Can Hudson’s Bay Beat Amazon in Canada?

Canadian retailer Hudson’s Bay, which is also the parent company of luxury department store Saks Fifth Avenue, is building a third-party marketplace with thousands of new products. Opening an online marketplace for independent sellers is just one way Amazon has become the 800-pound gorilla of ecommerce, whereas Hudson’s Bay has historically been "willing to try various different digital initiatives" and "has been quick to test and learn," according to Chelsea Gross, senior principal at Gartner. Gross also said that Hudson's Bay's agility bodes well. So can Hudson’s Bay build an online marketplace that appeals to both sellers and customers despite Amazon’s long shadow? A tall order A recent report from ecommerce data firm Marketplace Pulse found Amazon has more than 6 million sellers worldwide. More than half list goods on Amazon in North America and the platform continues to add around 2,000 new sellers daily. Sales by these vendors added up to $300 billion in 2020, making up nearly two-thirds of the platform’s total gross merchandise volume. As CEO Jeff Bezos might say, these sellers continue to kick Amazon’s first-party butt. Research shows Walmart, which launched its marketplace in 2009, has just 82,000 sellers, and that was when as a result of being limited to U.S. sellers until recently. Since opening to global vendors earlier this month, the retail giant has welcomed about 100 sellers from China, according to Marketplace Pulse. Meanwhile, just two years after its debut, Target’s marketplace reportedly has only 300 sellers. Expanding sellers Hudson’s Bay said in a statement that it plans to bring more than 500 sellers on board by the end of 2021 and to expand in categories such as sports, technology, pets, health and wellness and vintage designer handbags and watches. “We now have the ability to add millions of products to our offering, quickly adapting to customer demand,” Iain Nairn, president and CEO of Hudson’s Bay, said in a statement. But in an email, Joe Kaziukenas, CEO of Marketplace Pulse, noted 500 sellers is “a tiny amount to have meaningful sales impact,” particularly since Amazon.ca “has selection from hundreds of thousands of sellers.” According to web analytics firm SimilarWeb, Amazon.ca and Amazon.com are the first and third most popular ecommerce sites in Canada, respectively. Another question is where Hudson’s Bay is going to find 500 third-party sellers. “Canada is, comparatively to the U.S., a smaller country,” Robert Smolarski, vp of ecommerce at Reprise Digital, said. As of January, Canada's population is about 38 million, according to the national statistics office. That’s about 11% of the U.S. population. Seller and platform perks Nevertheless, Gross said this opportunity should appeal to small businesses that haven’t built their own websites and can now capitalize on Hudson’s Bay traffic. Per the retailer's own figures, it operates the fifth largest ecommerce business in Canada. “Why wouldn't you go build your own website? Because of how costly it is,” she said. “You can, to a certain extent, bank on a certain volume of users to just be browsing Hudson’s Bay and be able to have that visibility there." Smolarski noted the marketplace also allows Hudson’s Bay to offer more on- and off-site advertising. “Similar to sponsored advertising spots on Amazon or Walmart.ca,” he said. “It's pay to play. Retail media, in general, has exploded in the past year. So that certainly opens up that opportunity for Hudson’s Bay to then incorporate more of those capabilities on their site.” That’s in part because of increased traffic. “I think they're going to see probably a meaningful influx in visitors to the site because there's just going to be more sellers and more product and there's going to be an opportunity to take advantage of that through sponsored placements,” Smolarski said. Third-party challenges But that’s not to say it’s a slam dunk. Potential challenges include a disjointed customer experience resulting from different shipping and returns policies among sellers. “When you add a number of these products into your cart, you'll find that they have completely different purchase pathways,” Gross said. “So different shipping policies, certainly different timelines, and you end up having a bit of a cumbersome experience to purchase a number of different products where you might be used to having that all come in one box.” In addition, while sellers have to apply to sell on Hudson’s Bay, Gross noted, “I haven't seen anything specific that would prevent counterfeit merchandise necessarily to be sold through,” so knockoffs could still be a problem on this marketplace as well. Smolarski agreed one of the risks of online marketplaces and the invitation of third-party sellers is a detriment to the overarching retail brand. “To a consumer, maybe they'll go on [TheBay.com], buy a knockoff item and not even realize that the seller they're buying it from is just some third-party seller,” he posited. “They just like a name brand and they buy it, so, to the consumer, that's [Hudson’s] Bay.” But Smolarski said Hudson’s Bay will likely be strategic in its seller vetting process, which should minimize the problem—at least to start.“I think a good example of that is Target, he said, adding they curate who they invite. “Walmart has started to open it up, but initially they were very specific on what third-party sellers were allowed to sell on the Walmart.com marketplace.” Oh, Canada Another important consideration: Hudson’s Bay is serving customers in Canada. Canada has been “a tough nut to crack,” Gross noted, in part because shipping across Canadian provinces is more challenging than across U.S. states. But, she thinks “it actually makes a lot of sense." "It's not a spot that any international players have had a really strong ownership of to date and it still represents a relative white space in terms of owning that market," Gross said. Le Tote Acquires Lord & Taylor in a $100 Million Deal