It was difficult to imagine, fifteen years ago, how disruptive the Marketplace model would be.
The big retailers, with enormous force, were the destiny of every manufacturer and importer, acquiring goods and reselling them to final consumers. They were responsible for the purchase, stock, sale and delivery, both in physical and online sales, in their e-commerce.
Manufacturers projected their sales; their salespeople visited these large retailers and brought order schedules.
Besides that, importers filled their containers with imported goods from foreign manufacturers, and in the same way as manufacturers, their salespeople visited the same retailers, also returning orders.
The big retailers worked as an interface; the model seemed to be perfect, but the problem, however, was that the financial burden of the unsold merchandise, that is, the stock, would fall on the shoulders of the retailer.
Experiencing good sales or not, there would always be a day when the invoice due date for suppliers would arrive, and at this point, retailers realized that in this game, they took the highest risk.
Whoever assumes the greatest risk usually dominates the market chain. The pressure on prices over importers and manufacturers was not enough to alleviate the mismatch between invoice due date and the customer’s payment, that, once combined with the costs of occupying space, logistics, employees, bank interest, and other costs, retailers started to realize that sales margins began to dwindle no matter what.
The Marketplace model was the key to transferring inventory costs and product responsibility to the seller, either manufacturer or importer, thus taking advantage of traffic audience to offer an almost infinite number of item variants to online visitors. Hence, the retailer is able to eliminate the inventory cost, customer returns, and also take control of all financial transactions, by retaining a percentage of everything that is sold and not taking responsibility of what is neither sold nor returned. Now retailers are in heaven.
The business is so good, that what once was the problem became the solution. Instead of having millions of items under your cost and supervision, now they are under the seller’s responsibility. Good business indeed!
The huge warehouse of purchased products has become a huge warehouse of borrowed digital products, and what is not physically present becomes an image of a product on a server that is equally sold, but the entire risk process is also run by the seller.