Over the last 20 years, digital markets have fundamentally transformed the business and consumer expectations of the world. But although names like Amazon and Uber have become known names so far, the evolution and disruption caused by digital markets are far from over.
In 1995, eBay launched the digital market mainstream with its unique online auction model. In 2009, the retail economy grew and supercharged the digital market concept with hybrid markets combining specialized products and services with various market segments at a time. Airbnb, Postmates, Lyft, TaskRabbit, etc. By 2020, markets around the world will represent 40% of the global online retail market. But believe it or not, at that time, these dynamic entities could be a little different, both technologically and economically.
To understand the digital markets of tomorrow, it is essential that we understand the current state of these entities, as well as their most pressing challenges and short-term growth strategies. Because so little valuable research has been done to date, Altimeter group and Kahuna leave this year to get a handful of the current state and future of digital markets. Our results revealed a landscape of formidable actors on the threshold of their next evolution and a new chapter for the trade, platforms and experience of this process.
The main conclusions of our research include:
The markets are bigger than we thought. Of the more than 100 market leaders we surveyed, the majority of participants were high-income businesses. One-third of these businesses generated revenues of $ 100 million or more in the past year. In addition, 38% earned between $ 50 and $ 99 million and 25% between $ 1 and $ 49 million. The majority of markets (35%) reported a volume of gross goods (the total value of goods sold to customers in a market) of $ 500 to $ 999 million. Only 12% reported more than a billion dollars in GMV. In addition, 25% reported a VGM between $ 250 and $ 499 million and 19% between $ 50 and $ 249 million.
Competitive differentiation is their biggest challenge. Markets cite four common challenges for customers to continue growing: competitive differentiation, buyer retention, buyer acquisition, and social media engagement. Other market challenges include the abandonment of shopping carts (26%) and technological resources to increase growth (23%). Among the main challenges, only ecommerce companies said that competitive differentiation and customer experience were also the main challenges. Among the mixed enterprises, participants said that competitive differentiation was the main challenge.
Markets are challenged to retain sellers and buyers. The three main reasons for the seller's disengagement are insufficient differentiation of competition (46%), insufficient sales (33%) and market service fees (31%). In addition, sellers claim that marketing costs (28%) and lack of buyers (26%) are critical business issues. It is also interesting to note that 24% of markets say that sellers leave because of a network leak, which prevents them from dealing directly with sellers.
Markets judge their health according to their loyalty. Of the many measures that can be used to assess the health of the market, 46% of those surveyed focus on tracking the value of the customer's lifetime, which reflects larger and more frequent transactions. At 23%, markets also follow the loyalty of buyers and sellers. The third best health measure is tied at 11%: peak liquidity and repeated client transactions. The peak of liquidity is a crucial measure because it represents the relationship between buyers and sellers that maximizes the transaction value.
Very few reach the ideal ratio of Pareto. Regarding the Pareto principle, experts estimate that 20% of sellers should generate 80% of total transactions. The same goes for buyers: 20% of buyers should make 80% of transactions. But today's markets are not quite there. The majority of markets say that the concentration of sellers representing 80% of transactions varies between 40% and 60%. Nearly half of all markets report that repeat customers account for more than three-quarters of all transactions and one-third of repeat customers account for half of transactions.
The next evolution of the markets
The above information is revealing for the future of digital markets. In light of the current challenges of competitive differentiation and the market's almost obsessive focus on customer loyalty and customer loyalty, we can expect a change in market approach in the coming years. come. The most successful markets of tomorrow will not only be a place of exchange of services and goods. They will be experiences for themselves.
Markets will soon look beyond the connection of buyers, sellers and service providers to create unified platforms that deliver complete experiences as a product or service. For example, when customers are looking for a solution for dinner, they are not just looking for a place or making reservations. They started to dine, either at the restaurant or by delivery. The process by which they discover solutions for dinner is based on several elements that applications, networks and markets largely solve in a discreet, not global. There are many individual and disparate aspects that add to the whole, but do not describe the image per se. These services include matching personal tastes with options, location, reviews, menus, images, videos, reservations, coupons and much more. This is an opportunity for the markets.
The way markets develop solutions for these holistic experiences will become the next crucial competitive advantage for them – and the next redefinition of the consumer experience.