
Just imagine what we’ll see as marketplaces continue to foster an environment where buyers can bypass search engines for all their shopping needs.