Third-party marketplaces have emerged as one of the biggest growth opportunities for retailers this year, with companies from Macy’s and Bed Bath & Beyond to Giant Food and Michaels launching marketplaces (or announcing plans to do so) in the last six months alone.
Albertsons will soon join that mix as well, and the company’s Senior Director of Marketplaces Jasmin Krdzalic gave attendees at last week’s Retail Innovation Conference & Expo a sneak peek at what he and his team are building.
The grocery sector has had a hard time cracking the marketplace code, and no company knows this better than Albertsons: it launched a marketplace in 2018 only to quietly shutter the operation a few years later.
Krdzalic isn’t intimidated by this history or the challenge ahead; in fact, it’s what excites him. “[In my career] I always look for opportunities that are not already won,” he said at the session, titled The New State of Marketplaces and Their Opportunity for Growth. “Amazon has conquered the world of logistics, they’ve conquered online shopping, they’ve conquered the world of selection — the one area they haven’t conquered, nobody has, is online grocery. And what is bought more often than grocery? Nothing. Food is omnipresent in our lives, and yet not all the food that I care about is available in one place. [So how does Albertsons become] a one-stop shop for all our customers’ food needs and become a food authority? A marketplace may be the way to get there.”
Krdzalic (who joined the company so recently that his LinkedIn profile hasn’t even been updated yet) is perhaps uniquely suited to take on this task. Not only did he help turn around the business of Bodybuilding.com, in part with the addition of a marketplace, but his own personal history has made him particularly resilient to risk. Krdzalic was born and raised in Bosnia and fled with his family to the U.S. in 1994 after living as POWs for a year. “One thing that really did is remove the fear,” he recounted. “What’s the worst thing that can happen? They can fire me — big deal. [Living through an experience like that] removed this idea that there’s only one path in life and you have to follow it.”
Krdzalic, who clearly has no intention of failing at this latest endeavor, outlined his approach to the company’s not-yet-launched marketplace — which is being built in partnership with Marketplacer — including:
- Using its marketplace to expand into trending and underserved food categories like ethnic and specialty products;
- Validating product selections with market research and its own consumer data to identify gaps in its current inventory; and
- Focusing on curation, not just in the kinds of products added through its marketplace but also how those items are presented to online shoppers.
Second Time’s the Charm?
Albertsons second try at a third-party marketplace will be different, although not drastically so, from what the company attempted back in 2018. This time the focus will be squarely on food products, extending the company’s inventory within specialty categories and niche offerings that don’t necessarily have the consumer base to justify being carried in stores, according to Krdzalic.
“Like every other business that knows itself, you have to start from the core and then work your way out into adjacencies, and our core is food,” he said. “As an example, there’s something like 1,500 barbecue sauces out there. We don’t carry all 1,500, but you can’t sell what you don’t have. So maybe there is an opportunity for a marketplace to be the vehicle for an SMB with a particular barbecue sauce that maybe my customer wants.
“One trend that is really powerful right now in the food space is ethnic and specialty foods,” he added. “Not only are we more diverse as a population, but there is this idea now of being inspired by food. [There’s a realization that food is about] more than just eating and nourishing our bodies, it’s about connecting, which we’re desperate for — food creates a connection for people. [For example], people don’t want to invite you over for chicken, rice and salad anymore, they want to say ‘I made you a Lebanese chicken,’ but that requires a very specific sauce most grocers don’t carry.”
These products will “complement not compete” with Albertsons existing product lineup, said Krdzalic: “If we already carry it, we are not going to ask for that [item]. We’re being very intentional with our marketplace.”
Creating the ‘Online Cheese Aisle’
Even after these types of strategic questions are answered, retailers can’t take a “set it and forget it” mentality with their marketplaces. “Deciding what kind of marketplace you want to be is the first step; who is going to be my integration partner to help me get that done is the second,” he added. “[Tech] and product offerings like Marketplacer are integral to what you’re trying to accomplish so that the sellers have an easy time getting in. Keep in mind also that, yes, you’re serving your customer, and that’s always going to be the priority, but you’ve got to take care of the sellers too. The sellers are your partner; they have to feel like there’s a pathway for them in this in this journey.”
One other thing that Krdzalic believes is critical to the success of most marketplaces is curation. “I think one of the biggest challenges that marketplaces have is, when it’s all thrown together it ends up being a hodgepodge of stuff that doesn’t allow for discovery, [and] it certainly doesn’t allow for conversion,” he said. “You have to think like a consumer. When you walk into a three-dimensional store there is a cheese aisle. You almost have to create an experience for people in the [online] marketplace that they know that they’re staring at the cheese aisle. The value of a marketplace is in the curation.”
Landing on the Right Type of Marketplace
Interestingly, as Albertsons looks to the marketplace model to expand its reach in the food space, fellow grocer Giant Foods is taking a different tack, with a new marketplace that grows its selection beyond food into categories such as health and beauty, home décor, seasonal, outdoor and pets.
Only time will tell which is the right approach (it’s possible they both might be), but expansion beyond food clearly doesn’t fit into Krdzalic’s strategy for Albertsons, at least initially. “When you start thinking about a marketplace for your company I would start with what am I not going to do in my marketplace,” he advised. “Marketplaces allow you this opportunity to do anything. Why don’t we sell furniture? Yes, you could, but what’s the value proposition? You can’t just pump stuff out that’s not valuable, that’s not curated, that doesn’t address the consumer’s needs.
“There are two things that that I do right up front when setting strategy,” he added. “One thing I do before anything else is make sure there’s buy-in company-wide. The second one is looking at trends in the market — what the consumer in general is looking for — and then you go inside your own data and ask, ‘Is my customer thinking the same way?’ Validate [it with] your own data — what percentage of your searches are for this type of product and are returning no result? So, it’s a matter of what is your business all about, what is the company’s ethos? And then, what is the customer gap that you’re closing? Your strategy about what kind of marketplace you need almost writes itself.”