Software For Sellers, The New Engine Of Growth In E-Commerce
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Potential comes as new marketplaces boom

Marketplaces have become e-commerce’s engine of growth. As their selections have improved, some have replaced search engines as consumers’ first stop in their search for a product. They are expanding especially fast in mature online markets and are forecast to make up 40% of e-commerce’s $3.4 trillion in worldwide gross merchandise value (GMV) excluding groceries in 2024, up from 21% in 2018.

How can investors benefit? The rise of marketplaces is fueling the growth of specialist third-party sellers, which gain access to a multi-billion-dollar retail market using IT and some products on hand. The sellers increasingly need new software capabilities to run their operations, and we think there is an opportunity to invest in providers of these specialized services. To give some idea of the scale, sellers’ spending on software typically amounts to between 1.5% and 2.5% of their GMV, and we forecast their total GMV excluding groceries to rise to more than $1.3 trillion in 2024.

This potential follows a major shift in the marketplace industry. Early on, it was dominated by e-commerce giants such as Alibaba and Amazon. Now, newer players have figured out the functions and capabilities that underlie successful marketplaces, and they are driving the growth. In particular, specialist marketplaces focusing on specific products and segments are taking share from the giant one-stop shops.

Thanks in part to these specialist marketplaces, sellers are now growing in scale. The recent increase in marketplaces’ GMV derives from higher revenues at individual sellers – whereas previously, growth came from a rise in the number of sellers. That means an increasing number of sellers will reach the size needed to run new capabilities profitably.

GMV of online commerce general merchandise, global, 2018-2024F

There are a number of reasons why sellers need to upgrade their operations: Marketplaces are professionalizing their seller management, forcing sellers to upgrade their own setups – supply chains and IT interfaces, for example. Just a laptop no longer does the trick. Also, regulators are imposing more complex requirements on sellers, for example though stricter tax reporting. In addition, heightened competition is pushing sellers to develop more-sophisticated capabilities, so that they can improve their platform marketing and offer high-quality supply chain services.

Support Services In Demand

Many of the capabilities in demand will be similar to those developed elsewhere in the retail sector. Here are six areas in which software providers can address the needs of marketplaces and benefit from the expansion.

  • Seller software helps fulfill orders and run back offices efficiently. While some global solutions are emerging, the markets for these products are mostly still fragmented by country or, at best, region. This software often commands high margins.
  • Tax-tech solutions help sellers file and report value-added tax (VAT). Compliance and filing obligations are increasing in Europe, for example through reductions in the VAT exemption threshold. In particular, the requirements are growing more stringent for cross-border trade, indicating high growth potential for these solutions.
  • Fulfillment solutions tailored to marketplace sellers help to fulfill orders smoothly, even when selling through several marketplaces and other channels, both online and offline.
  • Marketplace intelligence tools aim to boost sales using advanced – often AI-based – marketing, pricing, and customer management.
  • Marketplace and e-shop integrators help to integrate new sales channels quickly and smoothly, while synchronizing information in a seller’s backend operations. These are especially important for sellers with a broad range of online channels.
  • Reporting, controlling, and e-invoicing systems automate administrative tasks.

Services Reaching Investment Size

Predictions for the future of marketplaces used to center on the potential winners of a competition for dominance between the giants of the field. But the new marketplaces are boosting sellers – which are then helping the marketplaces to expand further.


The sellers’ demand for tech solutions is now significant, and the makers of this software are becoming large enough to present opportunities for growth and private-equity investors. These potentially include rollups and consolidation. The prospects and high level of market fragmentation make these providers an interesting target for investors – and they will stay that way for several years to come.