Services marketplaces are the next revolution in e-commerce

Miniseries E-commerce features Part 1

The democratization of the internet in the 2000’s gave the opportunity to brick and mortar stores to switch to online stores. Nowadays, electronic commerce is a big part of the economy. In 2018, in France, the E-commerce market weighed already more than €200 billion. When selling on the internet, we generally think of selling products online and B2C, but is it really only the case? Are services marketplaces really the next revolution in e-commerce?

Hugues Odasso, Channel Manager at Cocolabs answered these questions and explained why we think that services marketplaces are the next revolution of the e-commerce industry in the next few years. You can watch his analysis in the first episode of our miniseries dedicated to services in e-commerce with a focus on marketplaces.

1. E-commerce in France, a paradoxical situation

The biggest paradox comes from the fact that services represent 3/4 of the total French GDP and yet these very same services represent only 35% of online sales, the rest being product sales. The analysis of the 100 largest ecommerce platforms in France confirms this under representation. Indeed only 9 of these major websites sell services. 

As we can see in this image, e-commerce can be compared to an iceberg. At the top we can find online product sales from B2C, below the surface the sale of products in B2B and finally the sale of services in B2C and B2B. The last category represents almost half of the first two, while being hidden. As it is often the case, the submerged part of the iceberg is bigger than the emerged part. 

When we look at the statistics of e-commerce, we see that services are under represented. They represent only a little bit more than half of the sales of products online, although being the biggest part of the French economy.

Despite not being the biggest concern it is also about the business models that are most represented. Most of the online selling is done between two professionals (b2b) rather than business to consumer (b2c) as one might think. 

B2B buyers and sellers are acting ‘behind-the-scenes’ and a lot of businesses still operate in an old fashioned way. That is why B2B e-commerce is under represented but it was already more than €130bn in 2018 in comparison to €120bn for B2C e-commerce. 

What would happen if all B2B businesses switched to online business? What would be the impact of all those products and services? 

2. Services and products sales online, growing at different rates

We will compare the services to a part of the products, the retail by putting aside a part of the sales of products, ex: the industrialists or manufacturers. When looking at the numbers, it appears that retail sales are growing, but slowly, while services are experiencing strong annual growth. Services e-commerce is not enough considered although it grew at a double digit each year, between 2012 and 2018. 

This impressive development can be seen to a greater extent depending on the sector in which the services came. Once again the B2B sector represents more growth than the B2C. 

Indeed, between 2012 and 2018 the sale of online services has increased by 17% between professionals against 10% between a professional and a consumer. In general, services have increased by 13%, reaching €81 bn. The retail web revenues have grown by 5.6%, hitting €73 bn.

Considering that services share is lower in the e-commerce industry than in the whole economy, we can foresee an even greater potential for selling services online. Our estimation is that services will weight €273bn within the online businesses market in 2030.

3. And the marketplace model’s weight in all of that? 

When looking at the number for 2018, we notice that marketplaces already weighed €16.2bn so 7% of the total e-commerce. Corporation as well as small businesses could benefit from the growth of online shopping for services. Especially for online services sales, indeed 45% of sales on marketplaces are services. 

As we can see in one of the article of trends of April 2021, companies are launching or thinking about launching their services marketplaces for two main reasons. Firstly, to cover the losses related to the drop in product sales. Secondly, to fit into the trend of the sharing economy where ownership is no longer the priority of consumers but simply the response to a need, as is the case for example with rental marketplaces. 

Marketplaces also facilitate transactions from consumer to consumer (C2C) through new circular economy platforms or even social media for some of them, although this trend is not as important as experts were predicting in the past. 

If you want to know how to create an online platform or simply to learn more about services marketplaces or e-commerce do not miss our next episode. 

Sources : E-commerce Nation – Top 100 E-commerce and INSEE – Les TIC et le commerce électronique dans les entreprises en 2019  / enquête de 2013 à 2019