Kroger launches 3rd-party marketplace to drive media revenue
The ecommerce world is abuzz with the news that supermarket giant Kroger will launch a third-party marketplace. There’s much conjecture about why Kroger would make such a move. But the smartest folks in the game understand the reasoning quite well: Kroger is making a play for media revenue.
“If launching a marketplace is just about selling incrementally more SKUs, I would definitely think twice if I was a grocer,” Tory Gundelach, senior vice president of retail insights at Kantar Consulting, told Modern Retail. “But if it’s about looking for other places to sell media, then the picture starts to become more appealing.”
Seen through the lens of advertising media, Kroger’s move makes perfect sense. The company is already deep into an initiative that began in 2017 to create new revenue streams to offset the notoriously low margins of the grocery business. And the component of that initiative that is most interesting to ecommerce insiders is the Precision Marketing Business, an impressive array of first-party data from the Web combined with in-store data collected from shoppers at the company’s more than 2,750 supermarkets and multi-department stores.
Kroger markets its Precision Marketing Business to CPG companies as a tool to improve ad retargeting.
The new third-party marketplace, which will be built by ecommerce software company Mirakl, then becomes an effective tool to increase the size and power of the Precision Marketing Business, adding on-site ad revenue and boosting the already impressive retargeting service.
Kroger is already a powerhouse player in retail. The company is the largest supermarket by revenue in the United States ($121.16 billion for fiscal year 2019). The Cincinnati-based company is also the second-largest general retailer in the country, trailing only Walmart. Selling items like toys or furniture or whatever else that Kroger supermarkets don’t have room for on their shelves, will only make the company bigger and more capable of fighting off Walmart and Amazon.
But at its core, Kroger’s move is about the two things that matter the most now for everyone in ecommerce: using first-party data to understand consumer intention and then clear the path.
Here at <intent> we have a tool that allows you to sell media on your site without the risk of cannibalizing your core revenue streams.
We call it <intent> Decision. If you have a marketplace already, or are thinking about launching one, we should talk.LEARN MORE