Is Running a Marketplace Right for Me? The presentation will discuss the growing trend of retailers adding Marketplace functionality to their ECommerce websites, and discuss how to evaluate whether this is right for your business. In particular, the following questions will be discussed in depth: What is a marketplace and what are the business advantages to one? What are the elements of a successful Marketplace launch plan? What are the elements of maintaining and growing a successful Marketplace? Who should not start a marketplace? Having launched and now managing Barnes & Noble's Third-Party Marketplace, combined with 10+ years of experience helping retailers scale their Marketplace businesses, Rick Watson is uniquely qualified to discuss the benefits and pitfalls of building your own marketplace as part of your ECommerce strategy. Presented at 2012 E-Commerce Europe Summit: http://e-commercesummit.com/program/june-6th-day-2

1. IS RUNNING A MARKETPLACE
RIGHT FOR ME?
Rick Watson
June 6, 2012
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2. A LITTLE ABOUT ME
• GM, Marketplace for Barnes & Noble.com
• Software / Technology Background
• 13 years in ECommerce Industry
• Twitter: @rickwatson
• Website: http://rickwatsonsblog.com/
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3. OVERVIEW
• What?
• Why?
• How?
• Why Not?
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4. WHAT?
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5. MARKETPLACE: VIRTUOUS CYCLE
More Expand
Buyers Selection
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6. DC WORKFLOW
Ship
Search / Browse Purchase
Customer
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7. MARKETPLACE WORKFLOW
Search / Browse Purchase
Customer
Inventory
Feed Order
Information
Ship
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8. ENHANCING SELECTION
DC Products Dropship Products Marketplace
Vendor Type Manufacturers Distributors Online Retailers
Vendor Count Hundreds Hundreds /Thousands Thousands/Millions
Selection Profile Narrow and Deep Variable Broad and Shallow
Gross Margin 40 - 60% ~30% ~12%
Inventory Risk High None None
Inventory Title Owner Flash Title Seller
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9. WHY CONSIDER A MARKETPLACE?
• Expanded pool of products, promotions, pricing, options,
availability
• Improve unit economics
• No cost of goods
• Shipping can become a revenue source
• Lower inventory risk
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10. OPTIONS TO CONSIDER
• Product Posture:
• Promotional
• Non-overlapping
• Fully overlapping
• Seller Posture:
• Closed/Gated
• Open
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11. MARKET LANDSCAPE
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12. HOW?
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13. THE ESSENTIALS
• Legal Terms, Taxation, and Data Ownership
• Product Creation, Categorization & Cross-Linking
• Listing Data Model
• Seller Recruitment & Onboarding
• Buyer & Seller Service
• Site Merchandising & Promotions
• Seller Metrics Plan
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14. DATA OWNERSHIP
• Right to use, modify, combine, display and retransmit a
seller’s data
• Survives contract termination
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15. LISTING DATA MODEL
Applies to:
Product Listing • Products/Listings
• SKU • Seller • Orders
• UPC • Seller SKU • Analytics
• Title • UPC
•… • Quantity
• Condition
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16. SITE MERCHANDISING & PROMOTIONS
• Sellers expect proactive promotion & exposure
• Examples
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17. AMAZON – CATEGORY PAGE PROMO SPOT
Featured sellers/retailers on AMZ. When buyer clicks on the
logo, they are taken to that retailer’s listings on AMZ. AMZ
offers this positioning to retailers as part of the contract

18. BUY.COM’S DAILY DEAL
Buy.com also has a daily deals slot for retailers.

19. SEARS – SHOP BY MARKETPLACE SELLERS

20. BUYER SUPPORT
Buyer Support Organization Seller Support Organization
First-Level
Customer
Request
Second-Level Seller Support
Team
Third-Party
Merchant
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21. SAMPLE ORGANIZATIONAL MODEL
Function Merchandising Marketplace Team Seller
Team Support
Seller Acquisition Coordination Ownership
& Onboarding
Seller Management Key Accounts Coordination Ownership
& Support
Site Merchandising Ownership Coordination
& Promotions
Feature Development Ownership
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22. WORRIES
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23. MERCHANDISING ALIGNMENT
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24. ONGOING PRIORITIZATION
• A Marketplace puts you in the software business – sellers expect
you to execute on some of their ideas
• Merchants have choices – why are they with you?
• Prefer fewer, long-term resources over larger #s of temporary
resources for “launch”
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25. WHAT “NO” LOOKS LIKE
• Most projects in perpetual 1.0 stage
• Top vs bottom-line focused
• Internal teams not easily aligned
• Rigid/inflexible systems
• No clear differentiated value proposition for merchants
• Internal conversations often not data-driven
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26. WHAT “YES” LOOKS LIKE
• Clear business owner
• Unique customer base
• Goal to improve selection & profitability
• Willingness to see merchants as customers
• Good traffic acquisition strategy
• Invest in platform/software over long-term
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27. SUMMARY
Long-term commitment
Contact Rick Watson at:
• Twitter: @rickwatson
• E-mail: rwatson@book.com / richard.m.watson@gmail.com
• Web: http://rickwatsonsblog.com/
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28. REFERENCE MATERIAL
• How to Build an Online Marketplace
• Brian K. Walker, Forrester, May 8, 2012
 Why Every Retailer Needs an Online Marketplace
• Sucharita Mulpuru, Forrester, May 9, 2012
 Company to investigate:
• Merchantry / Rakuten: Build marketplace platforms
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