Breaking Down the Future of Internet Marketplace Success:

January 15, 2015

Looking in the Rear View Mirror to See What is in Front of You

Breaking Down the Future of Internet Marketplace Success

Jim Tompkins
CEO, Tompkins International

To start, here are six indicators of Amazon’s success that can predict the future of retail:

1. The number of units sold on the Amazon marketplace doubled in 2014.
2. Amazon marketplace sellers sold 23% more units on Cyber Monday 2014 vs. the same day in 2013.
3. In 2014, Amazon marketplace sellers from over 100 countries sold products to customers in 185 countries.
4. Chinese sellers on the Amazon marketplace grew 80% in 2014.
5. Holiday deals offered by Amazon marketplace sellers increased 250% in 2014.
6. Units sold on Amazon Marketplaces in 2014 increased 400% over 2013.

So, what does this tell us?

• Items 1 & 2 tell us that Marketplaces REALLY WORK.
• Items 3 & 4 tell us that Cross Border Trade REALLY WORKS.
• Item 5 & 6 tells us that the promotional environment of holiday 2014 was CRAZY.

I find this all very interesting since these are the exact same points that I have made over and over again when discussing Alibaba.

If you look at the most successful internet companies in the US and China you see the same three things:

1. Marketplaces are a big deal, a really BIG DEAL.
2. Cross border trade is a big deal, a really BIG DEAL.
3. Promotions can be huge to an organizations growth and profitability.

To be successful you must turn these factors in assets. The only way to make this happen is to create a plan your firm. To do this, you MUST have:

1. A PLAN FOR MARKETPLACES
   1. What marketplaces should you sell your products?
   2. What products from others should you place in your marketplaces?
   3. How should you handle the supply chain for your marketplaces?

1. A PLAN FOR CROSS BORDER TRADE
   1. In what countries should you sell your products?
      In stores
      Online
      On marketplaces
   2. In what counties should you sell through others?
   3. How should you handle the supply chain for your cross border trade?

3. A PLAN FOR PROMOTIONS
   1. Promotions are marvelous when done correctly, but can destroy a brand when done poorly
   2. Promotions must contribute to Profitable growth, not to unprofitable growth
   3. Promotions need to be done in the context of an omnichannel strategy and not as a knee jerk reaction to competition

So Amazon and Alibaba are both doing many things well.  We need to learn from these giants and put forth a plan for marketplaces, cross border trade, and promotions that allow us to grow both our top and bottom lines.