Urban Outfitters launches third-party marketplace, tests self-checkout

Dive Brief:

Urban Outfitters this month launched an online marketplace, giving third-party sellers the chance to list their merchandise on the retailer's sites, according to a transcript of the retailer's Q1 2019 earnings call posted on Seeking Alpha. The marketplace is already gaining traction with executives who expect it to be a "big win," said Dave Hayne, chief digital officer, during the call.
The retailer has also started accepting Apple Pay and Afterpay, a buy-now, pay-later platform. The company discussed its investments in infrastructure to make its sites, which include Anthropologie and Free People, faster, more shoppable and reactive to consumers, according to the transcript. Additionally, the company is testing a self-checkout experience at the Urban Outfitters location in Herald Square in New York City.
New iOS apps, rebuilt from the ground up to provide better navigation and enhance the overall customer experience, have gone live for the Urban Outfitters and Anthropologie brands, and the company is launching a new Free People app in the coming months.

Dive Insight:

Digital continues to be a strong channel for Urban Outfitters, with the retailer reporting that this week that during its first quarter for fiscal year 2019, digital growth outperformed stores with a double-digit sales increase, with digital accounting for more than half of first quarter sales. The retailer has taken a strong position in digital for some time — its websites and mobile apps are built on proprietary technology meant to insure they are fast, reliable and scalable — and is now further ramping up its commitment to digital. Urban Outfitters also posted a 10% sales increase at stores for the quarter, beating analysts' expectations.

Urban Outfitters' new marketplace could appeal to the company's customer base by broadening its product selection and offering unique items that they might not find elsewhere. While Amazon has been one of the biggest players in e-commerce marketplaces of general merchandise, specialty retailers are jumping into the market. Crate and Barrel launched a marketplace in 2016 featuring "highly curated" third-party items that mix well with the brand's existing products. Overall, online marketplace revenue is expected to grow quickly in the next few years.

Marketplaces are generally popular with consumers, but they can pose challenges for brands, which don't have full control over the quality of the items sold by third parties or how the vendor handles shipping and logistics. Consumers may not be able to distinguish poor shopping experiences with the third party from the brand, which can harm the company’s reputation, according to Retail Dive.

The self-checkout test is interesting because retailers are having mixed results with empowering in-store shoppers to use their phones to avoid the checkout counter. Walmart recently abandoned its Scan & Go checkout because of low adoption while Macy's is expanding its mobile checkout program. Apparel and specialty retailers may be having an easier time with mobile checkout because shoppers typically are purchasing fewer items so they don't have to do a lot of scanning.

Adding new payment options, like Apple Pay and Afterpay, gives shoppers more options. Afterpay allows customers to purchase products and pay for them over time with no interest charges or credit checks. Urban Outfitters reported in its earnings call that the service has been a success in Australia, where it originates from, and the retailer expects it to increase conversion rates and boost average order values.