The influence millennials have in the growth of online marketplaces

Gepost op 03 June door Simon Gomez in Marketplaces


There is no secret that millennials (born between 1981-1996) have an advantage over past generations if we speak about internet usage. This generation experienced and helped grow the internet world to the level that today it has. Millennial shoppers possess higher knowledge than the previous generation (Generation X, born between 1960-1980), and in terms of technology, they are addicted to it and know everything about it.    

Technology and the internet had never been so important to retailers because, for the first time, this generation prefers to shop online more than any generation we have ever seen before. That is why stores should move to the online world as Unpacking Ecommerce confirmed this and gave a warning to those companies that do not have an online store: “This is a sign of dominance that the online retail market places will have in the future. Time is ripe for the retail business to make an impending transition to stay relevant in the demographic shift of its consumer base.”   

And retailers that moved to the online world are pretty happy with the results they are getting. This generation is willing to buy stuff from the internet more than ever before is encouraging to them. Millennials buy more than 54% of their products online. Plus, this generation is pretty much always connected. A study showed that 48% of millennials are regularly available online, and 46% go online multiple times a day.      

Recently, Statista and ecommerceDB published an article citing the hugest online marketplaces in the world. Taobao and Tmall, both owned by Alibaba, occupied first and second place with a Gross Merchandise Value (GMV) of 490.3 billion and 464.5 billion dollars. In third and fourth place came Amazon and JD. The US-based company had a GMV of 397.2 billion dollars, and JD, also a Chinese online marketplace, had a GMV of 301.9 billion dollars. The last place goes to eBay and with quite a distance. Their GMV was 75.6 billion dollars. 

Source: Statista and ecommerceDB 

As incredible as it sounds, millennials influenced the growth or negative growth of these websites. Let's take a look at how millennials affected them.   

Positive impact:   

In 2018, Daniel Zhang, CEO of Alibaba, indicated that Taobao was making a big adjustment to become younger. At the summit in Hangzhou, China, Zhang said. “Taobao is undergoing a major change and is getting younger and younger. This means the platform needs to become ‘younger’ as well, to serve the next generation of buyers.” The numbers do not lie for Taobao as more than 70% of its users are between 20-30 years old, which means they are millennials.    

Stores inside the website of Taobao also had high revenues due to more millennials buying. To cite one example, a brand called YingYuTang that sells Hanfu (traditional Chinese dress that looks like a robe) had revenue growth of 150% because millennials had an interest in ancient Chinese history.  

In the case of Tmall, almost half of its active users are between 18 and 28 years old. This group also made Tmall the most used online shopping website by millennials in China. This number will continue to go up as Tmall expects more users in the following years, and the company is ready for this growth, according to a spokesperson for Tmall Global Consumer Insight division. “Our research shows that consumers in this age group are quickly becoming the major growth drivers for the platform because, for many of them, they are starting to earn a salary.”   

The following is one case of a market inside Tmall that grew due to the use of Millenials. According to a 2020 report from Bain and Tmall, there was an increase in the Chinese market share for luxury products. It went from 11% to 20%. One of the factors that contributed to this was the millennials shoppers. Bruno Lannes from Bain & Company expressed: “Millennial shoppers play a key role in this year's growth”. The estimation is that this trend will keep growing. In a survey, this group affirmed they would increase their spending on luxury in 2021. Millennials in China consider these items essential because they want to look good wherever they are. 

Source: China’s Connected Consumers: The Rise of Millennials  

Amazon’s growth was also affected by millennials. Remember that in just the USA, millennials are the largest population group with an estimated population of 72.1 million people, according to Statista. So, these numbers are astonishing. In 2019, a Nielsen Report indicated that 61% of millennials made at least one purchase online through this site. In just the United States, the numbers for Amazon are incredible. Al least 64% of millennials make half or more than one purchase on Amazon, and 97% of the millennials at least use Amazon to do part of their online shopping.     

JD in China was the third most used app in mobile phones by millennials, behind Taobao and Pinduoduo. And in you look at the chart on top again, you will notice that JD was the second most visited online shop among millennials.   

Negative impact:   

eBay was the only company with negative growth (-8%) out of the four mentioned. That happened because lately, they started to care and treat millennials as new consumers for the present and future.   

Jamie Iannone, eBay’s CEO, stated that they are focusing on millennials as new consumers. “We had a TikTok promotion that went extremely viral, we got 4 billion views on that, and a lot of the acquisition that we’re seeing is actually from millennials”, Iannone explained in the Nasdaq 43rd Investor Conference held virtually in 2020.   

On top of that, eBay is trying to change its style. Before, it was more of an auction-style site and a place where people sold used stuff. Now it is leaning towards fixed prices. 86% of the products are sold at fixed prices, and most of the products sold are new. Another thing eBay did was revamp its home page and added new features.    

eBay now has implemented a better artificial intelligence machine that offers millennials more personalized shopping depending on what they look for, click, or their interests. Furthermore, now in the app, you can snap a picture of something you like, and the shop offers you a similar brand or product.    

Conclusion:   

Millennials play an essential role in the growth of any online retailer because they are the largest workforce, and of all generations, they have the highest spending power in the world. They prefer to do their shopping online. That is why shops must dive into the online world to provide them with a solution for their needs. As an online retailer, you must take advantage of this, and you as a company will increase your sales and income.   

But be aware of something: 80% of millennials are influenced by the price when shopping. That is why as an online retailer, you should look for price monitoring software, and PriceTweakers is the program for you! We offer you the possibility to adjust the pricing on your products using a dynamic pricing strategy and make profits along the way. With our software, you have full knowledge of the market you are in, and we provide you with different and interactive dashboards with valuable information. Follow us for more information. 

 


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