Big-box retailers are launching their own online marketplaces, giving brands more ways to sell but also more complex systems to manage. While Amazon remains the dominant third-party platform, Walmart’s marketplace has shown strong growth. The retail giant reported its third-party marketplace grew close to 50% year over year during the quarter ending April 30, marking its fastest growth rate in years, according to Marketplace Pulse. Target is also focusing on its Target Plus marketplace, aiming to reach $5 billion in business by 2030.
New Fronts for Major Retailers
Brick-and-mortar stores are expanding into new sales channels. Best Buy, Sephora, and Ulta launched on TikTok Shop this year. This diversification offers brands fresh opportunities, but it also adds operational layers. Success on these platforms depends on inventory management and understanding each retailer’s specific promotional strategies. Brands must align their margins with the deals offered by each marketplace.
Monil Kothari, founder of the jewelry brand Haus of Brilliance, says the process involves working with each channel to identify opportunities and create a plan. Until about 2021, Haus of Brilliance relied heavily on Amazon. The brand still accounts for about 15% to 20% of Haus of Brilliance’s business, but Kothari has diversified sales to include Target and Nordstrom.
Elizabeth Marsten, vice president of innovation and growth for commerce media at Tinuiti, points out the sheer amount of logistics involved in launching on a new marketplace. Returns are a major cost, and fulfillment times vary. Most marketplaces do not offer their own fulfillment services, requiring brands to manage shipping agreements or hire third-party logistics providers (3PLs). This can make the economics of expanding into new marketplaces challenging, especially for brands with limited warehousing capacity.
Operational Foundations
Building a strong operational foundation is critical for brands selling across multiple channels. Haus of Brilliance was designed for multi-channel sales from the start. The brand sold through Amazon and dropshipped via Overstock when it launched in 2019. Kothari notes that a good system allows the brand to handle high volume and fast shipping, like having just 10 units of a product on Black Friday. If the system updates inventory correctly, it can show one unit available rather than mistakenly displaying ten, preventing overselling.
Gorilla Commerce, the maker of Gorilla Grip bath mats, relies on a network of 3PLs and staged inventory to manage its presence on Amazon and Walmart. The company places stock near the fulfillment centers of these retailers so it can quickly move inventory if demand spikes during the holidays.
Deciding Which Products to Discount
Deciding which products to discount requires a close look at each marketplace’s rules. Amazon limits its popular Lightning Deals to the top 20 items in a brand’s catalog. This means the rest of the catalog receives less exposure during the Black Friday-Cyber Monday period compared to items with a Lightning Deal. In contrast, Nordstrom reaches out to brands for items that meet a minimum discount threshold. If a brand opts in, they receive Black Friday-Cyber Monday coverage. Target restricts its marketplace to products under $500, making it a focal point for lower-priced items.
Inventory Staging and Discount Strategies
Bilangino explained that maintaining proper inventory levels is a delicate balance. Using Amazon or Walmart fulfillment services creates risks for brands. Too much stock can result in excess storage fees. Too little inventory can lead to running out of product during key moments.
