The Marketplaceor the new era of (e-)commerce

White paperJanuary 2016

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FOR THEIR CONTRIBUTION TO THE WHITE PAPER (1/2)We Would like to thank

Artsper - marketplace Hugo Mulliez

Co-founder & President

La Redoute - marketplace Frédéric Maus

Marketplace Director

Carrefour - marketplaceDavid Schwarz

Non-food e-commerce Director

Mano Mano - marketplaceP. de Chanville & C. Raisson

Co-founders

Fnac.com - marketplaceAlain Keravec

Marketplace Director

Mirakl - solution ITPhilippe Corrot

CEO

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FOR THEIR CONTRIBUTION TO THE WHITE PAPER (2/2)We Would like to thank

AS Discount - marchand Nicolas Michel

Founder and COO

GlobalConnect - marchand Jonathan Schmidt

Partner

Expansys - marchandTony Montbroussous & Sébastien Bourrut Lacouture

Marketplace director and Chief Operating Officer

Izberg - solution ITBenoit Feron & Luc Falempin

Co-founder

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FoReWoRd

Nicolas RéquillartPerformance offer and Digital

Innovations manager at CGI Business Consulting

of French internet users have already shopped through a market place.

1. Mirakl/Sorgem/IBM Barometer « Les Français et les Marketplaces » (02/2015).

2. 6000 top retailers stores about to close (forecast in 2015), /about.com 2015.

3. Internet Retailer 2014 Top 500 Guide (2014).

4. Mirakl/Sorgem/IBM Barometer

95% The evolution of Internet users’ habits in recent years has, without doubt, induced

From the advent of the Parisian shopping arcades and then the departement stores throughout the nineteenth century, through the expansion of shopping malls in the 1980’s, the shopping arcade is reinventing itself into marketplaces, giving customers a totally new experience. Although the digital revolution has a clear impact on the retail sector (with mall and stores attendance gradually declining in the US), the shopping center is not dead yet but, thanks to the internet, is reinventing itself, shedding its main constraints (space and time) to propose an offer of unlimited depth and breadth.

Today, 40% of amazon’s revenue, with over one third of products sold, come from / originates from its marketplace.

The quick rise of this business model, especially in the service industry (Uber, AirBnB, Blablacar...) challenges established positions and is raising business model, orgnaization and legal issues.

How far will dematerialization, disintermediation and collaborative use.

The figures speak for themselves and reflect the fever surrounding this phenomenon: in February 2015, Uber announced the biggest fundraising carried out by a start-up ($ 2.8 billion) in June AirBnB is valued at nearly $ 25 billion, 7 years after its creation in September 2015, BlaBlaCar becomes the first French start up valued to more than $ 1 billion ($ 1.6 billion or over 70% of Air France – KLM market capitalization).

The nature of e-commerce is to evolve in a competitive environment and confront with growth and profitability issues. What will differentiate Cdiscount, Auchan, Carrefour and Amazon marketplaces for both customers and vendors tomorrow? How will they differentiate themselves?

The answer will probably lie for some of them, in their ability to offer a successful cross-channel experience and for others to continue cultivating the “Wow” online effect. Click & mortars as well as pure players must evolve to survive and marketplaces appear to be as a key growth driver and as a renewal of shopping centers.

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Contents

Focus on the consumer goods industry’s issues

2Key factors of success and

attention points when starting up

a marketplace

3Marketplaces

or the renewal of the shopping

center concept

1

5

6

deFinition oF the MaRketPlaCe ModelA marketplace is an online intermediation platform between sellers and buyers (individuals and professionals) where the operator is a trusted third party: the operator secures transactions, intervenes in disputes and provides a hub of audience and functionalities to the seller but also guarantees the buyer’s satisfaction.

2 Product or service purchase The buyer places an order and makes the payment

3 Payment process The operator or another third party receives the funds securely on the seller’s behalf

6 Rating sellers Before or after fund transfer, the buyer rates the seller on the platform

4 Order fulfillment The seller fulfills the order

1 Offer availability The seller registers on the marketplace and displays his catalogue of products or services

5 Fund transfer to the seller The funds are transferred to the seller after delivery confirmation or after a given period of time

Operator

BuyerSeller

7

“Few risks exist because the market-place is one of the only true Win- Win models between the seller and the marketplace.”

17

Alain KeravecFNAC Marketplace Director

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a suttle BalanCe BetWeen 3 stakeholdeRsThe marketplace success is based on the operator’s ability to retain the buyer and the seller while maintaining costs to keep strong profitability

SELLER

• Provides offer & related services

• Empowers the marketplace offer

Seller benefits

Additional distribution channel

Increased offer visibility

Operator brand image

Additional public audience

Reduced IT and online customer acquisition costs

Not commitment (required)

OPERATOR

• Brings a qualified public audience and technological tools

• Exposes a wide and referenced offer

• Certifies payments and ensures a worry-free shopping experience

Operator benefits

Quick offer expansion

Reduction of shortage-induced customer frustration

Pooling of existing IT infrastructure with limited investment

Lab model / new product lines testing / new targets

Better pricing thanks to seller competitiveness

Strengthened loyalty / ‘one stop shop‘ customer logic

SEO optimization (linked to catalogue size)

BUYER

• Selects the best product or service with the best value for money

• Shares his/her opinion as a consumer with the community through his/her ratings

Buyer benefits

More choice: «everything at the same place »

More prices: access to a complementary or competitive offer with the best price

More services (via seller experts)

Higher product availability

More security: the marketplace guarantees a worry-free purchase

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an ineVitaBle eVolution oF (e-)CoMMeRCeThe marketplaces are freed from many constraints of the physical world: space (the operator has no stock to manage), time (open 24/7), frontiers (worldwide delivery).

• eBay is the pioneer of marketplaces with with its model

• The pure players then agreed on a model and started evangelizing it, while making substantial revenues

• The major food retailers and specialized superstore chains are gradually coming on a channel that is still wrongly perceived as capable of cannibalizing parts of their in-store sales

Intensification of competition is observed, due to:

• A growing number of pure players

• The appearance of corporations from the retail industry

• Penetration of new market segments

1 : Hybrid marketplaces (Historically originating from e-commerce websites like Amazon, Fnac, Cdiscount,…) have their own offer that is generally put in competition with other sellers.Note 1. Pure Player = 100% online e-commerce actor as opposed to brick and mortars or e-retailers which have physical stores and online websites.

THE 3 MAIN PHASES OF MARKETPLACES’ HISTORY

THE PIONEERS THE CATALYSTS THE RETAILERS

1996 2000 2003 2006 2008 2009 2010 2011 2014 2015

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tYPes oF MaRketPlaCes and theiR PositioninG

MAJOR STRATEGIC HIGHLIGHTS OF MARKETPLACES

Penetrate the B2B market for new growth drivers

The pure players are offensive on this market with high potential (10% growth per year between 2014 and 2017).

Diversify to retain and acquire new customers

The established players and new known entrants are trying to address new strategic segments by capitalizing on their brand image and large audience.

Going vertical to remain visible

Hard competition with top players on prices is pushing some new players to opt for specialization, focused on detailed market knowledge and on targeting customers who are sensitive to service offer.

Vertical marketplace

B2C2C

B2B

Horizontal marketplace

Vertical C2C Multi-specialists

The 2.0 malls

The 2.0 Hubs

Professional C2C

Chart: CGI Business Consulting Oct. 2015

11

“Amazon’s killer weapon is its marketplace,which enables it to become a one stop shop ‘ like Walmart was in the 80s and thus conquer and retain many customers.”

Bill SimonWalmart CEO

12

the MaRketPlaCe

Source Fevad octobre 2015

is the growth in sales volume in the second quarter of 2015Source: Fevad, septembre 2015 – based on Ice40

of the sales volume of the 40 largest e-commerce players has been made via marketplaces (second quarter 2015)

Source Fevad septembre 2015 – base Ice40

27%

is the forecasted turnover generated in 2018* by marketplaces in France for the B2C market.

€15Billion

58%

KEY FIGURES OF THE FRENCH MARKET

is the percentage of French web users having already used a marketplace, sometimes without even knowing itMirakl/Sorgem/IBM Barometer ‘Les Français et les Marketplaces’

95%

13

The marketplace is a lifesaver for many online players in need of profitability. The marketplace is a real profitability lever for many pure players.

Alain KeravecFNAC Marketplace Director

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an ineVitaBle GRoWth dRiVeR FOCUS ON E-COMMERCE MARKET

• While E-commerce in France has entered a phase of reduced growth, marketplaces are the market’s driving force overall E-commerce in France is still growing mainly because of the marketplaces (increasing by nearly 50% each year since 2012)?

We are witnessing a transfer of purchases from e-retailers’ websites to these «digital malls»

• In Q2 2015, the trend accelerated

Nearly one order in 3 comes from website marketplaces (members of the iCE40 panel)

They recorded a twice as important growth (+ 58 %) as those with no marketplace

10%

90%

13%

87%

17%

83%

25%

75%

+47%

+13%

+46%

+11%

+56%

+5%6057

5145

2012 2013 2014 2015

70

60

50

40

30

20

10

0

n French-commerce turnover(€B) n French marketplaces turnover (€B) 60 E-commerce market (€B)

Chart: CGI Business Consulting Oct. 2015 - Source:FEVAD

EvOLUTION OF MARKETPLACES’ SHARE IN FRENCH E-COMMERCE

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Any retailer will not be able to use this model because of the entrance barriers related to traffic, platform and organization.

For sellers, selling via this new channel can appear as a solution to meet their visibility and customer proximity issues but requires being consistent with the distribution strategy.

David SchwarzCarrefour non-food e-commerce Director

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FOCUS ON E-COMMERCE MARKETan ineVitaBle GRoWth dRiVeR

RANKING OF MAJOR FRENCH E-COMMERCE VENDORS BY AUDIENCE (S3 2015)

A market in an acceleration and rationalization phase:

• Shedding the unprofitable categories in favor of the marketplace and refocusing on profitable stored offer (Cdiscount)

• Business model mutation towards a 100% marketplace model (Redoute, Pixmania)

• Pure player acquisition by retail leaders (Rue du commerce by Carrefour)

• Diversification focused on customer services (Darty)

Source FEVAD S1 2015

NU

MB

ER

OF

UV

/MO

NT

H

E-COMMERCE

WEBSITE HYBRID MODEL

MARKETPLACE

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“The marketplace, when well operated, gives the opportunity to go and seek new business while strengthening the existing one.This new channel makes it possible to enhance the offer, and therefore to maximize not only conversion rate but also customer loyalty.”

Philippe CorrotMirakl CEO

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ONE OF THE KEY FACTORS OF SUCCESS FOR SALES vOLUME GROWTHoFFeR dePth and BReadth

Note 1. The sales volume is the total amount of past transactions on the website. In order to calculate the operator turnover, it is necessary to apply the average commission rate, generally between 10 and 15%, to the sales volume.

EVOLUTION OF SALES VOLUME, AUDIENCE AND SIZE OF A FRENCH MARKETPLACE REPOSITORY

For larger merchants’ catalogs - more than 2 million references - there is a rationalization of operators (eg Amazon) to improve in both operational monitoring and relevance to the customer.

If the increase in SKU does not automatically increase traffic, it stimulates repeat business and thus increases sales volume.

In order to increase quickly, the sales volume needs a critical mass of audience and an offer depth and breadth (number of SKU).

5,5 3< 1%

78

8,9

4

10%

10,5 96,5

25%

7

35%

8,5

45%

12

60%

2009 2010 2011 2012 2013 2014

Chart: CGI Business Consulting Oct. 2015 - Source: Client feedback

100

80

60

5025

5

Sales volume in Billion € n Average Uv in Million n Number of SKU in Million n Percentage of MP SKU

Contents

Focus on the consumer goods industry’s issues

2Key factors of

success and attention points when starting

up a marketplace

3Marketplaces or the renewal of the shopping center

concept

1

19

20

Three fundamental issues should be discussed ahead of a marketplace setup, to clearly define the path to follow.

WhiCh stRuCtuRal eleMents aRe ReQuiRed to set uP a MaRketPlaCe?

OFFER

What kind of offer for differentiation?

• How to manage the marketplace cross-channel integration?

• Should we offer the same services as the products sold in store (loyalty program, warranties, return management

• What withdrawal services can be offered (in-store, relay point ...)?

BUSINESS STRATEGY

Should we open the marketplace to any seller?

• Should we allow second-hand product sale?

• How many sellers for each category of products? Unlimited?

• What services can we offer to sellers (fullfilment, dashboard, catalogue import ...)

• Should we put sellers in competition with the operator On which segment of the offer?

TARGET

How to define the target market segment?

• Should we start developing a generalist or niche marketplace

• Is my target a bunch of individuals and / or professionals?

• How to build on my internal resources to be relevant to my target customers?

• How to reassure customers without overloading the customer service?

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“We are probably witnessing the birth of of a marketplace model each player will have to invent its own model to exist and differentiate itself from the competition. Some stores would opt for an extension range strategy, while some others would open their offer to competitors etc.”

David SchwarzCarrefour non-food e-commerce Director

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THE DIFFERENT STRATEGIES FOLLOWED BY RETAILERS’ MARKETPLACES MatuRitY Model:

Marketplace is perceived as an internal risk

• “Range extension” approach: one seller per market

• Professional sellers only

• No competition among sellers or between seller & operator

Internal evangelization of the model

• “New Range”approach: several sellers per market

• Professional sellers only

• Competition only between sellers (no competition with operator)

Awareness regarding marketplace potential

• E-commerce website turns into a marketplace: own offer integrated within marketplace offer but remain the main offer (buy box / choice box)

• Any seller (pros and individuals)

• Competition in all or part of operator offer

Marketplace is an integral part of the global offer

• Operator refocuses on its core offer

• Any seller (pros and individuals)

• Exhaustive seller services: payment and delivery guarantee, fulfillment, Call center...

DEFENSIvE STRATEGY

BUSINESS MODEL TRANSFORMATION

TOTAL OPENING STRATEGY

PARTIAL OPENING STRATEGY

Launch stageRunning stage

Penetration stage

SA

LES

vO

LUM

E Ev

OLU

TIO

N.

Chart: CGI Business Consulting Oct. 2015

Consolidation stage

TIME

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What leGal issues FoR MaRketPlaCe oPeRatoRs?IS

SU

ES

Ex

ISTI

NG

SO

LUTI

ON

S

• Payment collection is done on operator bank account before being transferred to seller

• Positive impact on the MP cash flow

• Marketplaces are reclassified as payment providers under the authority of the French Prudential Supervisory Authority

• Actors must comply to avoid financial penalties

• Opportunity to become payment institution

• Possibility of relying on an authorized third-party

PAYMENT COLLECTION

• Seller’s ID is checked by operator

• Fraud and money laundering risks

• Identification process need in order to fight against money laundering

• Seller ID must be saved, bank control…

• Mapping and transformation of existing processes to reach the targeted level of control

• Specialized external solutions

SELLERS CONTROL

• Represents full time work for some sellers, who become entirely dependent without employee status (AmazonTurk, Uber)

• Emergence of disguised employment

• Homejoy closed on July, 31th 2015 (cleaning service marketplace which fundraised €40M)

• Inability to raise funds employees’ class action costs

• Avoid subordination relationship with sellers to avoid having them as salaried staff

• Hire highly dependent sellers (Instacart)

SELLERS STATUS

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SERvICE OFFERvARIABLE COSTSFIxED COSTS

• Either as a monthly subscription or as a fixed cost per item sold (usually for CtoC)

• Aims to cover part of platform and customer collection costs but also to discourage non-active sellers

• Exemption for top sellers

Subscription price examples:

• Priceminister: from €39 to €499/month

• Amazon: from €39/month

• eBay: from €26/month

• Marketplaces main source of revenue

• Need to find the perfect balance between attractiveness and profitability, including main operator’s offers

• Ability to correlate rates with sales performance as an “incentive” for sellers

• Customized services monetization

• Lever to highlight seller and allow differentiation

• Strengthen customer service because of competition between sellers

What Business Model to enGaGe?

+ +

Commission rate examples:

• High tech: 6-8%

• Culture: 10-12%

• Garden and furniture: 10-12%

• Accessories: 10-11%

Monetization examples:

• Monetization of spaces (CPM/CPC)

• Highlight search results

• e-mailing

• Fulfillment

$%

Contents

Focus on the consumer goods industry’s issues

2Key factors of success and

attention points when starting up a

marketplace

3Marketplaces or the renewal of the shopping center

concept

1

25

adoPtinG the MaRketPlaCe oFFeR A FUNDAMENTAL APPROACH TO CUSTOMER PATHS

BEST PRACTICE

•���Making�customers�aware�there�is�a�marketplace offer:

Via a dedicated tab

Via a homepage space

Via clear price reading on product page

Via purchase confirmation page

•���Reassuring�customers�the�customer�on the quality and seriousness of this extensive offer through dedicated pages where the conditions of use and sale are clearly and explicitly exposed

•��Guaranteeing�the�customer�a�trouble- free after sales service for all sellers

•���Making�the�marketplace�available�in�store, either through salespeople or self service and proposing dedicated corners for top sellers

ENHANCING THE IN-STORE MARKETPLACE OFFER

ENHANCING THE ONLINE MARKETPLACE OFFER

Asos Homepage

Fiche produit Fnac.com

La Redoute conversion funnel

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27

keY FeatuRes oF a MaRketPlaCe PlatFoRM

• Provide multiple uploading tools (CSV, Web Service ...)

• Provide a dedicated hotline in case of technical issues

PRODUCT CATALOGUE INTEGRATOR

• Guarantee secure payment environment

• Strict control on buyers and sellers (fraud, hacking ...)

TRADE SECURITY

• Easy-to-use rating system for customers and sellers

• Highlighting most relevant comments (rated comments)

SELLER RATING

• Statistical analysis tools to drive business decisions

• Tool reliability and interface with sellers’ IS to optimize processes

ORDER TRACKING

• Flexible interfacing with existing operator’s IT System to reduce time-to-market

• API made compatible with e-commerce solutions provides added value

API INTERFACE

• Diversification of payment methods appears as a powerful conversion lever

• Payment tools need to be flexible to ensure seamless connections with the Finance IS

PAYMENT TOOLS

• Fast data sync (product, price, availability ...) between FO and BO to ensure accurate stock management and on-promise delivery to customers

FO/MO/BO INTEGRATION

• Technical integration with solutions such as Lengow or Neteven to improve visibility on comparison shopping engines and facilitate catalogue imports

BROKER’S COMPARATORS

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WhiCh PlatFoRM to Choose FoR MY MaRketPlaCe?

• Do requirements justify developing an in-house solution?

• What level of customization do I want to offer to my sellers (standard or shop like Priceminister)?

• What kind of Back-Office functionalities do I want to provide to my sellers?

• How to integrate the e-commerce platform with the existing technical architecture?

• Specific marketplace development implies important time and resource costs.

• This choice is usually made when:

Operator has important and qualified internal resources to take the lead

The requirement of the operator is very complex

The operator’s application system belongs to its strategic orientations

• The technology’s level of native functionality provided determines how much customization is required, depending on the complexity of the requirement

• Complex integration to existing application highly impacts time-to-market and CAPEX

• The compensation-based model (subscriptions, sales commissions) should be carefully analyzed considering expected revenues to set the breakeven point?

• What are the integration possibilities with the existing tools (available API)?

• Which of the standard features provided by each solution meet my requirements?

• What is the scope of customized developments?

• Which tool is best suited for my trade volume?

• What maintenance services are provided by the different solutions?

SOLUTION SELECTION

SPECIFIC VS STANDARD SOLUTION OUR RECOMMENDATIONS

SELECTION CRITERIAS✔

ReCRuitinG stRateGY and selleRs ManaGeMentDepending on their objectives, each marketplace has its own approach: professional and private sellers (Fnac), professional sellers only (La Redoute), free (Amazon) or restricted (Carrefour) access.A well-qualified marketplace team is essential to develop good daily relations with seller - partners.

• Work on the mapping with the site’s product datasheets and monitor their quality

• Work with a flow integrator (Lengow, Seller mania ...) to manage product catalogue import and order export

INTEGRATE THEM QUICKLY• Seller recruitment is a time-consuming

activity

• Having an expert and available team is a reassuring factor for sellers

DEDICATE A TEAM

• Identify top sellers (product catalogue size, online visibility ...)

• Select them according to specific criteria (rating, turnover ...) to avoid quality problem regarding the website’s image

TARGET EACH MARKET LEADER

• Create collaborative spaces per market for sellers to let them share best practices

• Retain the best sellers by monitoring KPI’s (customer response time, acceptance rate, order fulfilment rate...)

FEDERATE THE COMMUNITY

• Develop account management through individual performance monitoring of the best sellers

Improved performances through dedicated operations

OPTIMIZE THE PERFORMANCE• TOP sellers are a strategic element of the

marketplace

• Negociating with them is a necessity

BE A MERCHANT

MANAGING

SELLERS

RECRUITING

29

30

Philippe CorrotMirakl CEO

“In 100% of cases, integrating a marketplace in an organization has to be supervised at its highest level. As an example from one of our clients, the CEO himself contacted the first sellers and thus sent a powerful message not only to future sellers but also to the whole company.”

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the Main keY suCCess FaCtoRs oF a MaRketPlaCe

Human resources & knowledge

Organization & Governance

1

• Presence of a dedicated independent team integrated within the existing online team.

• For the operator, switching from a “seller” approach to a “buyer” approach

• Implement the digital governance across “Product”, “e-commerce” and “marketplace” management to build a consistent online offer

Business & technology

Tools choice and seller selection

2

• Implement a robust, agile and customer-centric platform to facilitate the model’s scalability

• Identity and win over the market’s top sellers to propose a competitive offer (qualtiy, price and product availability)

• Retain sellers through advanced performance and pricing monitoring tools

Trust & reputation

Marketplace development ?

promotion ?

3

• Internally, reassure the teams by sharing on the issues and challenges and ensure they remain involved.

• Reassure customers on the relevance and complementarity of the marketplace offer by emphasizing the trusted third party approach

• Communicate to sellers on the site’s differenciating assets (size/quality of audience) and service offer (delivery methods, in-store access to offer...)

ConClusion:WHAT COULD BE THE TRENDS FOR THE UPCOMING YEARS?

The last 3 years were marked by the arrival of brick & mortars on this market

With major advantages to compete with pure players: brand image power & distribution network, important financial resources....

A necessary transformation (even disappearance) of second-tier pure players: already initiated by La Redoute which is now refocusing its core offer on fashion and decoration markets

Seller identification and control processes will be reinforced to comply with anti-fraud and anti-money laundering

The rise of service marketplaces will foster the creation of new, less protected jobs (free-lancers versus permanent contracts) and will quickly raise the issue of redefining this status, or that of the permanent contracts

Retailers / operators should re-work their global offering (web & in-store), focusing on their core offers, improving purchasing conditions and concentrating on profitable categories. Amazon has given up its large appliances to its marketplace, Cdiscount has done the same with cultural products

Generalist sellers will tend to giwe way to more specialized sellers with a broader, more competitively-priced offer

In some markets (appliances, computers...), revenue from marketplaces will be significantly higher than that of the in-stock offer. To increase their physical presence at a lower cost, the best specialized pure players will create corners on the retailers’ premises, taking advantage of the surfaces freed through the overhaul of the in-stock offer (eg BestBuy in the US)

The marketplace offer will be available in store through the department managers’ tablets (who will receive commissions on these sales) and through the click & collect order collection desk (ex: Argos)

A SIGNIFICANT PROGRESS OF BRICK & MORTARS PLAYERS

A STRONGER LEGAL CONTEXT

A NEW OFFER MANAGEMENT

BETTER INTEGRATION WITH OFFLINE OFFER

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aBout the authoR

For nearly 11 years, Nicolas has been working on corporate management-sponsored projects, building up on the experience he acquired with major specialized retailers (BtoB and BtoC), consultancies and startups.

Focusing on client issues and delivering ROI, Nicolas is an expert in designing, launching and monitoring e-commerce websites, whether on the front office side or middle and back office side (platform, logistics, customer service, finance).

He has recently helped the management of FNAC and CarrefourOnline to launch or optimize the performance of their e-commerce and marketplaces.

CGI is the fifth-largest independent business processes and IT services provider in the world with nearly 65.000 collaborators across 40 countries.

Our business consulting division helps corporations in gaining insight into their transformation projects and to execute them across their organizations, processes and IT systems.

They rely on our functional expertise to improve the efficiency of their back-office production and support functions, and on our ITC consulting expertise to take advantage of new technologies with ever-shorter maturity cycles.

Whether to contribute at key moments of the process, to lay the foundations of a program or to take over entire execution streams, our teams are committed to our customers.

Nicolas RéquillartManager of the Performance and Digital Innovation offer at CGI Business Consultingnicolas.requillart@cgi.com +33 6 38 40 62 60

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Appendices

35

WeBoGRaPhY and thanks

SOURCES

THANKS FOR THEIR CONTRIBUTION

For supporting

Corinne Fortuny, VP CPGR

Arnaud Cartigny, Partner

Christine Dollfus, D. Mkg

For contribution to the development of the white paper

Marie Coulon, Pierre Rognion & Yanis Sif, consultants CGI BC

FEVAD, July 2015, e-commerce review at T1 2015

FEVAD, September 2015, e-commerce review at T2 2015 Médiamétrie/FEVAD, March 2015, « Baromètre Multicanal et comportement d’achat »

IBM/Mirakl/Sorgem, February 2014, Barometer « Perception des marketplaces en France »

Mirakl, March 2014, « Marketplace: l’e-commerce de demain »

Sucharita Mulpuru, May 2012, Forester, « Why every retailer needs an online markteplace »

SQLI, July 2015, « De l’Eldorado à la Californie: 10 questions

incontournables pour créer son projet Marketplace »

Internetretailer.com, June 2015, « Amazon marketplace sales double 2014 »

Forrester, May 2012, « Why Every Retailer Needs An Online Marketplace »

Lengow, 2013, « Dopez vos ventes grâce aux marketplaces » VNC Online, July 2015, « Livre Blanc Marketplace : J’y vais, j’y reste, je développe »

Iziflux, 2014, « Vendre plus et mieux sur les marketplaces »

Iziflux, 2013, « Marketplaces : mode d’emploi »

Comscore, 2014, « U.S. Digital Future in Focus »

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THANKS FOR THEIR PARTICIPATION

Hugo Mulliez, Artsper

David Schwarz, Carrefour Online

Alain Keravec, Fnac.com

Benoit Feron et Luc Falempin, Izberg

Frédéric Maus, La Redoute

Philippe de Chanville et Christian Raisson, Mano Mano

Philippe Corrot, Mirakl

Nicolas Michel, AS Discount

Tony Montbroussous et Sébastien Bourrut Lacouture, Expansys

Jonathan Schmidt, GlobalConnect

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FOUNDER AND PRESIDENT OF ARTSPERinteRVieW : oF huGo Mulliez

Launched in 2012, Artsper is a marketplace specialized in contemporary art work market.With more than 100.000 visits per month, the start-up set his sight abroad.

What was the genesis of the Artsper project?The website was launched in 2012 and now includes 10 employees. Today, 10 000 works are available on the site. The average basket in 2015 is 1500€. We work only with art galleries, which play talented selector’s role on the market, to be able to reassure our buyers on the quality of the sold works. Art galleries have complex business models: they need to develop their online visibility. The promise of Artsper, for our galleries partners is to be a contributor of visibility, business and customers who cannot be touched offline. Artsper development and launchThe marketplace allows solving problems of production, sourcing and logistics. The idea was to penetrate a market which had not been disrupted yet. Marketplace in art market enables proposing a worldwide offer.

IT plateformArtsper was developed in intern because existing solutions at that time were not adapted to start-up. We are organized on Agile method which allows us to structure the implementation stages.Controlling technology is a key factor of success for the marketplace because a marketplace website is not a simple e-commerce website; it requires strong and particular features. We also developed web communications tools to help galleries to begin with digital, starting with emailing.Besides, the role of marketplace operator is to be a trusted third party, thus it imperatively must win the trust of customers for actually purchasing. Reinsurance in user experience is criticall.

Selection and management of sellersGalleries are selected according to artists they propose and fairs they participate in. Our commissions on sales are 15 %. A lot of awareness-raising still needs to be done to make gallery owners accept online transparency. Many Art market practices were questioned to allow galleries to go online. Customers are ready for online art purchase, whereas the brands have not been so far.We try consequently to evangelize galleries on best e-commerce practices, in particular at the customer service level. Today, French galleries are more focused on their image whereas English galleries have gone furthest in their e-commerce approach and therefore are data oriented (UV, conversion rate...).

Pre-launch advice In order to get a robust website, it must be kept in mind that it implies investing the needed budget or developing its own marketplace from scratch.If you are satisfied with the product when you bring it out, it means you have brought it out too late. It is necessary to bring out quickly a product and to develop it step by step.Do not manage logistics can be a true situation if sellers are not sensitized to logistics and after-sales services issues. If you are in this position, you must evangelize enough your partners regarding those points.In my opinion, future of marketplaces will tend to gravitate around niche markets, with one leader by market.

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FNAC MARKETPLACE DIRECTORinteRVieW : oF alain keRaVeC

The Fnac marketplace registered an increase in business volume of 25 % in 2015 T1. It represents more than 17% of Fnac.com sales.

What is your vision of marketplaces?Marketplace is an economic reality, not only a trend. This is a new model now unveiled in the French e-commerce environment. Today, half of the 20 French best e-commerce websites have developed their MP. The marketplace is convenient to strengthen an existing offer but also to develop niche markets and allows preventing unavailability and stock shortage issues without financial risk on purchase investments.The marketplace enables customer reaching diversified offer and prices, keeping the same quality of service desired from FNAC customers.

What is the genesis of the Fnac marketplace project?FNAC willed set up a Marketplace in order to provide customers a wider range of products. This will is rooted in the same pursued goal: increase customer satisfaction. Partners are selected on reliability and quality of service they provide.Besides strengthening an existing offer, the marketplace allows to be a laboratory of ideas to test new range of products avoiding major risks of purchasing stock.

Difficulties met during the launch: Few difficulties were met because of good internal communication, allowing this project to be supported by the company management and teams from the beginning, and because of an high level of control on sellers, thereby ensuring the same quality of service as Fnac website. Allowing project integration implies real implication from all teams.

Risks incurred during the launch of a marketplaceFew risks exist because marketplace inherent model is a Win-Win model between the seller and the marketplace. It appears as risk free for the seller because he keeps control on his offer and only pays commission on sold products. Monitoring sellers’ quality of service is essential for a marketplace in order to prevent risk of tarnished brand image. Implementing minimum controls on sellers may limit the risks. Customer rating is a natural mean to filter irrelevant sellers and to value the best.

IT and UX integration FNAC acquired SplitGames, a video game marketplace. IT platform integration was progressively made over several months. UX integration was naturally made by integrating

sellers in existing product pages. There is no differentiation between marketplace and FNAC stored offers. Customer benefits of an exhaustive range of the products proposed directly by FNAC or through its seller partners.

Selection and management of the sellersOur main goal is proposing the right tools for buyers and sellers guaranteeing secured transactions. The marketplace model appears as self-managed: each transaction leads to seller rating and enables a quality of service control. The FNAC marketplace is available for professional and individuals sellers, allowing proposing adapted offers to every type of customers.

What evolution for marketplaces?The future of marketplaces will be cross-channel or will not be at all. The big strength of the FNAC model resides precisely in the synergies between web and stores, differentiating us from pure player competitors. It is necessary to create a appropriate integration conditions and making it understandable by the customers. It is one of the keys of success.

What are the other key factors of success?Get top management and teams’ support: an education and evangelization work is required in everyday work life. While the marketplace remains a recent phenomenon that must not be undergone by the teams, it should imply to measure all benefits. IT and UX are key elements of success: both reliability and ergonomic of provided tools to sellers and buyers are essential.

Advices for a company willing to create or integrate a MarketplaceYou should not hesitate to be ambitious and attribute the needed resources in the marketplace development. This will contribute to give credence to the activity and make sellers come on the marketplace..

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FOUNDERS OF IZBERG

inteRVieW : BenoÎt FeRon and luC FaleMPinG

Izberg is an e-commerce marketplace solution, available in SaaS.

Izberg presentationWe initially wished to create our own marketplace in fashion for women, Modizy.com. In those days, we did not find a suitable solution for our need.We consequently developed Izberg. Izberg is the only e-commerce marketplace solution allowing whether creating a marketplace “from scratch” or integrating a marketplace to an existing e-commerce website. Then, Izberg connects as well existing e-commerce sites (adding a marketplace approach) as not transactional websites. Our solution is fully available via API, which provides entire flexibility.  Vision of Marketplaces Beyond the term marketplace, it is all about connected e-commerce. Everything is about to be connected: physical environment, digital, points of sale … A marketplace appears as a central platform putting through buyers and sellers, as an offer aggregator that provide a single entry point for all these actors. To summarize, a marketplace can be compared to shopping malls. What is interesting about marketplace model is you can whether add or delete thousands of products easily, according to their sales performances, knowing that 20 % of seller catalog represent 80 % of its turnover.

According to you, what expectations can be made about marketplaces evolution?The main issues for services marketplaces are linked with temporality, geo-localization and CtoC services provided.E-commerce actors understood the mains takes of this business: allowing important costs savings and generating additional margin. “First Mover advantage”: the first actor on the market will aggregate competitors’ offers, absorb majority of web audience and become a leader on the whole market.Marketplace model is not about e-commerce automation; it is all about scalable e-commerce, which allows making fast moves while not being slowed down upon inventory management issues.

Marketplaces are predicted to be a way to diversify media website incomes enabling them to monetize audience, what appears as real growth driver. It represents a great opportunity for media websites in need of economic model renewal. Capitalizing on in-depth customer knowledge, they will be able to propose relevant contents. Therefore, selection of sellers on the marketplace can be further refined. In the end, mix contents and shopping seems inevitable. The largest e-commerce websites (like Asos or Zalando) have already bet on editorial, if media do not engage on e-commerce model, they will be obsolete soon.Many sectors, that we do not look at, will be impacted with e-commerce and marketplace concerns. We are in a digitalization phase of activities.   What are essential factors to ensure marketplace success?There are 3 key competence centers for ensure marketplace success: Business development and account management (management of sellers), Marketing (communication, CRM and optimization) and IT (marketplace connectivity is a key factor of success). According to us, you have to options, fully engage on the project and provide real customer experience, or simply do nothing. Customer experience must be unified to benefit from brand image and make customer confident with you. Sellers need to find suitable marketplaces according to their objectives and vice versa. You should be aware selling on marketplaces implies time, investments and specific skills. Finally, you will need to reach a critical mass of sellers and customers to allow you entering in virtuous circle of marketplaces. Sellers are needed so that the buyers come, and vice versa. What make management of these sellers essential: you must define seller quality criteria and facilitate seller networking.

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LA REDOUTE MARKETPLACE DIRECTORinteRVieW : oF FRédéRiC Maus

With almost 6 million unique visitors a month, La Redoute was referenced as the 7th e-commerce actor in France in 2015 T1. Launched in 2010, its marketplace has nearly 450 e-sellers.

How was conception and launch phase of your marketplace? La Redoute launched its own marketplace in December 2010. We have made the choice to develop our own platform since, at that time, there were no rugged solution.La Redoute used Merchant Tree solution, to import product catalog because of its simplicity of integration to existing infrastructures. The marketplace has successfully demonstrated income opportunities lead by new business models. It enabled us to quickly widen our offer while rationalizing La Redoute branded offer in order to focus on our core offer: Fashion and Home Decoration. How La Redoute manages the balance between its own offer and the marketplace one?The marketplace allows new product tests while maintaining a ROI approach. We debate with our buying and logistics teams in order to identify the optimal solution for customer, seller and La Redoute. Our logistic platform allows us to optimize the management of some product categories. Relying on sellers’ logistic capacities, as far as possible, when more relevant on a product category. Hybrid model can occur where products are both sold by La Redoute and our sellers on the marketplace.

What is your recruitment and facilitation policy for sellers? La Redoute seeks to become the biggest online store department for Fashion and Home Decoration with leading brands in their environment. In order to achieve this, we set up hyper-elitist recruitment process. We aim to work with only industry leaders, reputed actors for their product quality and customer service professionalism. Thus, clients perceive coherence between customer services provided by La Redoute and the one proposed by its marketplace sellers. Our approach is recruiting these top actors and dedicating sufficient resources to support their revenue growth.

How is organized your marketplace team?Our marketplace team constitutes a separate business unit within our organization. A business developer team has to recruit new target sellers. Our account managers ensure optimization of our sellers’ incomes. The R&D is constantly seeking for innovations to enhance our seller and customer experience. Finally, our IT team focuses on the correct integration of the marketplace within the La Redoute IT infrastructure.

Which are, according to you, the key success factors for a marketplace launching? By contrast, which are the pitfalls to avoid? The equation of a profitable marketplace lies in the alchemy between the access to a critic audience, UX quality and customer service, intern governance and a ROI culture.First of all, it is essential to control economic equation of the marketplace. The challenge is to acquire a large and qualified traffic, with controlled costs, while proposing attractive enough commissions for sellers. Governance matter is also central.

A strong sponsorship from Managing Directors is essential if you want to start this new activity.Evangelization of company directions should assure a model will not replace another but complete the offer provided to customer. The first threat is considering the marketplace as a miracle activity. From an external point of view, the marketplace has a cash-machine image which needs a very few internal resource investment.

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LA REDOUTE MARKET PLACE DIRECTORinteRVieW : FRédéRiC Maus

However, efficiently manage a marketplace needs a real expertise, which require to have specialists able to bring value for customers and sellers.Choice of product categories is key :categories deviating too far from core offer can be fatal for the brand image. Sellers’ inadequate quality product offer or inadequate service quality can strongly degrade the e-retailer image and generate consistent income losses.

How do you choose new categories to launch?La Redoute strategy is focusing on its core offer: textile sector and household for female target market. We seek to work with top sellers of this universe in order to propose the best quality offer to our clients.We have recently launched two new categories: grocery and wines. These ones are complementary to our offer and match with our brand image. Additional benefit including complementary categories is allowing customers to get all what they want on the same website.

What is your vision of international marketplaces? France is an exception when we look at international marketplaces. Indeed, we are the only ones to have actors, able to compete of competing with Amazon, while in many countries, the

American leads the market almost alone. We are convinced of marketplace model potential abroad this is why we are about to open our platform in 20 countries in 2016, countries where we are involved in with our core offer.

What is, according to you, the future of marketplaces? The current trend of marketplace increase will inevitably involve a market skimming. Besides, e-commerce actors will have to standardize services between website and marketplace. Make marketplace sellers able delivering products in relay points is a new opportunity for current sellers. More generally, integrate sellers to Click & Collect services appears as a new stage in implementing cross-channel customer paths.

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MANOMANO CO-FOUNDER (PREvIOUSLY MONECHELLE.FR)

inteRVieW : PhiliPPe de ChanVille et ChRistian Raisson

Can you tell us about the genesis of monEchelle.fr? We used the marketplace model because of several advantages: low start investment, large IT scalability, ability to quickly reach the breakeven point. Moreover, we processed by eliminating with other potential models:No e-commerce site possible, given the economic equation complexity. E-commerce is more a logistics business than a trader one.- No media website (few sites are highly profitable with a business model based on advertising)We quickly recruited experts in traffic acquisition (SEA and SEO), allowing us to obtain 1.5 million unique visitors monthly. This qualified audience is a powerful negotiating leverage with our merchants to obtain competitive prices and to attract even more customers. Why did you choose to develop your internal platform rather than relying on an existing technology? In 2013, there was no solution with a suitable business model for start ups. And our job is providing an intermediation service, including robust and agile functional technology platform, for both customers and sellers (we can affect neither the price nor the logistics services). If we have the same technical product than our competitors, what makes us different from them?This is why we decided to build our own solution in order to benefit of a real competitive advantage.To start-ups wanting to start in this way, I would advise to recruit developers and build their own technical solution.Resorting to external service providers is not productive, in my opinion, because these companies will make themselves essential and your teams will not capitalize on technical expertise.

What do you see as the key factors for success in launching a marketplace? What are the main pitfalls to avoid? Two factors are essential:- Humans: the quality of execution is fundamental, first because of time-to-market view but also because of costs, given to margins smallness.- Market size you want to entry: marketplaces are particularly characterized by volume of issues from whether regarding offering, audience and market size you are operating on. The online DIY market, booming, has a weight estimated between €3b and €4 billion over the coming years in France. In addition, Internet penetration of this sector remains very low (about 3%), implying good prospects for the future.The marketplace business revolves around two main activities: seller sourcing and customer acquisition.The main difficulties we encountered are related to traffic acquisition issue which requires large investments with a daily accurate control in order to maintain a ROI strategy.

Collaborative marketplace dedicated to DIY and gardening, in 2 years, ManoMano made more than €40M sales reaching a level of 200,000 customers” by “Within the last 2 years, this collaborative marketplace, dedicated to DIY and gardening, can boast about its 200,000 customers generating more than €40M in revenue.

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What is your vision of pure players’ marketplaces and e-retailers developing their own marketplace? The e-commerce marketplace model (Amazon model) can go against seller interests. For retailers, the marketplace is a laboratory allowing them to distinguish best performing products on the market. Then, they use their bargaining power to get competitive prices from sellers’ suppliers and begin to supply their own offer to compete directly with sellers. A marketplace pure-player never tries to compete with its sellers’ offer which appear as its true partners. Our revenues are made exclusively upon commissions. We set up, for free, several marketing services to maximize our sellers’ sales. The conclusion is simple: our results are directly correlated with our sellers’ ones.

What is the future of marketplaces? The most relevant market segmentation is all about splitting specialist and generalist actors. The product categories will be shared between these two players.Products that require specific expertise according to customers will revolve around vertical marketplaces, which propose a product offering wide enough and a powerful community. The product categories already settled in e-commerce universe, bringing low margins for sellers, would be provided on generalists’ marketplaces. On the one hand, temptation of diversifying its product categories can be attractive for retailers. In the other hand, it can appear as an important risk taking its activity away from their core business. Indeed, brand is associated with specific products universe in customers’ mind who will call for an expertise. Some retailers could lose this competitive advantage if they force diversification.Second-hand market is not a real issue in our market (tooling represents 8% of CA value) while BtoB or personal service markets could lead significant growth.

MANOMANO CO-FOUNDER (PREvIOUSLY MONECHELLE.FR)

inteRVieW : PhiliPPe de ChanVille et ChRistian Raisson

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inteRVieW : PhiliPPe CoRRotMIRAKL CEOFounded in 2012, Mirakl supports its customers in their marketplace projects by offering Mirakl Marketplace Platform© solution. Mirakl has now over 55 customers in 11 countries.

Company PresentationFounded in 2012 by Philippe Corrot & Adrien Nussenbaum, Mirakl supports equally world largest retailers and startups or media groups in their projects of Marketplace, offering its solution: Mirakl Marketplace Platform©, the most advanced platform on the market. Mirakl has now more than 55 customers in 11 countries, including Galeries Lafayette, Best Buy, Darty, Eprice, Woolworths, or Game. With offices in Paris, Boston and London, Mirakl is able to bring its expertise to most of all large global players, helping them entering in e-commerce future.

Vision of MarketplacesOur vision of marketplaces is based on three pillars: technical, commercial and marketing stakes. The technical topic is firstly about the platform which allows managing sales, inventory and ensure compliance with customer service quality. Commercial topic mainly corresponds to sellers’ recruitment and animation. This appears as a completely new activity for operators, because it is not the same to thing working with a seller and a supplier. This is not the same type of contact or the same business relationship. On a marketplace, the seller may equally be an individual or a large firm. The purpose of a marketplace solution is to simplify the work of sellers: small sellers / individuals interact with the solution via the Mirakl interface, professionals sellers interfaced their own system with Mirakl API. The last pillar is the marketing, meaning finding customers, differentiating and ensuring offering the right product at the right price with good service quality.

Tips for a business creating or incorporating a marketplaceWe must not underestimate importance of the 3 fundamental pillars (technical, commercial, and marketing). The technical platform is the most decisive investment because it is the most engaging: in case of error, a delay or even project abandonment is inevitable. Platform also allowes you to improve agility.We should consider the technical platform as the marketplace backbone.The challenge is you can’t anticipate technical requirements of your future platform when you do not have enough knowledge upon marketplaces. As far as it is difficult to anticipate

the future needs, in the context of an internationalization example. The important fact is platform flexibility. Thus an agile platform will enable to adapt itself immediately in case of change in strategy, in contrast with internally developed platform, based the original strategy, which therefore would require significant upgrading effort. It is Mirakl strength, this platform was conceived by business experts. Deployment investments would not be underestimated rather available resources should be carefully considered: we would advise limited resourced player to use open source functional elements (eg PCM) and ensure an effective core of the marketplace platform.Concerning seller recruitment and marketing, you can work with a business developer or a dedicated team according to your resource. The key word is flexibility and agility.

What are your recommendations for the organization?A performing platform is necessary but insufficient: change management is essential. You have to be supported by experts, what we propose our change management offer. The marketplace management is a completely new business, far away from initial activity. Collaborate with sellers is extremely different from working with suppliers. You need a dedicated marketplace team in order to work with marketing and commercial teams in synergy. Most of all, the marketplace must be supported at the highest level: the marketplace department must be attached to the executive committee or to the e-commerce department. In 100% of cases, integrate a marketplace in an organization is not easy and must be managed at the highest level. An example of one of our clients, the CEO himself participated in the recruitment of merchants, the message was clear to the teams.Marketplace integration may be a challenge as e-commerce integration was. Today, nobody would challenge a strategy including e-commerce concepts.

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It may take time. Even Amazon marketplace was challenged a lot at beginning while it appears today as a core element of the firm’s strategy. It thus seems necessary to set up dedicated teams; these teams must remain small, what is possible when the technical platform is powerful and flexible. There will be no profitability with non automated tasks. There is a very thin economic balance to find in order to run the marketplace.

How to explain the buzz about marketplaces, both on the operators and customer side?This buzz can be explained because e-retailers have understood the necessity of refocusing on customer centric need by proposing large product choice, attractive prices and flawless service quality. E-commerce used to stick on traditional VPC, inheriting its weaknesses without its strengths. The marketplace model takes its strengths from Internet, with intermediation, making costs savings (logistics, storage), finding profitability and margin, making everybody winning: operator, seller and buyer. In Asia, many companies firstly engaged directly on marketplace project, without having a previous e-commerce experience: Alibaba, T-Mall, Tao Bao, Rakuten, Flipkart, SnapDeal, Amazon Inde, etc. while in Europe, traditional distribution brands took time before understanding they had an interest in launching their marketplaces. Marketplaces is incremental because it creates new business while strengthening the existing one; it is not cannibalization; and contrary to what most people think, it will not hinder e-commerce activity. Every analyzes show it. In a Fevad report, figures highlight the fact that e-retailers with one marketplace have twice as much growth than without one. This easily demonstrates the synergic effect. Letting sellers sell references you cannot be competitive on means gaining a more significant margin than if you sell these references yourself, but in the same time you keep the customer within the brand universe. Customers will never buy an inaccurate priced product. There is therefore no cannibalization when marketplaces are well monitored. The marketplace platform should allow a smart product monitoring, first by the marketplace team and then by the trade teams

How a seller can make a difference today? Obviously on repositioning customers at the heart of the marketing strategy. A seller must be capable «of providing the customer with what he wants, at the good price and with the right quality of service (especially on delivery and return processes). The marketplace leverage is based on its customers. The marketplace model is very convenient because it offers a quality service to customers while bringing profitability for both operators and sellers. Like Sam Walton used to say: «There is only one boss. The customer. And he can fire everybody in the company from the chairman on down, simply by spending his money somewhere else».Let’s take an example of one seller which makes the difference: Farfetch (UK high-end mode marketplace), proposes, in case of product return, that a DHL agent comes to customer’s place in order to take the package. This is more expensive than normal service but the purchase experience appears far improved. Another way is to propose innovative services, for example Jet.com, who reinvents the buying club: it is a marketplace, but it is also a buying club as FNAC could be it in the fifties.

What are the big trends about marketplaces in the coming years?Internationalization: it is all about being and selling everywhere. Technically, this is made possible by multicurrency management on marketplace solutions. Brand image and cross-channel matter: brands settled in physical stores (for example Apple, Bose, Samsung and SFR have their own in-store corner and sellers at FNAC, or Intel in Best Buy stores, allowing an easy order process on marketplaces from stores).Hyper-specialization: operators who will be able to provide proper purchase experience and high qualified services will be the ones making the difference. On the other hand, sellers expectations rise towards operators regarding the level of services they provide. Sellers who will be able stand out will be the ones that offer the good product at the appropriate price. 

inteRVieW : PhiliPPe CoRRotMIRAKL CEO

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“AS DISCOUNT” FOUNDER AND DIRECTORinteRVieW : niColas MiChel

Company overview AS Discount, founded in 2005, is a generalist e-retailer carrying out sales in its own website as well as most of marketplaces (Cdiscount, Amazon, Fnac, RueDuCommerce, Piximania, Priceminister, Darty, Carrefour, Ebay and La Redoute). Sales are currently being launched in Europe. The company, a sales’ leader on marketplaces, has 50 employees with a sales revenue up to €20M which is strongly growing (€0.2M 5 years ago). Since the beginning, company’s strategy was to maintain a long-term view with profitable growth; it has always been efficient and has never given up that view in order to increase its sales revenue.

Why selling on marketplaces and not only via a e-commerce website?Since 2005, the strategy has been to go through marketplaces in addition to the e-commerce website (At the time, eBay and Amazon were the only players). Marketplaces enable companies to have total and instant cost and profitability control, to reach the majority of the French audience without any advertising investment, to generate feedback and finally to reach other European markets. AS Discount strategy is based on instant profitability seeking. Today, 80% of the sales revenue is generated from marketplaces thanks to a precise profitability control. The company is supporting the launch of new marketplaces aiming a presence in most of them.

What specific features distinguish marketplaces today?marketplace. Thus, we may decide to sell some products on a specific marketplace because of its good referencing on specific range of products. Operators have also different strategies to launch their product catalog on the marketplace. Finally, if they all offer the same basic functionalities to sellers, API is not equally reliable upon from one operator to another, and some functionalities, such as repricing, do not exist everywhere.Our choice to create or not a product sheet on a marketplace on a certain product depends on the marketplace functioning which we know thanks to our experience as well as the opening marketplace strategy and the adequacy of our perspective with the marketplace view.

Do you use some specific editors’ services or marketplace operators?Everything is 100% in-house developed. With marketplaces development and highly sophisticated automated systems, it is essential to maintain relevance in terms of tools and to have its total command. There are high risks for venders associated with functionalities, such as repricing, not being fully controlled. Thus, by using our tools, our pricing is automatically adapted in real-time depending on several specific settings of different marketplaces. The offered services of marketplaces or aggregators are standardized. They are more relevant with small vendors.

What is your vision of the sector’s evolution (operators and venders’ side)? In recent years, there is a noticeable increasing of the marketplaces’ number, and it is going to continue, most of high-audience websites are intending to seek profitability through a marketplace. At the same time, the operator’s requirements’ level towards vendors in terms of customer satisfaction is highly increasing. This will lead to a vendors’ number regulation in marketplaces and it will create a balance between operator’s offer and marketplace offer in the e-commerce websites. In fact, some operators will inevitably seeking to reduce the weight of marketplace in their online turnover fearing to lose their identity. Today, lots of sellers are not profitable and give into the appeal of quick & easy revenues. The challenge for these actors will be the ability to better manage margin and profitability in order to remain in business.

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inteRVieW : tonY MontBRoussous MaRketPlaCe diReCtoR AND SEBASTIEN BOURRUT LACOUTURE ExPANSYS OPERATIONS DIRECTOR

Expansys has 52 e-commerce websites all over the world with sales revenue up to €100 M (€45M in Europe).

Company PresentationExpansys group has been doing e-commerce for more than 15 years. The marketplace team is composed of 3 members. The company, specialized in the high-tech field, has put a step very early in marketplaces market (10 years of marketplace) which has helped it to benefit from the sector’s explosion. Today, we are facing an overloaded market with fierce competition and a margin reduction. The marketplace activity represents 15 to 20% of our revenues. A less part than before because of the strategy change: We went from a strategy of conquest to a strategy of solid profitability and cost’s management. We cautiously manage with the type of products that we put in marketplaces. Our activity is expanding in e-commerce as a white label: Some manufacturers outsource their e-commerce to us IE we manage their marketplace activity.

On what MP are you selling? Since when?10 years ago, we have started in France because it was an accessible and bearer market, then we have entered in a conquest phase, with a marketplaces integration across Europe, starting from Spain and Italy (with Piximania in particular).Our new strategy has led us to focus on the countries where we perform the best; we have then left the Nordic countries (Sweden, Norway and Denmark). In France, we are present on most of marketplaces (Amazon, Priceminister, RueDuCommerce, Cdiscount, Ebay, Fnac, Darty, La Redoute).

Why selling on MP? At the beginning, we went slowly to penetrate marketplaces. With the audience’s loss in our e-commerce website we wanted to maintain the sales volume but selling in a marketplace meant to us providing products which set us apart from competitors. We made a lot of volume but we were not too much profitable because of low margins. Since then, we have made a 90-degree turn by focusing on the sales net profitability. We now adapt our prices (which were legally impossible few years ago) according to marketplaces; this price management allows us to better perform on this channel leading to abandon certain product categories. Our marketplace activity is driving a sales channel to maximize profitability.

What are the specific characteristics (customers, tools, services) of the different marketplaces?Each website has a different public (with different average basket for example) and offers a better visibility for some products. It’s our role to push the appropriate product into the best market. The sellers’ tools are more or less complete, in various prices according to operators. Some of them have more tools to attract customers (mailing, coupons, points, key words ..), but these tools are not free. We can use their services punctually during key periods (highlighting marketing packs and Christmas banners) or using internal budget to test a tool, but globally we stay on a basic product listing and a highlight using newsletters. Likewise, we don’t use external providers and we integrate directly with different API and operators’ web services. On the technical level, integration systems of products are not all equal. They have more or less important manual part for the seller.

Vision of marketplace evolution The marketplace is a channel which will keep growing (In Asia, 70% of e-commerce go through marketplaces) but needs to evolve. Today, there is a big paradox because operators are thinking like sellers websites and they are competing with their own marketplace offer. When the customer will belong to sellers (who will get access to customers’ datas), the activity will be easier. However, the traffic will continue to concentrate in marketplaces.

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GLOBALCONNECT PARTNERinteRVieW : Jonathan sChMidt

Globalconnect commercializes and distributes the brand Sleeper’z in Europe. Their turnover in 2014 was €44 k.

What is your business?My company is Globalconnect which own the brand “Sleeper’z” (sleepers’ online sales and customization). We sell under our own brand in Europe while US supplier sells to merchants and directly on US market. Sleeper’z has exclusivity on these product sales on the European market. We sell and distribute the brand using different channels including marketplaces.

On which marketplaces do you sell?Amazon only. We stopped selling on PriceMinister because the turnover was not satisfying on this platform due to the low number of customers interested in textiles. I think PriceMinister is not made for textile product sales. For example, it is necessary to indicate the product gender (male / female) which is irrelevant for sleepers and implies multiple SKU for the same item. Stock Management is therefore more complex.During Christmas period (since start of November), we achieved 18% of our annual turnover in only 2 months on Amazon.

How was your introduction on Amazon?The catalog integration on Amazon was quite difficult. The tool is not flexible and interlocutors are not reactive enough and often change (high turnover). You have to adjust to Amazon catalog model and product sheet structure. Integration lasted from 2 months and a half to 3 months for 350 references which appears as quite long. With good reactivity of the collaborators, I think a month is enough. We also had to think about the optimization of products sheets (keywords for SEO and category nodes).

Why did you choose to sell on marketplaces?to increase company turnover,to brighten brand visibility,and learn about marketplace vision mainly on IT, logistics / catalog management issues and to save time and energy: it is much more cost effective than approaching physical stores.

Can you describe the main points of attention raised by sellers related to marketplace operators?Sellers look first at commission rates applied by the marketplaces, then at cost simulation tools. We are also evaluating the ability of marketplaces to value products using advertising banners, product-push and rules on the search engine... especially when the marketplace gives us in complete transparency its algorithm for more visibilityPriceminister for example highlights shops instead of product sheets. When a customer is looking for a product, he can get on the seller’s store. We also look at stock management tools. Amazon has a tool for managing levels stock and alert when levels are too low. Actually we are using our, on Excel, which allows backing down stocks on different distribution platforms.

What are the strengths and weaknesses of each marketplace you are working with? On Amazon: the number of customers. Amazon provided a large audience and significant visibility to seller. Amazon various software, such as stock management one and Delivered by Amazon one which allows to reach worldwide market.Priceminister offers an interesting Rakuten points system: sellers earn point for each sale and are able to spend them on other sellers’ products. Priceminister gives the possibility to brand sellers’ images through their stores, which can increase brand recognition.

According to you, what is the main added value of a marketplace vs. other distribution channel? The potential customer reach ! On its own website, we can reach 500 visitors / day.On a physical store, frequentation is geographically limited. On a marketplace, there is no limitation.

47

deCline oF shoPPinG Malls: LACK OF ANTICIPATION REGARDING NEW HABITS

American malls, symbols of consumerism and after World War II growth are progressively closing their doors (from 15 % to 50 % estimating closing for 2030):

• Medium-sized malls are the most affected

• The collapse of this shopping mall model, «where we can find everything», has two main reasons:

Back to city center small stores E-commerce channel growth

In Europe, shopping malls need to adapt in order to face e-commerce impact on their activity:

• Providing new technologies and services: make them appear as a facilitator of cross and omni-channel services.

• Improving customer experience, developing specific positioning and identity

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49

thReduP SECOND-HAND CLOTHING MARKETPLACE

Market :

THRED UP CUSTOMER PATH

Make as quick and simple as possible for seller who only has to sent, for free, clothes to ThredUP via a mailbag.

ThredUP perform clothing sorting and listing. They stores and ships selected clothing (remain clothes are given to charities).

Customer can even give his gains to a charity association if he wants to.

Founders : James Reinhart, Chris Homer and Olivier Lubin

♥1 2 3

second-hand clothing marketplace, exclusively on women’s and children’s clothing Promise: 25,000 brands of clothes, up to 90% discount compared to new products. A dedicated team ensures clothing quality.

UV : 1.8 million in August 2015 VS 700 000 in August 2014

Competitors : Cloakroom Collective, Twice ( eBay) , Poshmark , Tradesy , ThreadFlip , The RealReal

Creation date : 2009

Fundraising : in several rounds, $125M

Investors : Goldman Sachs Investment Partners, Upfront Ventures, Redpoint Ventures, ...

Break even point : non yet reached

50

Jet.CoM hTHE GENERALIST MARKETPLACE WHICH TRIED TO CHALLENGE AMAZON

REDUCTIONS DEPEND ON THE FOLLOWING ELEMENTS:

Quantity and origin of goods: if 100 % of the basket is from one merchant

Reaching a critical mass of orders for the same delivery area: customers agree to group their orders with other customers of the same area

Means of payment used: -1.5% on the order for credit card payment

Delivery time chosen

Acceptance of a non- return policy (instead of «30 days satisfied or refunded».)

Jet.com : la marketplace généraliste qui veut déstabiliser Amazon

Marché : marketplace généraliste accessible via un abonnement qui promet des produits identiques jusquʼà 15% moins cher que ceux proposés par Amazon.Modèle économique : vente abonnement (50£/ an ) + taux commission marchand (entre 8 et 15 %)Fondateurs : Marc Lore (ex fondateur de Quidsi, racheté par Amazon). Date de création : printemps 2015Levées de fonds : en plusieurs fois , 220m$ à date

Effectif : 130 employés, ~700 Marchands au lancement : Sony, Sears, Gap, J. Crew, TigerDirect…

Marketing : 150m$/ an (pubs TV, en ligne, presse, réseaux sociaux…)

51Sources : Bloomberg, Forbes, Inc, Jet, Journal du Net, Re/Code, Wall Street Journal. Crédits photo : KansasCity.com

1. Quantité et origine des produits achetés : si 100% du panier chez un seul marchand

2. Atteinte dʼune masse critique de commandes pour une même zone de livraison : le client accepte de grouper sa commande avec dʼautres clients résidant dans la même zone

3. Moyen de paiement utilisé : -1,5% sur la commande en cas de paiement par CB

4. Délai de livraison choisi

5. Acceptation dʼune politique de non-retour (au lieu du «30 jours satisfait ou remboursé».)

« Faire à Amazon ce que Costco a fait à Walmart en permettant aux marchands de restaurer leur marge tout

en proposant de meilleurs prix et dʼacquérir de nouveaux clients»

Marc Lore, CEO Jet.Com

Les réductions dépendent des éléments suivants :

Jet.com : la marketplace généraliste qui veut déstabiliser Amazon

Marché : marketplace généraliste accessible via un abonnement qui promet des produits identiques jusquʼà 15% moins cher que ceux proposés par Amazon.Modèle économique : vente abonnement (50£/ an ) + taux commission marchand (entre 8 et 15 %)Fondateurs : Marc Lore (ex fondateur de Quidsi, racheté par Amazon). Date de création : printemps 2015Levées de fonds : en plusieurs fois , 220m$ à date

Effectif : 130 employés, ~700 Marchands au lancement : Sony, Sears, Gap, J. Crew, TigerDirect…

Marketing : 150m$/ an (pubs TV, en ligne, presse, réseaux sociaux…)

51Sources : Bloomberg, Forbes, Inc, Jet, Journal du Net, Re/Code, Wall Street Journal. Crédits photo : KansasCity.com

1. Quantité et origine des produits achetés : si 100% du panier chez un seul marchand

2. Atteinte dʼune masse critique de commandes pour une même zone de livraison : le client accepte de grouper sa commande avec dʼautres clients résidant dans la même zone

3. Moyen de paiement utilisé : -1,5% sur la commande en cas de paiement par CB

4. Délai de livraison choisi

5. Acceptation dʼune politique de non-retour (au lieu du «30 jours satisfait ou remboursé».)

« Faire à Amazon ce que Costco a fait à Walmart en permettant aux marchands de restaurer leur marge tout

en proposant de meilleurs prix et dʼacquérir de nouveaux clients»

Marc Lore, CEO Jet.Com

Les réductions dépendent des éléments suivants :

“Do to Amazon what Costco did to Walmart allowing sellers to recover their margins while proposing better prices in order to acquire new customers”

Marc LoreJet.com CEO

1

2

3

4

5

Market : subscription-based generalist marketplace which proposes products up to 15 % cheaper than those offered by Amazon.

Economic model : subscription model ($ 50 / year) + seller commission rates (between 8 and 15%)

Founders : Marc Lore (former founder of Quidsi , acquired by Amazon).

Creation date : Spring 2015

Fundraising : in several rounds, $220M

Marketing : $150M / year (TV commercials, online ads, press, social networks ...)

Staff : 130 employees, ~ 700 sellers at launch: Sony , Sears, Gap, J. Crew , TigerDirect ...

51

is a sPeCulatiVe BuBBle BeinG FoRMed aRound MaRket PlaCes?

Une bulle est-elle en train de se former autour des marketplaces ?

12,610milliards

de $milliards

de $

9,641,2milliards

de $milliards

de $

Comparatif de valorisation

52

SalariésCA 2014Création

141.0006,1 $Mds 1967

Source : JDN* Chiffres en 2009

Airbnb et Uber sont deux exemples de marketplaces communautaires aux levées de fonds records. Leur valorisation a de quoi surprendre, surtout quand on les compare à leurs dates de création récentes : 2008 et 2009. Face à ces valorisations exceptionnelles, on peut craindre la formation dʼune bulle comparable à celle de 1999.

NCNC

2008

SalariésCA 2014Création

29.350*11,1 $Mds1918

NCNC

2009

COMPARATIvE vALUATION

Airbnb and Uber are two community marketplace examples of record fundraisings. Their valuation is quite a surprise, especially if we compare them with their recent creation dates: 2008 and 2009. Seeing these exceptional valuations, we can fear the creation of a bubble similar to the 1999’s one.

Source: JDN* Figures for 2009

10 Billions

12.6 Billions

41.2 Billions

9.6 Billions

NC NC

2008

EMPLOYEES2014 TURNOVER CREATION

141.000$6.1B 1967

NC NC

2009

EMPLOYEES2014 TURNOVER CREATION

29.350$11.1B 1918

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