How Retailers Can Manage and Leverage Incentives for Marketplace Sites

According to BCG data, online marketplaces account for 67% of global e-commerce sales, a number that will only increase as more traditional retailers develop their own vehicles. But as retailers expand assortments through third-party sellers, many are discovering a new challenge: marketplace growth is exposing serious cracks in their incentives infrastructure.

Case in point: Best Buy introduced a marketplace in August 2025, joining retailers like Lowe’s, Ulta Beauty, Michaels, and Nordstrom to launch sites in the last two years. Walmart and Target also continually expand their marketplaces (Walmart+, Target Plus).

Retailers clearly see advantages like broader assortments and revenue gains in partnering with select third-party vendors to sell on a dedicated marketplace. In these models, third-party vendors list, fulfill, and ship products — while the retailer controls the customer relationship.. 

However, there are benefits to working with traditional retailers: 

1. They come with name, recognition, and trust.
2. They carry a long history of promotions expertise and incentivizing consumers to buy.

Essentially, it’s not enough for a third-party vendor to simply be on a marketplace. Incentives and offers power sales, and retailers have the know-how. 

But do traditional retailers have an incentives engine in place that can seamlessly control and execute incentives across all touchpoints — from in-store to e-commerce to a dedicated marketplace — because some tricky situations can arise working with third-party vendors.

Without a unified incentives engine, marketplaces introduce complexity that can quietly erode margin, strain vendor relationships, and confuse loyal customers — often without retailers realizing it until performance declines.

What Retailers Get From Third-Party Relationships

For traditional retailers, there are obvious perks to partnering with third-party vendors and setting up an online marketplace, such as:

• Increase assortments without housing the product
• Spike revenue potential without the capital investment and risk
• Sell products, have the vendor drop-ship to consumers, and keep the margin
• Open new monetization levers like commissions, advertising, and data

There are definite niceties that come with working with vendors. Best Buy, for example, reportedly doubled the number of products it sells by adding a marketplace. 

However, retailers do need to be careful when curating a marketplace, knowing that these brands and experiences will ultimately reflect on them. Companies must examine and vet third-party vendors before signing agreements. When they do, retailers gain a real advantage. 

Consider a beauty retailer, let’s call it GLAMCITY, which has a highly diverse consumer base. Unfortunately, store space and inventory are limited at GLAMCITY, so it can’t carry every item for every shopper — products addressing medical issues, skin types, ethnic groups, sustainability, etc.

A GLAMCITY+ marketplace significantly expands its offerings, and the retailer can personalize offers and connect meaningful third-party vendors directly to their loyal shoppers.

Reaching this level of digital personalization requires a tech infrastructure that has both entities always in communication. Retailers that launch marketplaces behind a curtain, operating them as siloed businesses, can have promotions interfere with one another, hurting profit margin. 

How an Incentives Engine Streamlines Incentives for a Marketplace

Let’s get into potential scenarios that can arise when GLAMCITY operates promotions on its marketplace:

1. Running a promotion that can hurt a vendor. GLAMCITY launches a site-wide promotion of 15% off all purchases, including its traditional, glamcity.com e-commerce site and GLAMCITY+. However, being an inexpensive product, a third-party lipstick vendor might not want the product sold at a discount, upsetting the vendor and the relationship.

2. Including an offer from a third-party vendor site. Here, the lipstick vendor has decided to create a large bundle incentive on its Shopify site, awarding free shipping and 25% off a purchase of 20 lipsticks. The beauty retailer may also want to run that incentive, but disparate engines prevent the two sites from connecting.

When a retailer operates a unified incentives platform, both scenarios are easily managed. In fact, a good incentives engine doesn’t care where a promotion comes from, because retailers are able to define rules around promotions and have total visibility of all incentives across all physical stores as well as all digital touchpoints, including the marketplace.

Addressing those scenarios specifically:

1. With XCCommerce’s streamlined incentives engine, GLAMCITY can identify the lipstick vendor and define a rule so that it’s not included in a site-wide promotion. It can also make very clear delineations, such as only run an incentive for first-party-owned items and not third-party products.

2. In the case of a vendor running a unique offer on its Shopify website, unified incentives engines have vendor offers directly available to feed into GLAMCITY’s marketplace, as it wishes. The retailer can use the exact same promotion or use it as a targeted promotion by region or shopper, etc. XCCommerce provides GLAMCITY a unified incentives engine with open APIs and connection points to enable third-party vendors to share offers with a retailer to get more juice out of a campaign.

XCCommerce’s incentives engines are agnostic to what a promotion looks like and where it comes from. Many retailers are using AI solutions that review a shopper’s purchase history, loyalty interests, and more to develop automated, personalized offers. 

A unified engine handles the most complex, targeted offers, giving retailers visibility and control to optimize sales and maintain profit margins.

We Can Unify Your Marketplace

If you’re building — or expanding — a retail marketplace, your incentives engine shouldn’t be an afterthought.

Contact us, and we’ll show you how a unified incentives platform gives you visibility, control, and profitability across every marketplace touchpoint.

---

Frequently Asked Questions: Marketplace Incentives & Unified Promotion Management

Why do incentives become more complex in marketplace environments?

Marketplaces introduce multiple sellers, pricing models, fulfillment methods, and margin structures. Without a unified incentives engine, promotions can overlap, conflict, or unintentionally apply to third-party products—leading to margin erosion, vendor dissatisfaction, and shopper confusion.

What is a unified incentives engine?

A unified incentives engine is a centralized platform that manages all promotions across channels—e-commerce, stores, mobile apps, loyalty programs, and marketplaces—from a single system. It provides full visibility, rule-based controls, and consistent execution regardless of where an offer originates.

How do retailers protect third-party vendors from harmful promotions?

With a unified incentives platform, retailers can set rules at the vendor, product, or category level. For example, they can exclude specific vendors from site-wide promotions, limit discount thresholds, or restrict incentives to first-party merchandise only.

Can third-party vendors run their own promotions on a retailer’s marketplace?

Yes—if the incentives infrastructure supports it. A modern incentives engine allows vendors to share offers directly with retailers through APIs, enabling retailers to approve, adapt, target, or extend those offers across marketplace, region, or shopper segments.

How does a unified incentives engine improve personalization?

Unified platforms connect shopper data, loyalty behavior, and purchase history across all channels. This allows retailers to deliver personalized, AI-driven offers that work seamlessly across first-party and third-party products without creating conflicting promotions.

What happens if marketplaces are managed separately from core e-commerce incentives?

When marketplaces operate as standalone systems, promotions often interfere with one another. This can cause double discounts, inconsistent pricing, broken loyalty experiences, and margin leakage—issues that are often discovered only after performance declines.

How does a unified incentives platform impact profitability?

By providing full visibility into all active offers, enforcing promotion rules, and preventing overlap, unified incentives platforms help retailers optimize promotional spend, protect margins, and scale marketplaces profitably.

Is a unified incentives engine compatible with existing retail tech stacks?

Yes. Leading incentives engines are platform-agnostic and integrate with existing e-commerce platforms, POS systems, loyalty solutions, vendor systems, and AI tools through open APIs.

When should retailers think about incentives for a marketplace?

At the very beginning. Incentives should be foundational—not an afterthought—when launching or expanding a marketplace. The right incentives engine enables growth, protects vendor relationships, and ensures a seamless customer experience from day one.