Study on local marketplaces & opportunities for brick-and-mortar retail [Update 2022]

In this study, we will first look at the category of non-transactional approaches for retailers. The simplest solution here is offered by so-called retailer directories, which are described below.

Retailer directories are simple online directories that list and present the local retailers of a city or region. They offer retailers the opportunity to achieve a certain visibility on the Internet. In most cases, visitors to these retailer directories will find contact details and opening hours of the retailers, occasionally there are also extended retailer profiles. Usually, a map search is also offered, which shows the locations of the retailers. In case the retailer already has its own website, or even a webshop, a link to these pages is also common.

Here there are not only Germany-wide platforms like Buy Local, Lokalkauf or Shopdaheim. There are also countless local initiatives, partly because of Corona, they try to tell the local population which retailers are open or how they can be reached.

Examples of retailer directories (click to enlarge)

A low level of effort on the part of the retailers is therefore also offset by a low level of benefit. The question here is therefore what incentives the directories offer users and, above all, customers. Customers increasingly use options such as Google My Business to find retailers because they do not have an overview of the existence of such small Retailer directories.

In the following, so-called assortment directories are defined and evaluated here. They are also called “online storefronts” and display the retailer profiles for a specific city or region (similar to Retailer directories). Links to dealer websites or webshops are also possible. However, they offer the add-on of a dealer-specific digital assortment display. Thus, the basic idea is that customers can get inspired online in the assortment directory by viewing the retailer’s assortment. The customer can then purchase the goods in the stationary retailer on site. Retailers sometimes also offer reservation functions here, so that product availability on site is guaranteed.

Online storefronts are often local initiatives that showcase the products of retailers in a specific city or region. Therefore, local companies are often heavily involved in their design and commissioning. Publishers in particular serve as bases for such projects. One example is the Lieblingsladen platform, which is operated by Südkurier Medienhaus in the Lake Constance region.

Another player in the segment of assortment directories is the shopping center operator ECE, which operates such sites called “Digital Mall” for more than 60 shopping malls. In this project, the assortments of the participating retailers of the respective malls are presented in a shopping area on the center websites. In this way, customers select their desired product at home, carry out an availability check and then pick it up on site at the mall. Alstertal-Einkaufszentrum is currently in a pilot phase that will enable customers to buy products online and have them delivered to a desired location as part of a transactional marketplace.

Examples of online storefronts (click to enlarge)

The assortment-based approach is attractive if either customers can find their way to the retailer’s site and be inspired by the local offering or, on the other hand, the items are marketed in such a way that they can be found by specific product searches by local customers, e.g. via Google. However, this is only true in the rarest of cases, so that a large majority of initiatives, although created with a great deal of effort, rarely achieve any noticeable effects for participating retailers.

This section looks at transactional platforms on which local offers and the demand of a city or region are to come together.

While customers can shop throughout Germany on some of these marketplaces, other marketplaces restrict demand locally or to the region, for example by only allowing goods to be picked up. One example of a transactional marketplace that delivers nationwide is Mein Heilbronn Shop. Here, customers can order in the store, by e-mail or by phone and then pick up the goods from the retailer, have them delivered in Heilbronn or even Germany-wide. Flobee represents an example of exclusively local delivery. However, Flobee offers same-day delivery and thus real added value for local customers.

A large proportion of local online marketplaces are based on solutions from commercial providers such as Atalanda , which specialize in selling local marketplaces. This is no coincidence, because installing a transactional platform is significantly more costly than a non-transactional solution. Many local initiatives shy away from this investment. But it’s not an easy market for commercial providers of such platforms either, as the long list of failed providers here shows: Allyouneed, Locafox, SimplyLocal, Locamo, Lozuka and many other players have ceased operations in recent months and years because they failed to develop a business model that works independently of subsidies or municipal grants. For retailers, there is a great deal of effort involved in posting their assortments on these platforms, which are barely integrated into the e-commerce ecosystem, if at all. Moreover, they do not achieve sufficient reach and sales to justify this effort. As a result, there is generally no added value for customers, and after a start-up phase, cities and municipalities generally have to ask

New on the market since April 2021 is the concept “eBay Deine Stadt” (eBay your city), with now more than 30 participating cities and regions. eBay Deine Stadt offers a different concept for a local marketplace with some significant advantages, which explains the great success of the model in the past months. For cities, eBay Deine Stadt offers a fast implementation based on a platform that is connected to the eBay marketplace. Many local retailers from all over Germany are already active here, which facilitates the implementation of a local online marketplace per city, since in many cases a critical mass of merchants and assortment already exists. The most important advantage for the cities, however, is that the eBay Deine Stadt model is attractive to retailers, making the approach a sustainable model for a local online marketplace. On the one hand, sellers work with an established platform (ebay.de), where they find additional reach and local visibility in a local online marketplace. In addition, new sellers find extensive support in the first few months as part of the “eBay Durchstarter” program.

The special approach of “eBay Deine Stadt” is also shared by experts in the market:

Examples of local and regional marketplaces (click to enlarge)

The implementation of local online marketplaces represents a significantly higher effort than non-transactional solutions. For this reason, solutions from commercial providers are more likely to be found than individual municipal developments. Listing and settlement processes also represent a higher expense for retailers, which is generally not covered by the low demand. In the past, this has led to the failure of even ambitious projects with prominent partners such as the following. eBay’s approach is an exception here, as merchants can combine the wide reach of the eBay marketplace with the local online marketplace under “eBay Deine Stadt”.

Examples of failed platforms (click to enlarge)

In this study, we can’t overlook the marketplaces of composite groups or vertical aggregators. These are among the vertical approaches and tend not to be operated by cities or municipalities. The aim is not to promote the stationary trade in general, as in the previously mentioned categories, because trade associations usually only support the members or participating partners of the composite group. The fact that the stationary partners are no longer visible, but part of a centralized online model of the composite group could be a problem in this case.

Examples of vertical online marketplaces (click to enlarge)

A detailed analysis of buying groups and their digitization concepts was already made by eStrategy Consulting in a separate study and is available here.