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How to reduce risk for new products with the marketplace model

Kilka Seller Case Study_Nov 2022
Published on May 17, 2021
Kilka Seller Case Study_Nov 2022

Marketplaces are profoundly reshaping the footprints of eCommerce operations, particularly for operators looking to massively expand their offerings with new product categories. As a result, many sellers are doing away with traditional approaches to expanding product lines and instead saying yes to new and innovative marketplace platforms that deliver a level of scale and sophistication previously out of reach.

Before we dive into exactly how marketplaces enable the seamless launch of products, let’s first look at what it takes to launch a product category using conventional methods.

The risky business of launching new product categories

There are many moving parts in the process of introducing – and successfully selling – a new product category that makes bringing your product to market intimidating and costly. For starters, you must be ready to confidently answer yes to questions like:

  • Will you be able to support fast, overnight growth?
  • If successful, will you be able to facilitate the increased demand?
  • Are there adequate resources, supply lines and processes in place to handle the increased customer attention?
  • Are customer service protocols and staff in place for handling customer inquiries?

Clearly, these questions require a significant investment of time, extensive planning and the ability to acquire the required resources in preparation for the launch.

Then there’s the substantial costs involved. The cost of designing, testing and manufacturing new products, inventory and the warehouse space required to store products; the logistics expenses; the costs of rebating and reclaiming unwanted stock; the time spent training staff internally; and the cost of advertising the new products. All of these costs – and plenty more – always accompany new product launches.

How marketplaces enable seamless product launches

An online marketplace is a digital platform that acts as a virtual store with an operator hosting and facilitating the sale of products and services between its customers and multiple third-party sellers. Generally, an operator will launch an online marketplace to supplement their core online product offerings. Using a marketplace platform, they can expand their product range and increase revenue while giving their customers access to a larger and richer selection of products – all without needing to increase on-hand inventory or logistics support.

Let’s dive a little deeper into how a marketplace handles the business processes to support bringing new products to market quickly – and without the traditional burdens we mentioned.

Complete platform support

A strong marketplace solution – such as Marketplacer – provides an out-of-the-box technology platform that covers the full lifecycle of marketplace operations, including:

  • onboarding sellers
  • importing products
  • order orchestration
  • payments
  • commission calculations, and
  • support for post-purchase activities.

With this foundation, it’s incredibly fast to onboard new sellers and import some, or all, of their products. This speed to market enables operators to effortlessly test or launch new products, whilst having confidence that their platform can handle the logistics and increase in sales and customers.

Drop shipping

While the traditional model requires items to be purchased prior to them being sold, a marketplace uses a fulfillment model known as drop shipping where the sellers products are offered for sale, but they do not need to be kept in stock by the operator. Instead, orders are transferred to the manufacturer, or seller, who then ships the item/s directly to the customer. The operator then takes a profit from the difference between the manufacturer and retail price, or as an agreed commission. No longer needing to invest in inventory upfront, the operator is freed from physical and financial constraints that might otherwise limit business expansion.

Endless aisles

The endless aisle concept allows operators to provide a much broader product offering by leveraging existing brand or supplier relationships. By introducing these suppliers to an already existing product mix, a marketplace is able to scale up to achieve previously impossible sales, limitless expansion and endless aisles. This doesn’t mean launching one new product category, instead operators can continually launch new categories, collecting data and insight to inform future launches – again without risk or substantial upfront costs.

Companies launching new products with a marketplace

At Marketplacer we’ve had a front-row seat to the incredible transformation our clients have gone through as they rapidly create, or expand, their businesses with a digital marketplace. Here’s a few of our recent success stories.

Myer Online
In 2017 – powered by the Marketplacer platform – department store Myer launched an online lifestyle marketplace stocking a curated range of higher-end home, entertainment and lifestyle products and experiences. The first phase involved launching the marketplace as a separate platform, the second phase has just completed with everything now appearing as a single, seamless offering on In fact, 75 sellers and 20,000 products have so far been migrated to effectively broadening the retail giant’s category base and product offerings.

When SurfStitch wanted to expand its range, product count and the number of categories on offer, Marketplacer was a natural fit. In just three months, the partnership saw SurfStitch attract a 300% increase in new vendors which added over 500 brands including household names like Vans and Rip Curl, with endless capability to add more.

We’re telling you these real-life stories because these businesses have completely changed the way they distribute products. And they have succeeded because they embraced the necessary mind-set to execute a marketplace model that allows them to rapidly expand their product offerings without the headaches associated with conventional approaches.

Thinking about implementing a marketplace strategy?

If you have a marketplace business idea, or you’re a retailer who is considering expanding your product offering and customer base, we should talk. Our unique platform is custom-built for a variety of use cases and we have the experience, thought-leadership, and support needed to implement a successful, sustainable online marketplace for your business.

Published on: May 17, 2021

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