It is the best of times, it is the worst of times. At the point of writing, there are approximately 40–50 ecommerce marketplaces available online, globally.

And there’s more coming online every year.
Linnworks
Marketplaces are raising more money than ever too, led by the big daddy of VCs, Softbank
Indonesian marketplace Tokopedia raised $100 million from Softbank.Indian marketplace Flipkart received a whooping $2.5 billion investment, followed by an acquisition offer from Walmart AND Amazon
Recent entrant Paytm Mall raised $445 million.
And yet for all the money flowing into marketplaces, many of them are struggling more than ever.

While dreams of wild success are coming true for some, others are struggling despite millions in investment.

Anyone remember Fab.com? Or Gilt?

At their peak companies like Fab.com and Gilt promised to turn retail on its head. They were going to take over Amazon and Walmart which ‘changing the way we shop forever’. Instead Fab.com went from a $1 Billion valuation to a $15 million fire sale. Gilt Groupe went from similar valuation to being sold to Hudson Bay for $250 million.

Rather than becoming the $1B behemoths retail sites became the subject of such colorful articles as ‘Death by Overfunding’ and ‘Unicorn Down?’

Not the startup dream.
So why is this happening?

Internet Retailers report that 97% of the people who shop online first browse products on a marketplaces. Online retail continues growing and its share of overall retail is increasing. Why then, are marketplaces having such a hard time surviving and thriving?

The problem with marketplaces is product content

Ecommerce marketplaces are incredibly hard to build and to sustain. Unlike traditional retailers, they almost all suffer from a product content problem.

Why?

This is because unlike traditional retailers (who have direct relationships with suppliers, brands and manufacturers and get their product content directly), marketplaces often rely on 3rd-party sellers to provide much of the inventory for sale.

They are often reliant on these sellers to upload their product content or go through a lengthy SKU-onboarding process to ensure all of the necessary fields are filled out to create a product display page.

Often times these don’t work out so well.

Size of virtual and real inventory matters

As found by Internet Retailer, a majority of people who shop online first engage in comparison shopping in marketplaces. And there’s going to be no comparison if the marketplace contains a measly 100–200 items. Unless a marketplace is very very niche 100, or even 1000, is an abysmal count. But this ends up becoming a chicken and egg problem — how does a new marketplace onboard thousands of products online without customers to justify the significant cost? And how can it get customers without thousands of products for them to browse?

Quality of inventory

So if we are looking at sheer scale then ideally we’d like thousands or millions of goods in a online marketplace.

Where’s all that going to come from? It is easy to decide what you want to list but putting up good quality listings is much more complicated.

Suppliers, brands and retailers all have different Product Inventory Management (PIM) systems which format data differently. Conventional data companies can offer limited help in reformatting the data but they leave significant gaps. What about missing product information? Or duplicated listings?

Research shows that the more information a product page has the more likely customers are to convert.

Ecommerce as a channel misses the tactile feedback offline stores can provide.

That’s why the best websites are the ones that provide the maximum amount of information in the most digestible format possible.

The first problem when it comes to good product data is standardization and formatting.

The product listing for a Canon camera below provides all the information you might need for a camera but for a customer who is browsing and looking at dozens of listing in under 10 minutes it is worthless.

It is nearly impossible to read and discern the actual product specs from such a listing.

The second problem is features normalization — when dimensions change between different products on the same website customers can get thrown off. Generally sellers are the ones to upload information so while the problem is understandable it is undesirable.

If a customer is looking for a table they don’t want to find some measurements in inches, some in meters and some in centimeters. A standardized product listing makes the shopping experience a lot more seamless.

For example, no website does this better than IKEA which has the advantage of control when it comes to inventory, channels and product metadata.

The magic question then is—How can a marketplace achieve an IKEA level of quality control?
Answer: Great product data.

How can Semantics3 help?

Expand your online catalog

Semantics3’s single-lookup technology reduces the manual constrains in product listings, expanding assortment without increasing procurement costs.

Onboard more SKUs faster

By halving the number of steps needed to list a SKU, sellers can onboard more SKUs quickly.

This helps other teams as well like category managers or suppliers to get more of their SKUs onto the platform easily without needing 3rd party tools.

Improve catalog quality

Semantics3’s product data is superior to data obtained from other sources as we match, merge and normalize product attributes to create a rich and complete product record.

Provide a sublime shopping experience

Semantics3’s data is normalized, with distinct attributes extracted according to their category’s ontology with all available information tagged to that SKU
This helps build a more engaging product search experience including providing for features like faceted search.

Winner takes all

The battle for ecommerce is not one were consolation prices are given out. Marketplaces, by virtue of their function, aren’t going to be as diverse as brands. A few marketplaces will dominate in people’s mind and emerge with the lion’s share of this lucrative ecommerce business.

And first movers have a huge advantage in this business —look at Amazon’s dismal attempts to gain a footing in China.

In order to win the race, marketplaces have to be a contrarian mix of easy-to-understand yet vast, limitless in choice yet not overwhelming. And for that to happen product content is key. An easy to understand interface coupled with comprehensive product attributes could be the difference between existing the next five years vs going up in smoke like Fab.com.


Semantics3 powers the world’s largest database of ecommerce product information. Talk to us today.