Marketplace Opening vs. Retail Store Opening

Marketplace Opening vs. Retail Store Opening

What is the difference between opening a new retail store in a big city like Munich or launching a marketplace business with your brand on an online platform like Zalando?

Starting a marketplace business is: complex, digital, uncomfortable (because new), intangible and you may go through a lot of resistance until the first products are live and sold online through the platform.

In the following we would like to compare the opening of a "normal" retail store with the opening of a marketplace channel. To make it more specific:

What is the difference between opening a 100 m² store in Munich and a new marketplace presence through Zalando's Partner Program for Germany?

It´s same, same but different.

You need the following for both the Retail Store Opening and the Marketplace Opening

Employees

Whether they're setting up your retail store, stocking the products or advising your customers, you need employees right away. This is also the case for the marketplace business. Here, your employees don't put products on shelves and serve customers in the shop, but they have to create all the structures so that the products can go online first of all. They have to set up and integrate data structures, processes and software. Marketplace managers have an incredibly broad range of tasks, especially at the beginning.

Merchandise

In the retail store, you need merchandise that you show to the customer on site so that they can try it on and buy it. In the marketplace business, you need the goods physically in a B2C warehouse to be able to send them to your customers and you need the appropriate online content for it. This means the right images have to be created (they have to be in accordance with the guidelines of the respective marketplace) and all product data should be set up properly. Only then can the goods be presented online.

Equipment

What the shop fittings are in the retail store, i.e. shelves, mannequins, clothes rails etc., the software is in the marketplace business. Software ensures that the goods are visible online.

IT & Software

Without cash register systems nothing works in a retail store and without marketplace software you will never put an article online. IT & software, as different as they are in scope, without them nothing works. And in the marketplace business software is very extensive. You have to deal with different interfaces and providers until you have found the right strategy and the right partner for you.

Marketing

If no one knows that you are opening a retail store, then no one will come to the opening. This is why you will most likely place different ads, distribute flyers or the like. In the marketplace business, too, customers won't know automatically that you are selling via e.g. the Zalando marketplace from now. In order to present yourself online among the wide range of online shops in your category, you can take various online marketing measures to become more visible. In both cases, the more visibility the better.

Marketplace Opening vs. Retail Store Opening

Conclusion: This is where the marketplace opening scores points

Everything you need to open either a retail store or a marketplace business is different, but similar in many ways. 

For both, it takes about 4-6 months in the best case scenario until you can "open" the business. 

However, the costs differ considerably: for a retail store of 100 m², costs of approx. 100,000-180,000 € arise. The costs for starting a marketplace business, on the other hand, are more manageable: approx. 10,000 - 25,000 € for onboarding, integration of software and other service providers. In addition, you can easily expand the marketplace business to include other marketplaces without high additional costs.  

The difference in customer reach is even greater: if we reach an approximate number of 2 million customers with our retail store in Munich, we can reach 46.3 million customers in Europe through Zalando.

So a retail store opening compared with a marketplace opening are "same, same but different". The conditions are different and yet somehow similar. However, when it comes to the costs and the potential customers you reach, the retail store doesn't stand a chance against the marketplace business.

If you want to learn more about how to make your opening in the marketplace business a success, check out our Marketplace Uni courses .

Request more information or send us a message. We will be happy to help you!

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