Unpacking Leroy Merlin’s marketplace strategy

Leroy Merlin CIO and head of e-commerce and marketplace strategy Dmitriy Anderson admits that profitability keeps him up at night, particularly when it comes to new business endeavors like the Leroy Merlin product marketplace. According to Anderson, this online marketplace, which launched three years ago and currently has over 500 third-party sellers, recently reached a big milestone of breaking even for the first time in January 2024. “While this is quite impressive, making sure these numbers keep growing and the marketplace stays profitable can sometimes feel like a nightmare,” he says, especially given the scale of competition in this space, with massive brands like Amazon offering such a wide variety of products where smaller and more specialized retailers often struggle to compete.

Over the years, the retail industry has had to adapt quickly to the rise of ecommerce and omnichannel, says Anderson. These market shifts have not only transformed how retail businesses sell, but changed what customers expect from their shopping experiences.  With a marketplace approach, France-based Leroy Merlin works with third-party sellers to offer customers all the products that weren’t previously available in stores. “For comparison’s sake, Leroy Merlin in France used to offer a range of around 200,000 products, and now they offer an additional three million on top of that 200,000,” he says. What this means is that someone buying a kitchen from Leroy Merlin can also access a wide range of appliances, crockery, cutlery, tables, and chairs all from the different sellers on the Leroy Merlin site.

The making of a marketplace

Currently helping the business establish their brand in South Africa, Anderson shares that setting up the marketplace there was an interesting journey, which began around the same time as lockdowns went into effect in 2020 due to the global pandemic. Understandably, the company implemented budget cuts, and there was talk that this marketplace project would be halted as a result. But Anderson pushed back, arguing that with everyone forced to spend time at home, the global lockdown presented a great opportunity for people to finally get to those home improvement projects. “People were stuck at home waiting for the world to open up again, staring at the chipped paint and all the cracks in their walls they promised themselves they’d fix,” he says. “So much so that our ecommerce numbers increased 20 times between 2019 and 2020.”

Rather than building their own marketplace platform in-house, they went with Mirakl, a French cloud-based e-commerce software company, which Anderson describes as the Rolls Royce of marketplace platforms. Mirakl handled everything from onboarding sellers and building product catalogues, to enabling ecommerce platform integration and invoice generation.

“It would’ve taken us years and a lot of resources to build up a team that could create something like this, which is why we went with Mirakl because we wanted to capitalize on what was already out there,” he says. But his existing team had to learn a lot, and he even snatched people from other departments to assist with getting the project across the finish line.

The marketplace, working in combination with their brick-and-mortar and ecommerce offerings, has had a flywheel effect for the business, he says, where customers are now shopping at Leroy Merlin as much as six times more than they did previously, and the average size of their baskets has also increased. Since the launch of the marketplace, they’ve exceeded their sales targets every year. “In the first year, our target was to make about ZAR5 million [$278,000] in gross merchandise value and we closed at ZAR12.5 million,” he says. “In 2023, the target was around ZAR80 million, and we made ZAR100 million, and in 2024, we’re hoping to increase this to ZAR185 million.” They also plan to channel this success elsewhere, and this month, Leroy Merlin launched their services marketplace.

Built in partnership with Xebia using Appian low-code digital workflow software, their services offering provides a platform to contractors and small businesses. “It could be a babysitter or a cleaner or a gardener,” says Anderson. “It could be for a small job like having a locksmith change a door handle or a big project like hiring a team to renovate an entire bathroom or kitchen.” The problem they’re trying to solve is to help customers get small jobs done by making it easier for them to connect with professionals who can help. And the fact that these service providers are approved by a well-known brand like Leroy Merlin adds an extra layer of credibility and security. “We also want to work with service providers who do bigger jobs, like install kitchens or renovate bathrooms, but we know there’s a big gap in the market for smaller, less complex tasks,” he adds.

These two marketplaces really are a win for all involved — for Leroy Merlin because it gets more traffic and revenue, for sellers because they get more exposure and more sales, and for customers because it means they can find everything they want and need in one place.