In the early meetings with our customers, while they're still mulling their marketplace strategy, a remarkable number of them voice the same fear: “We don't want to be like Amazon.”

We've heard that same sentence, in one language or another, more times than we can count. But what is it about Amazon that they find so unsettling: Is it the company's sky‐high market capitalization? Its same‐day deliveries and strong scores for customer satisfaction? What exactly is the downside of resembling a transcendent digital powerhouse?

No, no, they say. It's not Amazon's success they want to avoid. But still, companies have a number of concerns. The first is a common misimpression that the marketplace model is inflexible and will turn them into an “everything store.” In such a scenario, they would forfeit control over quality and selection, losing control of their brand. Worse, in their minds, such an everything store would push them into deadly mano‐a‐mano competition with the dominant platforms.

This “everything store” fear is based on a false premise. Marketplace platforms are not one‐size‐fits‐all. Anything but. Most companies curate their marketplaces using a combination of technology and expertise, retaining control over the sellers, the quality of their products and services, and the overall customer experience.

It's important to keep in mind that marketplaces come in all shapes and sizes. Retail sites, says McKinsey partner Cyrielle Villepelet, fall into five archetypes:

1. Skinny. These sites feature narrow offerings, with a strong focus on core categories of their own offerings (first‐party sales). This was like Amazon in its early days, when it was selling mostly books and music. It's most similar to a traditional eCommerce site, having few of the marketplace risks, but also losing out on the benefits.
2. Retailer‐centric. Again, the focus is largely on first‐party (1P) sales, bringing on sellers only to extend into new offerings, not to compete with 1P. Target and Urban Outfitters are examples.
3. Long tail. These look to sellers to provide more depth in categories they already sell. Weird colors, unusual sizes, items that might only sell to slivers of the customer base. Walmart is an example.
4. Huge. These are the everything stores, like Amazon and Alibaba: open marketplaces with thousands of sellers. They use third‐party assortment to build breadth and depth as fast as possible.
5. Third‐party only. Marketplaces like eBay and Alibaba, which sell nothing of their own. Everything for sale is third‐party. They have the highest assortment possible and carry out minimal curation.

Whichever model you choose, it's important to understand that a new marketplace does not introduce new competition to your business. That competition is already there. Without the efficiency and selection of a marketplace, other players, from digital giants to faster‐moving incumbents, will chip away at your eCommerce business until there's nothing left.

But the deeper concern behind these objections has to do with disruption. Many of these businesses have decades‐old, if not centuries‐old, brands and legacies. Are they ready to switch their focus from the comfortable age‐old patterns that have brought them to this point, the established relationships with vendors and customers and employees, and instead bet on something new and different? Will the switch to a marketplace be painful? What happens if it…doesn't work?

These common anxieties touch on important decisions – first, whether or not to plunge into a marketplace, and second, which approach to take.

It's important to note that the ecosystem of sellers has cha‐nged dramatically in recent years. Millions of sellers have emerged over the past decade, and they include major international brands, from Adidas to Gucci. For many of these companies, selling on marketplaces is central to their online strategy.

So, as you read these words, keep in mind that while a marketplace involves disruption and all sorts of change, it no longer represents a bold or unusual strategy. Marketplaces are mainstream. You've read our own story and digested our arguments. Now it's time to consider how a marketplace might fit into your future.

To navigate this decision stage, it can be beneficial to see how others have grappled with the very same questions. Here, our customers – among them many of the world's most trusted brands –are kind enough to share their stories. In this chapter, we share three case studies of retailers that sell to consumers. In the next chapter, we move to companies in B2B industries, whether they're selling forklift components or industrial refrigeration. In both chapters, we highlight takeaways and the best practices when it comes to making the momentous marketplace decision.

Best Buy Canada – Stitching together stores and a marketplace

For Thierry Hay‐Sabourin, it was an enduring memory. As a student, he was working part time as a sales associate at a leading consumer electronics chain in Canada, Future Shop. One day, a customer came up and asked where he could find the power drills. Future Shop didn't sell them.

The event alone was hardly noteworthy. Shoppers went into stores all the time looking for something the retailers didn't necessarily sell. But Thierry remembers to this day his revelation from that simple encounter. As the customer left the store, the young sales associate realized that the retailer could service his other consumer electronic needs as well. “That stuck with me,” Thierry says. “That customer could be gone for good.”

Thierry went on to a career at Future Shop, which was bought in 2001 by Best Buy. Seeing the growing digital trend, he moved quickly through the eCommerce track, and is now the senior vice president for eCommerce, marketplace, and technology at Best Buy Canada's Vancouver HQ. Throughout his climb, Thierry never forgot the lesson of the man looking for the drill. The first key to retaining customers, and selling them more, was to listen to them and be ready to offer them what they were looking for.

Traditionally, retail's response to this was to anticipate the customers' needs and desires, and to fill large stores with inventory expected to match. Well into this century, Best Buy Canada doubled down on this brick‐and‐mortar strategy. The company held onto Future Shop locations while adding Best Buy stores, often in the same neighborhoods. The two retailers appealed to different constituencies. In Future Shop, where salespeople earned commissions, there was more room for haggling, while Best Buy featured fixed prices and focused more on facilitating than selling. Together, they dominated retail for consumer electronics across the vast country, from the Pacific Coast of British Columbia to St. John's, on the eastern tip of Newfoundland.

But even with their combined display space, there was no way physical stores could effectively provide all the technology someone might want. So, like other retailers, Best Buy Canada dove into eCommerce. The offering provided convenience, especially for those living in far‐flung regions. Yet the offerings on the site were still constrained by what was appropriate and responsible for the company to buy and stock. Shoppers looking for other items would have to look elsewhere.

So, under the leadership of a visionary and innovative president, Ron Wilson, Thierry and his digital team were supported in their push for expansion. First, they extended the lines of consumer electronics beyond what they sold in stores. Then, working with a broad range of partners, Best Buy Canada began to stretch into areas adjacent to consumer electronics, from baby gear and luggage to beds and divans. For most of this, they worked with other retailers and manufacturers on a dropship basis. That meant Best Buy Canada provided the customers and handled the billing, while their partners built or acquired the goods and managed fulfillment.

For customers, this web strategy was a success. “They trusted the brand,” Thierry recalls. Best Buy Canada grew into one of the four most visited retail sites in the country. Revenue grew.

Some challenges, however, emerged. Scaling the business was limited. Each new seller partnership involved hammering out a bespoke deal. This took time. (In the years since, we and others have introduced innovations to remove friction from the dropship model. It is now a key component of many marketplace operations, which we cover in Chapter 5.)

By the time Thierry and his team started talking to us in 2014, they were very familiar with marketplaces. In fact, they were actively investigating it as an opportunity for Canada. A successful marketplace, they saw, required a finely focused strategy and strong support from the top of the company. But building from scratch involved a long and challenging learning curve.

Adrien, who had been crisscrossing the continent in search of customers, encountered the Best Buy Canada team at the far end table at the 2014 Shop.org conference in Seattle. There was an immediate connection, a natural affinity. They were familiar with Fnac, which made chatting easy, and ultimately led to Best Buy Canada signing our first name‐brand contract for a marketplace in North America. This would be a big breakthrough.

For Best Buy Canada, however, the decision to launch a marketplace raised a host of new questions. It would involve a large training initiative in an active effort to align the store managers, merchandising, and sales teams. They were accustomed to managing inventory – the pricing, selection, and end‐to‐end buying experience – and competing to win. Now, the online team was pushing for a radically different arrangement, one that would invite potential competitors onto its site.

The company had to forge a delicate balance. And this is an important point. If you ask us about marketplace strategy, our answer invariably tilts toward what's best for the customer. That's our North Star. A focus on the customer leads to a wider selection, healthy competition, and overcoming the fears associated with change. This maximizes the chance that customers will get what they want at the best price. Happy customers spell growth and success. It's axiomatic.

At the same time, in every company, there are additional important stakeholders and other business levers to consider. In Best Buy Canada's case, the key to the marketplace strategy was making sure that stores remained a central part of the shopping experience. Stores are still the heart of the company, and a valuable asset for the marketplace. For example, they could become distribution hubs. Customers could return items there, and perhaps find something else on the spot. They could get help from the store's tech service crew, the Geek Squad.

The winning solution was to piece together a strategy that maximized much of the marketplace's potential and strengthened the brick‐and‐mortar business.

To ensure success, Thierry and his team built support all the way up to the very top of the company. And the new marketplace, as it turned out, fit neatly into the company's digital strategy. Indeed, Best Buy Canada was readying to drop its double‐store approach. In 2015, the retailer would close its duplicative Future Shop outlets and consolidate behind the Best Buy brand on the ground, online, and in the coming marketplace.

Best Buy Canada's marketplace decision, while a North American breakthrough for Mirakl, was a meaningful move for Best Buy Canada. The next step was to get it up and running quickly.

Catch – From a website to a marketplace

Gabby and Hezi Leibovich were born to sell. After their family moved in 1986 from Nahariya, Israel, to Melbourne, Australia, the family sold from a stand on Sundays at the Wantirna Trash & Treasure Market in the outskirts of Melbourne. As soon as Gabby, the older brother, turned 18 and got his driver's license, he and 12‐year‐old Hezi struck out on their own. They bought imperfect apparel from a nearby factory, and on Sunday mornings, would rush to the gates of the market before dawn to land a good selling stall. Some nights they even slept there in their car. Once inside the market, Gabby, the louder of the two, would stand on a table, shouting at the top of his voice, grabbing shoppers' attention, while the quieter Hezi would handle sales. Their first day at Wantirna, the brothers came back with $700.

It was a good haul, but just the beginning. In the 1990s, the family set up a business selling discounted electronic appliances. And in the early 2000s, when eBay gained traction in Australia, the Leibovich brothers jumped in, each setting up an eBay store. They also sold goods on their own website, DailyDeals.com.au.

In 2006, they came up with an idea. It would be an eCommerce website that would offer one fabulous deal every day. After much back and forth, they dubbed the new site CatchOfTheDay (in later years, known as Catch). Over the following decade, it grew into an Australian phenomenon, with strong financing, automated warehouses, and annual sales reaching $200 million.

Still, as the digital economy expanded into the second decade of the century and giant marketplaces took root, the Leibovich brothers knew they needed a shift. With each year, their website and their hold on the market would be under greater pressure.

One problem with the website and its first‐party sales was that it did not appeal to the so‐called intent shopper, the person who came to the site looking for a specific item. CatchOfTheDay attracted plenty of browsers, people who came looking for surprises and bargains. But intent shoppers who didn't find what they were after, like the man looking for drills in Thierry Hay‐Sabourin's Future Shop, was a lost opportunity.

The website's greatest vulnerability, though, was scale. By 2016, CatchOfTheDay operated large warehouses and stocked 30,000 products. But that was minuscule compared to eBay, which featured hundreds of millions of listings. To expand their offerings, doubling or quadrupling them, CatchOfTheDay would need immense financial resources and more warehouses. On a number of levels, its eCommerce business was constrained.

The Leibovich brothers and Nati Harpaz, their managing director, had been thinking about a marketplace for a while. They often remembered what Jeff Bezos, the Amazon founder, had said years earlier, that marketplaces were “eating the world.” Adding a marketplace function to the CatchOfTheDay site was on their to‐do list. It was something they'd get to eventually, they thought, when their tech team could carve out some free time to develop it.

Those vague plans, however, turned real in a hurry. In 2016, they heard that Amazon was planning to expand into Australia. It was clear to them that a single website, no matter how popular, could not take on the giant by itself.

As the CatchOfTheDay team grappled with the marketplace decision, the biggest issue it faced involved its brand identity, the company's DNA. The business had always exuded a certain attitude – friendliness, informality, even a sense of humor. Its legacy harkened back to the brothers selling at the stall at the Wantirna Trash & Treasure Market, with Gabby on the table shouting and cajoling.

Over the course of 11 years, the brothers had built an entire community around this brand. They prided themselves on great prices and customer service, fast shipping, and a sense of fun. What would happen to their brand and the customer experience once hundreds of other merchants joined them?

The first step in figuring this out was to define the brand. If they were to mold a marketplace to it, they needed a clear idea of the values to protect and promote. So they wrote them down.

1. Out‐think the competition and execute faster
2. Win‐win relations with suppliers
3. Delight customers
4. Fun, kindness, and informality (including a disdain for suits)
5. Grow through word of mouth
6. Listen to everyone
7. Don't overspend
8. Think outside the box

Everyone in the coming marketplace, including the sellers, would have to fit within that framework of values. That provided a measure of clarity. Yet a host of the usual questions remained. How many sellers should they invite into the marketplace? Which categories would they dive into first? Would they clearly label items sold by sellers, and give them a place of their own on the site? Or would they blend first‐party goods with the sellers' offerings?

They also wondered about talent. Would they have to lure away rising stars from Walmart or Amazon to manage their marketplace? Where would their own 30‐person tech team fit? There were so many questions, the brothers joked in their 2021 memoir,¹ that the list might be longer than the book itself – and take months and months to resolve.

But CatchOfTheDay had qualities that made the decision easier. First, it was a digital business. It had no legacy brick‐and‐mortar stores to disrupt. What's more, the brothers and Nati Harpaz had no need to bring top executives on board. They were the top execs. And they prided themselves on making big decisions quickly. It was embedded in their culture.

In their book, Gabby recalls texting Hezi on WhatsApp for his buy‐in on building a $20 million, 23,000‐square‐meter warehouse. The response promptly popped up in two words: “Sounds good!”

This may sound flippant, and it's certainly true that companies should weigh all kinds of variables before embarking on a marketplace. But one of the best practices for a thriving marketplace is speed itself. It's vital to get started in the new business and to gain a foothold. And one of the keys to their success, according to the Leibovich brothers, is making 80% of the decisions with only 20% visibility. For many companies, acting with such low visibility may be impractical. The larger point, though, is that speed is essential, and not all of the scenarios can be mapped out in advance.

But even if they insisted on more levels of scenario planning, it would be impossible to figure out everything in advance. In fact, a marketplace is a never‐ending learning experience, a laboratory pulsating with digital data, from customers' comments and complaints to minute‐by‐minute data on the items that are selling, and to which types of shoppers. Adjustments can and must be made. It's one of the strongest advantages of a digital platform.

Gabby, Hezi, and Nati understood this clearly. So instead of wrestling with all of the questions, the three men simply decided: “Let's do it!”

NBCUniversal – Driving retail with media

So far, we've seen two retailers build marketplaces to reach more customers, one in Canada and the other a world away in Australia. The two marketplaces, Best Buy Canada and Catch, fit into the traditional mold of online marketplaces, the arrangement we've grown to expect. Since the world's introduction to marketplaces has come largely from companies like Amazon and Alibaba, it's firmly established that marketplaces work for selling physical items to people. That much we know.

However, if we look at marketplaces more broadly – their capacities for making connections and carrying out transactions – there are loads of other possibilities for them. An online marketplace is a powerful and highly versatile tool.

Evan Moore recognized this. He's senior vice president for commerce partnerships at NBCUniversal, the entertainment and programming behemoth. It was in February 2019, after only a month on the job, that Evan came across an article on a financial site about our company's Series C round of venture funding. He read about marketplaces and thought … maybe this could work for us.

His job at NBCUniversal was to find ways to turn the company's massive trove of programming, websites, and iconic IP into eCommerce opportunities. NBCUniversal's content reached a mind‐boggling 93% of households in the United States. The potential for new revenue streams, including eCommerce, was enormous.

Evan's specialty was precisely in that domain: forging new intersections between content and commerce. Previously, he had worked at Goop, the wellness and lifestyle startup headed by the actress and entrepreneur Gwyneth Paltrow. In 2008, Gwyneth had started the business as a newsletter from her kitchen. It quickly grew into a media website devoted to health and wellness, both physical and spiritual. It featured highly produced and shareable videos, and those fed an eCommerce business of related products, from mint chocolate tinged with serotonin to natural rubber yoga mats. Sales grew in the following 12 years from 0 to $49 million.

Evan's assignment at NBCUniversal was to create similar commerce projects, but on a much grander scale, with commerce embedded in premium content. The company's first such venture, Shop with Golf, was already underway when Moore landed at the company in early 2019. The idea was to create an online golf destination with alluring content, and to hitch it to merchants selling a rich blend of apparel and equipment. This allowed retailers to interact with an entirely new audience through a first‐of‐its kind commerce platform with Golf Channel.

Shop with Golf launched in March 2020, and quickly showed promise. Visitors clicked on content and followed eCommerce links. They bought things. “Brands loved reaching our audience through storytelling,” Evan says.

As time went on, Evan and the team at NBCUniversal evolved and expanded its commerce capabilities with more advanced technology and new innovative formats. One example of this was that, instead of separate websites, he envisioned pulling them together, with a single checkout that worked for all of them. Later this would be called NBCU Checkout. He and his team were developing these concepts when, in the second half of 2019, Evan read about Mirakl's recent growth. Instead of stitching together all of the sellers, he thought, maybe all of the development and commercial collaborations could operate on a marketplace platform. Merchants could sell on the platform by connecting their products to the NBCUniversal content, whether it was American Auto or Sunday Night Football. It would be a media‐centric marketplace.

Like so many big decisions, this one called for a dramatic pivot: a switch from the eCommerce sites, and all of the work that had gone into building them, and a bet on an entirely different marketplace approach.

Evan, alongside his boss Josh Feldman, global chief marketing officer, Advertising & Partnerships at NBCUniversal, made their marketplace pitch in the media haven of midtown Manhattan, in a boardroom just across Sixth Avenue from the legendary NBC headquarters at 30 Rockefeller Plaza, or “30 Rock.” It included the top executives for digital strategy. And it didn't take long to see that they were open to the pivot. In the end, they funded the marketplace for the coming year.

The media marketplace was taking off.

Chapter Summary

Here, we see how three different types of companies grappled with the decision to build a retail marketplace.

Executives at Best Buy Canada saw how marketplaces could help them scale. One central strategy for success was to train and prepare the whole company, including employees of its retail stores, merchandising, and sales teams, about the initiative. Communication was vital, as was designing a marketplace that worked hand in glove with the retail stores, using them to offer all the technology that a customer might want.

Australia's online retailer, Catch, faced a coming Amazon challenge. Unlike Best Buy Canada, Catch had no physical stores. Its challenge was to protect its friendly and offbeat brand, and its reputation for excellent customer service, while bringing hundreds of sellers on board. The company had two advantages: Since it was the co‐founding brothers who were mulling the marketplace, they started out with support from the very top. And they moved fast.

The decision at NBCUniversal was whether to use a marketplace to plunge into an entirely new business. The company had programming, both TV and online, that reached into the vast majority of North American homes and around the globe with Sky and the RTL partnership. Could the company use a marketplace to link its content to retail offerings, and create new revenue streams? This required a bold pitch to top executives at 30 Rock. It worked.