Introducing The State of 3P Commerce Report

New Survey: 57% of retailers and brands in the UK to increase third-party selling  
 

Retailers and brands may be feeling the heat as they grapple with rising operational costs and a highly competitive market that has caused major margin constraints. Traditional playbooks are no longer as effective, and businesses must rethink their strategies to survive in the marketplace. A majority of retailers, brands and suppliers believe margin constraints require adapting their business model for e-commerce.

Today, Rithum, a leader in third-party (3P) commerce, has released its first annual “The State of 3P Commerce” report, conducted by Wakefield Research*. With 3P commerce growing globally, this report surveyed 550 executives at retailers and brands using 3P in the US, UK and Germany to identify growth opportunities through this e-commerce model.

“What we’re seeing is a significant shift in the way brands and retailers go to market. Our research shows that 3P commerce provides the most business value and opportunity for retailers, brands and suppliers in today’s complex e-commerce landscape. Businesses are embracing the agility that the 3P model provides to meet consumer demands and grow in ways that traditional models simply can’t match.”

Lou Keyes, CEO, Rithum

In fact, 57% of retailers and brands in the UK plan to increase third-party (3P) selling in the next 12 months to help weather the turbulent economic climate. Globally, 99% of retailers and brands say that 3P selling is the best model for weathering economic volatility, according to the report. 

He adds, “Today, retailers and brands are feeling the pressures of the e-commerce market from all sides. What may feel like a crisis is actually a turning point filled with opportunity. As the industry evolves, it’s great to see how businesses are not just surviving but thriving when they adopt the 3P commerce model.”

What is 3P commerce?

3P commerce is different for retailers compared with brands. For retailers, 3P commerce helps them access unowned inventory. This is a business model where brands sell products directly to consumers through a retailer’s storefront, typically through a dropship or marketplace approach. This model shifts inventory risk away from retailers, who instead act as facilitators between brands and consumers. For brands, 3P commerce helps them extend their owned inventory to unowned channels. This allows brands to reach more consumers through a multichannel selling strategy.

Key Findings:

3P commerce is a significant growth opportunity for retailers and brands

• The report found that 70% of executives in the UK say that up to half of their total revenue comes through 3P selling. Nearly one-third say it’s more than 50% of their total revenue.
• The report highlights the growth opportunity of the 3P model, with 3 in 4 executives globally deeming 3P sales to be vital to their company’s ability to grow, with 57% in the UK planning to increase the use of 3P selling in the next year.

What’s driving demand for 3P commerce?

Consumers are shopping across more sites and social apps than ever before. That’s why reaching more consumers where they shop is a top reason retailers and brands adopt a 3P selling model.

• 37% of retailers and brands in the UK say they sell through 3P commerce models to reach a larger consumer audience.

AI and integrated technology will accelerate 3P commerce

While generative AI is all the hype in the technology industry, its more practical use for automating supply chain operations will likely be the most transformational for the retail and e-commerce industry. AI already allows retailers to reduce transportation costs, improve shipping speed and optimise inventory placement and restocking speed.

• Nearly all executives (99% in the UK) believe their company will never be able to meet growth expectations if they cannot get a handle on their supply chain challenges.
• What’s more, 91% of respondents in the UK indicated that AI is very important to their ability to successfully manage their e-commerce operations, including 1 in 5 who feel AI is critical for this.

Technology is transformational to nearly every industry, but for 3P commerce technology, the options for retailers and brands are fragmented.

• On average, retailers and brands use four platforms to manage their 3P selling, noting this complexity makes it harder to measure performance and ROI for the business.
• That’s why 98% of retailers and brands in the UK believe a unified solution for 3P selling is a ‘game-changer’ for their company.

Retailers and brands recognise the value of 3P commerce and believe it contributes to profitable growth for their company; however, technology solutions need to make it easier for them to sell and measure the ROI of these e-commerce models.

Read and download the full report here.

*Methodology: The State of 3P Commerce Survey was conducted by Wakefield Research (www.wakefieldresearch.com) among 550 executives at retailers offering 3P models and brands selling via 3P models, with 200 respondents in the U.S. and UK and 150 in Germany, between August 20th and August 29th, 2024, using an email invitation and an online survey.