Retail Channels

Third-party sellers can help Macy's improve selection, price

Riverbend Consulting's Joe Zalta breaks down the retailer's digital marketplace.

a dress on Macy's

A product page on Macy's marketplace. (Courtesy photo)

With the launch of a digital marketplace, department store retailer Macy’s is looking to tap into a network of third-party sellers as a source of growth for its ecommerce business.

Launched on September 28 after a year of “intense” work, as Macy’s Chief Digital and Customer Officer Matt Baer put it, the marketplace is seeking to add 400 brands in 20 consumer categories as it launches this fall. Macy’s partnered with Mirakl, a marketplace tech provider, to stand up the new offering.

Macy’s has several key building blocks that make the marketplace an appealing avenue for expansion, said Joe Zalta, who brings experience with apparel as a cofounder of Riverbend Consulting, a firm that works with third-party sellers. Following the launch, Zalta provided perspective to The Current on the marketplace's prospects for success.

Zalta said Macy’s standing as a large retailer has made its ecommerce platform a destination with sizable organic traffic. That’s an environment where adding more products and brands via third-party sellers can bring several advantages.

“They'll have to do some policing, but this move will bring better product assortment,” Zalta said. “Over time it will promote more competition and competitive pricing, and the cream will rise to the top. That’s great for consumers.”

The approach harkens back to Amazon’s famous flywheel. Adding more sellers grows the number of products on the platform, and in turn helps to drive prices down. Growing these offerings all keep consumers coming back. Following Amazon’s success with the third-party marketplace model. Walmart and Target launched marketplaces in the years before the pandemic, and are now seeing opportunities for growth. After building up digital offerings to meet demand in the pandemic, longtime retailers such as Bed Bath & Beyond, Land’s End, Hudson’s Bay and United Natural Foods followed suit last year to add the third-party dimension as a part of their ecommerce strategy. Now, Macy’s is among them.

Macy’s position can help to attract sellers to the platform. The cachet and brand equity of a 164-year-old retailer can be an attractive proposition for sellers. It has also proven it can attract shoppers with promotional events, which will provide opportunities for sellers on the platform to benefit.

“They always have sales,” Zalta said, noting that the upcoming holidays are a particularly attractive time, as well as special days such as Mother’s Day. “This will keep consumers coming back,” Zalta said.

Brands such as L’Occitane, Mary Ruth’s, Smeg and Sunday Citizen have already joined the marketplace. Macy’s said that the marketplace will also be an avenue to increase the number of products from women-owned, diverse-owned, and sustainable brands that it offers. This fall, 20% percent of marketplace sellers and brands will be from underrepresented enterprises. When it comes to categories, Macy’s will also add products in areas such as apparel, beauty, home improvement, toys and pet products.

As it adds many new products, Macy’s will aim to keep the visible changes for shoppers to a minimum. The marketplace will be woven into Macy’s existing ecommerce channel, rather than being a standalone section of its site and app. This means that third-party products will appear right alongside the others that Macy’s offers. They will be identified by a badge that notes the sellers handle their own fulfillment and shipping.

Macy’s has said the goal is to provide a curated offering, and the marketplace will also help the retailer customize assortments. As it scales, sellers will be “carefully chosen to ensure alignment with business needs and Macy’s high-quality product and fulfillment standards,” Macy’s said.

When it comes to execution, one key for Macy’s will be to ensure that the user interface remains easy to use, Zalta said. As it adds more brands, Macy’s will have to strike a balance to ensure it doesn’t become too crowded.

“They must strive to simplify things,” Zalta said.

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