How to migrate from an e-commerce model to a marketplace? » PACA’s economic and political charter

By Antoine Orsini, CEO and co-founder of LEMONWAY.

In recent years, the payments industry has developed and changed at breakneck speed, thanks to the favorable conditions linked to the success of online commerce. Needs and expectations evolve and allow for the emergence of new services. For example, marketplaces are considered a new standard for integrating and attracting players who develop new financial levers there.

According to the MIRAKL 2022 Barometer, the growth rate of marketplaces has increased by +49.7% over the last two years – compared to 22.2% for traditional e-commerce, i.e. a 2x faster progression. To survive this enshrinement, even pure e-commerce players must transform the test. A transition that stems from a multitude of strategic needs: geographic expansion, diversification of the offer, the need to retain customers and improve the response rate to customer surveys. But nesting the market model in the existing one presents a major challenge for the historic players in e-commerce: maintaining the basis of their success, the shopping experience.

The Marketplace, the essential change for Pure-players e-commerce

To support the continued evolution of e-commerce, all players must innovate. Marketplaces now account for 62% of online sales worldwide, their weight has increased in France from 8% of turnover in 2012 to 32% in 2020. Faced with this phenomenon, e-commerce is increasingly rushing to catch the wave, but not no difficulty. The diagram of an e-commerce website and that of a marketplace are fundamentally different. If the market occupies certain bricks of an online shopping site, it complicates even more for large volumes:

Modify certain parameters such as purchase tunnel, legal information, orders, payment, email notifications, etc. Impacting relationships with e-commerce payment solutions. Adding bricks such as sellers, marketplace offer repositories, order logistics, marketplace payment service provider. Paying on behalf of a third party comes with a technical, security and legal requirement that only an approved specialist can manage. To achieve this, it is therefore recommended to partner with a PSP specialist in marketplaces who can handle Pay-out management and the regulatory dimension (sellers’ KYC, fund reconciliation and payment of the latter). But how do you maintain your competitive edge when you are an eCommerce leader? Thanks to a modular API.

The modular API: the key to a seamless transition

The modular offering is ideal for pure e-commerce players looking to transform into a marketplace. The concept is simple: dissociate the Pay-in module (acceptance and acquisition of flows) existing on the e-commerce site, from identity verification, reconciliation of flows, as well as payout. A flexibility that facilitates the interweaving of the PSP marketplace with that of e-commerce and that preserves the platform’s DNA. It is common for established e-commerce platforms to offer a specific payment experience that is deeply embedded in the purchase funnel. By allowing them to manage the Pay-In part, the consumer’s shopping experience is preserved as a whole.

If the recommended modularity concerns only the Pay-In component. The control of the transactions, or the management of part of the wallet, are carried out by the technology of the PSP market. This ensures compliance with the provisions on combating money laundering and terrorist financing (LCB-FT). Its mission is none other than ensuring the reconciliation of funds, preventing fraud, verifying the identity of sellers and guaranteeing payment. In addition, the solution guarantees to cover the complexity of payment on behalf of third parties so that the operator of the future marketplace can focus on its business strategy.

Finally, for a big player that wants to open new doors for their business, migrating from e-commerce to marketplace is ideal! However, there are rules to follow. Whether vertical or horizontal, a marketplace acts as an intermediary between brands and consumers by referencing the offers offered. To provide a seamless user experience, the payment step is essential. The main challenge here is to optimize the conversion rate thanks to an unaltered user experience, a wide and diverse offer in a fluid and secure environment.

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