Macy’s has launched its digital marketplace platform, significantly expanding its offering of categories and types available on macys.com and providing sellers with a wider audience of potential shoppers.

This fall, via its marketplace, macys.com will make available 400 brands not previously sold at Macy’s, across 20 categories. Of the 20, eight categories are latest to Macy’s: electronics, video games, floral gifts, gift tissue/wrapping paper, vitamins, sports nutrition, computers and peripherals, and wellness.

The marketplace is geared to grow Macy’s volume and profitability and meet the demand for products that the retailer’s shoppers requested but couldn’t find on its website or in Macy’s stores up to now. The web offering will grow over time.

An enormous chunk of Macy’s volume is generated online. Last yr, of Macy’s Inc.’s $24.46 billion in total sales, digital represented 35 percent, a 9 percentage point decline from 2020, but a ten percentage point improvement over 2019.

Executives from the department store retailer told WWD that the marketplace is being “seamlessly” integrated into the product assortment of the e-commerce site, meaning that customers shopping online and thru Macy’s mobile app should feel minimal differences. On the product pages, marketplace items sold by a 3rd party and shipped by it are indicated.

Brands, third-party merchants, and/or individual products join through the marketplace platform to sell their products on macys.com. With the marketplace format, Macy’s doesn’t own that merchandise or manage the shipping to customers, but gets commissions on the sales. That is different than owned merchandise that’s bought by Macy’s merchants, held in its warehouses and delivered to customers by the retailer. It’s also different from drop shipping where Macy’s also owns the products which are sold on macys.com, but shipped by the supplier.

For the past couple of weeks, Macy’s has been testing its online marketplace with certain products and types, but on Wednesday it was officially launched with more products. Lots of the 400 brands are already being offered and others will probably be listed later this fall.

Digital marketplaces reminiscent of Amazon, eBay, Walmart, Alibaba, Farfetch and Shopify list an enormous array of categories and items. Some are characterised as “generalists,” meaning they provide the whole lot to everybody without having a pointy identity or clear image.

More recently, a fast-growing subset of smaller marketplaces has been emerging, providing additional competition for Macy’s, reminiscent of Express, Hudson’s Bay, Best Buy, Stadium Goods, Lands’ End, Crate & Barrel, Urban Outfitters and StockX. They allow retailers to present wider assortments, speed up sales volumes, and reach more consumers, whom they hope won’t surf competitors on the web as much to get what they need.

“While there are various very large marketplaces on the market, Macy’s competitive advantage is our curation, our merchants’ lens, that we bring to the entire categories that we sell, and we wish to be sure that that manifests through our marketplace offering as well,” Matt Baer, Macy’s Inc.’s chief digital and customer officer, told WWD in an exclusive interview.

“For us, marketplace is a multiyear journey, and our commitment is to construct a best-in-class seller experience and best-in-class customer experience,” said Baer. “I’m really confident that as we open up the marketplace to additional sellers and extra brands, we are going to give you the chance to keep up that basically strong curation and great customer experience, and that marketplace will proceed to evolve and grow and will probably be a critical platform for Macy’s future success.”

Baer said Macy’s has greater than 44 million customers — those that have shopped the retailer not less than once within the trailing 12 months. They supply “a ton of knowledge when it comes to what they’re in search of after they are shopping at Macy’s and likewise what other products and categories and retailers they’re shopping after they should not at Macy’s. We’re in a position to use that information to find out what are one of the best categories for us to get into, from a marketplace assortment perspective. That list evolves over time in addition to we enter latest or adjoining categories with the aim of best serving the shopper and meeting their demand for categories, products and types that they expect, or are comfortable with Macy’s selling.”

With a marketplace, speed is one other advantage, Baer said. “A marketplace platform permits you to get product to customers more quickly than you’ll otherwise give you the chance to in a more traditional merchant channel, so we are able to stay ahead of fashion and trend. If we discover a method or trend available in the market, we are able to discover a seller that has that product available, and we are able to onboard that product to the marketplace and have the product available almost immediately.”

Baer also said that marketplace “enables one other channel, where we are able to be sure that we’re fulfilling the product to customers in essentially the most profitable manner possible.”

As well as, “as we construct the strategy,” Baer said, “It’s really helping us to perform a few of our other enterprise goals, like our support for ‘Mission Everyone,’ which is Macy’s social purpose program to advertise and sell women-owned, diverse-owned and sustainable brands.” This fall, 20 percent of marketplace sellers and types will probably be from “underrepresented enterprises,” in line with Macy’s.

Some products that wind up getting listed on macys.com through the marketplace could also wind up being displayed in Macy’s stores. As Baer said, “One other advantage of the marketplace platform is that it allows merchants to check consumer response to categories, brands, styles and products. Where we see a robust consumer response we’d consider including in future store assortment plans.”

Bloomingdale’s will even be launching the marketplace format on its website. “Our goal is next yr,” Baer said, without being more specific on that timing. Bloomingdale’s and Macy’s, in addition to Bluemercury, are divisions of Macy’s Inc.

With any marketplace, there are risks. Brands sometimes find themselves near other brands of inferior quality, affecting perceptions. Brands also risk cannibalizing their sales on one marketplace from one other. As well as, if a consumer orders from a marketplace and is disenchanted by a poor shipping experience (it arrives late or the flawed product is delivered) the marketplace could be blamed and its fame suffer, though it could possibly be the fault of the brand handling the shipping.

Nevertheless, Baer said with the Macy’s marketplace, it’s been “a yr of intense work creating an exceptional experience for patrons and sellers.” He emphasized that the marketplace platform has been “seamlessly integrated into Macy’s digital shopping experience, giving our customers access to an array of expertly curated products — from apparel and wonder to home improvement, toys, pet products and more.

“What was really necessary for us is that we created essentially the most seamless customer experience we could. The client would have notification at the purpose of sale or on the item page, when it comes to who the vendor is and who could be fulfilling that product, and there are a few points of distinction within the post purchase experience as well,” Baer explained. “But we actually made sure that as we were constructing the platform we were making a best-in-class experience for marketplace transactions.”

Select Macy’s marketplace categories and latest brands include: 

“We should not focused on sku (stock keeping unit) growth, since it is so necessary for us that the assortment is curated,” Baer said. “So we’re really focused on getting the best brands and categories on-site and ensuring we should not creating any goals internally that will potentially dilute that customer experience.

With the initial 20 categories that Macy’s selected to deal with with marketplace, “quite a lot of those categories were very easy for us to discover based on what consumers were telling us and based on what they were expecting us to hold — things like beauty and wellness, or electronics or maternitywear, or pets,” Baer said, referring to pet accessories and other products, not the pets themselves.

“There may be also some adjacency opportunities or expansion opportunities that may not be quite as obvious today, but will tomorrow as we proceed to construct out our Toys ‘R’ Us partnership. As we start to enter video games through our marketplace platform, there then becomes natural extensions to other categories like sports cards and memorabilia. Even when it’s not our first alternative today, it becomes a very obvious alternative tomorrow, as we proceed to expand our product offering.”

Macy’s marketplace is powered by Mirakl, a significant marketplace technology company, and customised by Macy’s digital, merchant and technology teams.

“We made extensive research and identified what the best-in-class solutions are on the market to be able to provide one of the best seller experience,” Baer said. “We became very confident that Mirakl partnering with Macy’s was the best path forward to create one of the best experience and to get to market as quickly as possible.

“The Macy’s brand could be very meaningful for patrons. It stands for quality, curation, and we’ve got a perspective that helps customers own their style. Our process in constructing the marketplace and identifying sellers and curating an assortment that we bring onto the platform is one which is extremely creational and we’ve got one of the best merchants on the earth they usually are involved in that process when it comes to identifying the sellers and curating the assortment. We provide to customers a possibility to access this assortment, that can also be curated and aligned and has the best adjacencies to our existing owned and drop ship assortment,” he continued. “It also becomes an incredible profit to sellers to have access to Macy’s really strong network of consumers. It’s a very awesome opportunity for sellers to get their products and types exposure, and we’ve got had a ton of success going to market and talking to prospective sellers which are so excited in regards to the prospect.”

“Our marketplace complements our existing omnichannel strategy and is one other platform we are going to use to search out essentially the most efficient distribution strategy for our partners. Not only will we proceed to maximise brands and existing assortments, but we are going to use the marketplace to check and customize our assortments based on customer demand,” Josh Janos, Macy’s Inc. vice chairman of marketplace, said in a press release.

Last February, Macy’s Inc. chairman and chief executive officer Jeff Gennette said Macy’s has decided to not spin off its digital business, after a review of its operations. Macy’s had been under pressure from activist shareholder Jana Partners, to create separate dot-com and brick-and-mortar store businesses.

“This was a really comprehensive review…pressure-testing our strategy that we’re maximizing shareholder value,” Gennette said.

The review was undertaken by the board together with management and AlixPartners, a number one retail consultancy that worked on Hudson’s Bay Co.’s separation of its dot-com and brick-and-mortar operations on the Saks Fifth Avenue, Hudson’s Bay and Saks Off fifth divisions.

“Key to the choice by Macy’s management and the board was that an integrated Macy’s delivered greater value than the separation of physical assets,” Gennette told WWD. Additionally they concluded that spinning off the dot-com business would end in “really high” separation costs, in addition to ongoing costs of operating separate firms, and execution risks, Gennette said.

Gennette added that Macy’s was heavily investing in its dot-com business and that the corporate’s three-year, $3 billion cap-ex budget was largely dedicated to growing the digital business by launching a marketplace.