The traditional boundaries of retail are dissolving. At the NRF Big Show 2026, an insightful panel featuring leaders from Target, Nordstrom and Best Buy demonstrated how the future of the industry is centered on creating a seamless, omnichannel ecosystem powering market growth, rather than merely choosing between only physical or digital interactions with customers.
The session “How Traditional Retailers are Managing Marketplaces” revealed that for the world’s biggest brands, third-party (3P) marketplaces have evolved from experimental digital projects into core enterprise strategies.
Curation at Scale: The New Merchandising Mandate
For a business like Target, which has operated its online marketplace for seven years, the goal is not just to have the most products; it’s about “curation at scale.” Sarah Travis, EVP and Chief Digital and Revenue Officer at Target, explained that the digital marketplace allows them to identify emerging trends and bring products to market at a speed traditional wholesale simply cannot match.
By offloading bulky items like furniture to the digital marketplace, Target frees up valuable physical space in-store for high-touch categories like home décor. This strategy acknowledges a fundamental shift: consumers shop differently by product, not by fulfillment method. Whether an item is in a backroom or a partner’s warehouse, the customer expects the same Target experience.
Risk-Free Innovation and the “Two-Way Door”
One of the most compelling arguments for the marketplace model is its role as a low-risk incubator. Miguel Almeida, President of Digital & Customer Experience at Nordstrom, described the digital marketplace as a “two-way door.” It allows Nordstrom to fill assortment gaps, such as the under-$100 price point or expanded shoe sizes, without the financial burden of owning and managing the inventory.
3P marketplaces provide a low-risk testing ground where retailers can pilot new brands without risking the need for markdowns. If a 3P brand performs exceptionally well, it can then be “promoted” to 1P, or owned inventory status. Nordstrom cited Rothy’s as a brand that successfully made this transition from the online marketplace to physical store shelves within just six months due to its digital popularity.
The Unified Front: Incentives and App Integration
A recurring theme was the necessity of internal alignment. To prevent “turf wars” between traditional buyers and online marketplace teams, these retailers are unifying their goals. At Nordstrom, the integration is so deep that in-store sales associates receive full commission for selling marketplace items to customers via the app or “endless aisle” kiosks.
Best Buy, a newer player in the space, has used its online marketplace to increase its SKU count by a staggering 11 times. Frank Bedo, Chief Marketplace & eCommerce Officer, highlighted how this allows Best Buy to capture “at-bats” they previously missed. A customer buying a TV for the Super Bowl can now add a licensed team speaker or even a team-branded Snuggie to their cart, items that Best Buy might not stock in a warehouse but can easily offer via high-quality third-party sellers.
Redefining the Bottom Line
The financial shift is equally dramatic. While 1P sales offer higher top-line revenue, marketplace sales generate superior free cash flow and return on invested capital (ROIC). As Nordstrom’s Almeida noted, these sales are essentially “risk-free” because the retailer does not bear the cost of shipping or unsold stock.
Furthermore, the marketplace acts as a massive traffic magnet. Target’s Travis revealed that approximately 10% of Target’s external traffic now comes from third-party listings. Once those shoppers are on the app or site, the “flywheel” kicks in, leading them to purchase 1P staples along with their 3P finds.
Key Takeaways for Marketplace Success:
- Enterprise Alignment: Moving online marketplace goals from “Digital” teams-only to “CEO-level” priorities.
- SLA Excellence: Using strict Service Level Agreements to ensure 3P shipping practices match the brand’s 1P promise.
- In-Store Integration: Training and incentivizing floor staff to sell the “digital catalog” to physical shoppers.
- Quality Over Quantity: Vetting sellers based on their performance on other platforms to maintain consumer trust.
As we look toward the rest of 2026, the message is loud and clear: the most successful retailers are those that stop viewing online and offline as competitors. By investing in robust apps, rewards programs and a curated marketplace, they are ensuring that wherever the customer decides to shop, the brand is ready to meet their needs.
Image via Unsplash.