Urban Outfitters Testing Third-Party Online Marketplace

Last week in their 2019 Q1 earnings call, Urban Outfitters, the Philadelphia-based multinational lifestyle retail brand, revealed they just started testing an online marketplace.

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“The digital and brand teams working together continue to research and test new ways to enhance the digital experience. For example, this month, both the Urban and Anthro brands launched their new online marketplace. This exciting new feature enables a curated assortment of third-party sellers to list and sell merchandise on our brand websites. After a thorough test period, each brand plans to expand its marketplace to include complimentary brands, products and services with a goal of expanding the online assortment offered to the customer and increasing site traffic.”

Richard Hayne, CEO, Urban Outfitters

Being an earnings call, the company did not get into the technical details how this marketplace works. They also did not specify how they are testing this concept.

The company already operates a sourcing site called URBN Vendor which details how prospective vendors can get their products on the platform.

However, one look at the Onboarding Document, and it becomes very clear that the requirements to sell products to Urban Outfitters will require a significant investment and supply capacity.

And while some producers manage to provide “limited edition” products in that environment, it still seems to be out of reach for many one-person operations to deal with such a vendor “bureaucracy”.

Could this marketplace be designed to help micro businesses and more limited edition producers sell on Urban Outfitters?

“…This is not a new concept on the Internet, but it is relatively new concept for specialty retail bricks or something that we’re excited about for that reason.

I think it’s going to be a relatively big win for both our merchant teams as well as our customers. For the merchant that should provide them a fair amount of flexibility in crafting their assortment as well as how they react to the market. And then just for customers, we expect that to be something that will be able to get wider breadth and assortment and hopefully choose to shop with us and choose to come back to us because of that.”

David Hayne, Chief Digital Officer, Urban Outfitters

Fashion and Lifestyle is Hot!

Fashion and Lifestyle sales are hot.

One only has to look at last week’s news that Poshmark paid out over $1 billion in sales to online sellers. Then Etsy, which focuses unique items versus mass merchandise is gaining sellers and sales.

READ MORE: Online Fashion Marketplace Poshmark Pays Out $1 Billion in Sales

And while Amazon and eBay do not break out specific sales categories in detail, both companies have launched initiatives such as image search and curated content to drive more lifestyle product sales.

One area of concern for many fashion sellers is returns.

Amazon has tried to “solve” this problem by paying for return shipping, offering returns through its Amazon Lockers network and even partnering with Kohl’s department stores as a test.

The Kohl’s test might be the most intriguing for Urban Outfitters to consider.

According to research firm Gordon Haskett, foot traffic at Kohl’s stores with Amazon return counters outperformed nearby stores without the program by 8.5 percent.

The research firm also claims that stores with the program had a higher proportion of new customers. The obvious correlation being the foot traffic created by an Amazon return resulted in floor sales at Kohl’s.

READ MORE: Amazon and Kohl’s Form Another Partnership

Urban Outfitters already accepts online purchases in its stores. If the company accepted returns at its stores from third-party marketplace orders, it would gain a significant advantage over eBay, Etsy, or Poshmark.

And sellers may even be better served with such a system because a store associate would be inspecting items before they are returned, hopefully reducing or eliminating returns of damaged goods.

Of course, for such a return policy to work efficiently, the marketplace would have to be managed through one of its fulfillment centers.

There seems to be a good opportunity here for both Urban Outfitters and third-party sellers to benefit from a niche marketplace in a hot category with desirable shopper demographics.

As Amazon increases its assortment in online fashion and lifestyle products, unique products will be harder to find on the giant eCommerce retailer’s site.

Urban Outfitters could play a role in providing another sales channel for smaller merchants and artists that produce interesting low-volume products.

READ MORE: Amazon Most Popular Among Millennials For Clothing

The devil will be in the details as the company goes through this testing phase and eventually releases more information how this program works.

The idea seems very promising.

What do you think about Urban Outfitters trying a marketplace concept? Head over to our Facebook Discussion Group or use the comments section below.