Loblaw expands e-commerce to act as a 'marketplace’ for other brands

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Loblaw Cos. Ltd. is expanding its online sales beyond groceries and other household products, to include toys, housewares and even furniture – by inviting third-party brands to sell their own products on its websites. The Canadian retailer is diving into the expanding trend of online “marketplaces,” with the goal of attracting shoppers to its site with a broader array of products and brands that it has not stocked in the past.

The company announced the launch of its new marketplace on Thursday, starting with the e-commerce sites associated with three of its banners across the country: Loblaws, Real Canadian Superstore and Atlantic Superstore. The expanded product lineup will not be available initially in Quebec, but the company plans to expand to its other retail banners, including in Quebec, in the future.

The launch is an indication of the growing competition from retail giants such as Amazon.com and Walmart, which both sell groceries but also operate marketplaces including third-party sellers. A number of other sites operate marketplaces in Canada, including eBay, Best Buy and Wayfair. More than 50 per cent of online spending happened through marketplaces last year, according to research firm Internet Retailer.

“People are really busy. Instead of going to five different places to serve all their needs, they really want to go to one place. … That’s why we’re seeing a lot of these marketplaces grow,” Hesham Fahmy, vice-president of Loblaw Digital, said in an interview.

The team at Loblaw was surprised to find that customers were searching its site not just for grocery products, but for larger items such as cribs, strollers and mattresses. They believe there is an opportunity to sell blankets and baby furniture to a shopper who is looking for diapers, for example; or party supplies to someone buying cupcakes; or a wider range of pet-care products to someone buying dog food. At launch, Loblaw will have more than 100 third-party brands selling products across five categories: housewares and kitchenware, pet supplies, baby products and toys.

A marketplace can allow a retailer to expand the products it offers without taking on additional shipping expenses or the risk of owning more inventory. Marketplaces work by providing a platform for sellers to reach customers they may not reach otherwise, and generally charge a commission on sales. (Loblaw would not comment on the financial terms of its relationships with vendors.) Loblaw will offer order pickup through its PC Express click-and-collect service, or free home delivery for orders over $50. Sellers are responsible for delivery.

Like many retailers, Loblaw is attempting to hold its own against the e-commerce might of giants such as Amazon.com and Walmart. Mr. Fahmy said he believes Loblaw can appeal to shoppers by offering PC Optimum loyalty points on orders, and tailoring the product assortment to what Loblaw knows its customers are looking for.

“We recognize there are competitors out there," Mr. Fahmy said. "But we feel there’s a way that we can serve the customer better.”