Are Online Marketplaces the New Department Stores?

With ecommerce growth on the increase, more and more brands are turning to online marketplaces as department stores appear to become increasingly redundant. Host speaker Dilyana Gramadarova – Head of Strategic Partnerships at Retail Without Borders – was recently joined by two guest speakers in an exclusive webinar as part of the RWB Digital Series to discuss the shift from offline to online. The webinar welcomed its guest speaker Pete Harris, the Director of Managed Services at We Are Pentagon, who has vast experience in enabling retailers to sell products across their own marketplace stores worldwide. The conversation was also joined by guest speaker Cas Paton, Founder and CEO of With Pete’s decades of experience and OnBuy being the world’s fastest growing marketplace, both guest speakers  are uniquely placed to share their experiences and visions on the digital revolution.

Although the conversation revolved around the idea of ‘are online marketplaces the new department stores?’, a variety of topics were discussed, with several exciting questions raised:

  • Is the turmoil experienced by physical retailers due to the global pandemic just a transitional period? 
  • Are online marketplaces a perfect fit for the brands a department store represents? 
  • How has the social element of shopping been impacted, and can this thrive online in a digital trading environment? 
  • Have consumer expectations changed as a result of the pandemic and if so, how?

This article will explore some of these ideas, delving into key insights shared by the speakers who are industry experts and will provide clarity, as well as predictions for the future.

This article is a summary of a Retail Without borders webinar on the 16/02/2021.


Online Marketplaces: Transitional Shift, or Irreversible Milestone?

As we know, there has been a huge shift from shopping in physical stores to shopping online, largely due to the global pandemic and lockdowns. The first hot topic that our two guests discussed was whether or not this shift is merely a transitional period, or the new normal. According to the CEO of OnBuy, Cas Paton, this shift is not a temporary stage but rather a “catalyst”, which has simply accelerated the uptake of online. Cas pointed out that this isn’t necessarily a new change, but rather it has taken businesses that were slowly moving online and made them move faster in terms of building their digital infrastructure. Furthering Cas’ points, according to research from Barclays Corporate Banking, “15% of UK companies have created roles specifically to cater to an increase in digital sales and boost online capacity.” Therefore, it would certainly appear that this shift to online is here to stay; Cas described the shift as being “a very clear indication that online is well and truly solidified as the future.” 

Pete Harris, Managing Director at We Are Pentagon, agrees, noting that “this shift has been coming for a long time”. Pete believes that the pandemic hasn’t caused retail businesses to close down, but rather it has forced businesses, who were already struggling, to adapt under more pressure – accelerating the shift to online. Acknowledging that digital isn’t everything, however, and that “the future is a mix of digital and bricks-and-mortar”, Pete pointed out that remaining department stores have an opportunity to partner bricks-and-mortar with their digital offering, filling a niche that has been left by stores that couldn’t adapt and have subsequently had to close down, a statement Cas agrees with.


Social Shopping

Although we have already established that retail is experiencing a huge shift to online, will there really be no demand for physical stores? Host Dilyana Gramadarova (Head of Strategic Partnerships) raised another very interesting question during the webinar: what about the social element of shopping? Is there a way for social shopping to thrive online, and in digital trading, the way we are used to experiencing it in real life? Cas doesn’t seem to think so. According to the founder of OnBuy, “online is by no means a complete replacement for physical stores”. The social element to shopping is a factor that just simply cannot be recreated in the online space. In addition to browsing for items, going for something to eat or drink with your friends is part of the shopping experience for many people. Being able to enjoy that human interaction plays an important role in making a purchase, particularly if it’s a special one (such as a ring or other jewellery).

This brought Cas to another interesting point, which is that there are certain products that you want to touch and feel to really be able to appreciate as part of the buying experience. Referencing high end watches as an example, he clarified that “some products don’t lend themselves to online in the same way”. Pete agreed, adding that “once people start going back to work, delivery isn’t always the answer because people won’t always be at home to deliver”. According to a survey of 1056 UK adults carried out by, “85% of people still prefer to physically purchase products in store.”[2] However, it is worth noting that this survey was carried out pre-COVID, so it would be interesting to see how consumer attitudes have changed since the onset of the pandemic, which this article will go on to explore. 

The discussion around social shopping concluded with both guest speakers agreeing that we could see a large growth in Click and Collect as a solution to these problems. In addition, both believe that to be successful, there needs to be synergy between the two platforms, with Pete describing the situation as “what we really need is a really successful, thriving shopping centre or high street, complimented by a brilliant digital experience”. So overall, although many consumers are enticed by online shopping for the ease and convenience it provides, there’s certainly a more fulfilling experience to be had in physical stores that ecommerce simply won’t be able to offer.


Customer Experience: Changing Expectations

Finally, the speakers talked through a question which is very relevant in today’s climate. As mentioned previously, a survey revealed that the vast majority of consumers still prefer to shop in store, despite the convenience offered by online shopping. However, will we see a change in expectations of the customer experience and online customer journey post-pandemic? Both guest speakers had several predictions about what the future could look like in terms of the needs and wants of customers. 

Cas focused primarily on the physicality aspect of post-pandemic shopping, suggesting “consumers are not going to want to be huddled tightly in a department store anytime soon.” The graph below may provide some evidence of this point: 

Respondents who fear being infected by the Coronavirus (COVID-19) in UK, Apr 2020

As you can see from the graph above, the most recent data on the far right indicates that 42% of respondents are ‘fairly scared’ of being infected by the Coronavirus, with 14% being ‘very scared’. Only a tiny percentage of people (8%) are ‘not at all scared’. This might suggest that Cas is right in that a lot of people fear catching COVID-19 and therefore their attitudes to being in an enclosed space with other consumers may have changed.

His suggestion is that customers “are expecting the ability to have distance and space when they return to shopping”. This could be particularly important for smaller stores which may need to change their layout. However, it could also impact certain larger stores that are based around high footfall. As we’ve already seen, many shops are only letting a reduced number of people in the store at any given time, meaning customers may have to queue. This may push some consumers towards wanting to shop online, as they are not getting the experience that they wanted. All in all, Cas advises that “the stores that will do best are the ones who embrace this and focus on giving customers a good experience, rather than relying on high footfall.” 

Alternatively, Pete raised some excellent discussion points around the online space. He spoke about how pre-COVID, people had an “online favourite” – a brand they liked and would buy from even if the customer journey wasn’t perfect, or a bit “clunky”. However, in the last year, “people have spent so much time shopping online they’ve experienced new brands who have a really good experience.” For example, brands having a user-friendly browsing experience, quality content which explains everything you need to know about a product, and an efficient delivery proposition. The result is customer’s expectations for online are now much higher than they were previously, with consumers wanting that all-encompassing experience. So, Pete believes the outcome of this will be that “good online retailers will come to the forefront and those that don’t do a good job will disappear.” Overall, brands have learnt the importance of giving digital customers exactly what they need.


So, Are Online Marketplaces the New Department Stores?

Yes and no. While yes, online marketplaces are – in some ways – the new department stores, they aren’t to the extent that they will be a complete substitute. The insight gained from this webinar suggests that online marketplaces in the digital space, and department stores in the physical space, both have a key evolutionary role to play in the industry. There needs to be a collaborative, symbiotic relationship between a brand’s physical store and its digital offering in order to accelerate growth, but also to be able to utilize the pros and cons of each.


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