Marketplaces capture discovery and advertising dollars

Major retailers such as Best Buy, Walmart, and Target are actively developing their marketplace ecosystems. These platforms are shifting from being mere transaction points to becoming significant discovery hubs, attracting brands to utilize them as performance marketing channels, competing with traditional search and social media ad platforms.

Historically, brands focused investment on platforms like Meta and Google for demand generation, viewing marketplace distribution as a secondary channel. This dynamic has reversed, with retailers actively onboarding more small, specialty, and emerging brands onto their platforms.

Technological advancements, exemplified by Shopify, have facilitated the growth of digitally native brands. As customer acquisition costs have risen, brands are seeking alternative channels. Simultaneously, the technical and operational barriers to marketplace participation have diminished. Modern catalog management systems allow for simultaneous product distribution across multiple marketplaces.

This evolution has led to a larger supply of brands seeking distribution and an increased number of retailers looking to accommodate them. For instance, Best Buy launched its marketplace last year, while Walmart and Target continue to deepen theirs. For retailers, marketplaces represent new growth opportunities and a way to reduce reliance on a few dominant suppliers.

For brands, marketplaces are evolving beyond distribution channels into marketing opportunities. Consumers make purchasing decisions directly on these platforms, shortening the path from discovery to transaction. Inquiries about budget allocation, acquisition costs, and sales growth increasingly resemble performance marketing discussions. Marketplaces are effectively linking discovery with transactions, offering brands an attractive customer acquisition channel.