Why First-Mile Fulfilment is the Hidden Engine of Marketplace Growth

The future of marketplaces might be decentralised, but fulfilment still needs to be seamless.

As ecommerce continues to evolve, so do the models that power it. From fulfilled by marketplace (FBM), to fulfilled by seller (FBS), each approach comes with its own operational dynamics, seller expectations and logistics challenges.

For marketplace operators, understanding the challenges is strategic. Especially as competition increases with new players entering the European market and seller expectations rising fast.

Marketplace Models at a Glance

Fulfilled by Marketplace (FBM)

Marketplace controlled fulfilment, where sellers send inventory to centralised warehouses and the platform handles storage, packaging and delivery.

Strategic advantages

• Faster delivery times: Goods are already in stock at the warehouse, enabling next-day or even same-day delivery. A key factor in meeting customer expectations, boosting satisfaction and increasing conversion rates.
• Wider geographic reach: Centralised and regional warehouses allow sellers to serve customers across the country or internationally with existing infrastructures and resources.
• Simplified returns: Centralised returns processing reduces friction for buyers and sellers, enhancing trust in the platform.
• Operational efficiency: Standardised fulfilment ensures predictable service levels across sellers which supports brand reputation.

Limitations

• Higher operational costs: Storage, handling and return fees can be significant, especially for slow-moving or bulky items.
• Limited seller flexibility: Sellers may be deterred by packaging restrictions, inventory caps or lack of control over presentation.
• Onboarding barriers: New or niche sellers may struggle to meet warehouse requirements, limiting marketplace diversity.
• Exit complexity: Retrieving unsold inventory and be costly and logistically difficult, creating friction if sellers churn.

Fulfilled by Seller (FBS)

Seller-led fulfilment, where sellers manage their own inventory, packaging and dispatch, often delivering to a marketplace hub or directly to customers via drop-off points.

Strategic advantages

• Lower fulfilment overhead: Sellers absorb more of the fulfilment cost, allowing marketplaces to scale without heavy infrastructure investment.
• Attracts diverse sellers: FBS lowers the barrier to entry for small, international or niche sellers, expanding product variety and reach.
• Greater seller autonomy increases loyalty: Giving sellers control over branding and operations can improve satisfaction and retention.

Limitations

• Variable service levels: Without standardised fulfilment or logistics, delivery speed and quality can vary, impacting customer experience.
• First-mile bottlenecks: dispersed seller networks and volumes can lead to slow collections, delaying and risking poor seller and customer experience.
• Return complexity: Managing returns back to sellers individually can create inconsistency and operational friction.
• Scaling challenges: As seller volumes grow, marketplaces may need to support fulfilment infrastructure to maintain performance.

Why FBS is gaining ground

The FBS model is emerging as a powerful alternative to traditional fulfilment approaches. By giving sellers greater control, FBS lowers the barrier to entry and empowers sellers to operate on their own terms. This autonomy is increasingly attractive in a competitive landscape where marketplaces are buying for seller loyalty.

With flexibility, however, comes complexity. Sellers are often dispersed; delivery volumes are unpredictable, and customer expectations around speed and reliability remain high. For marketplaces, this creates a tension: how do you offer sellers freedom without compromising the customer experience?

Global competition is raising the stakes

The urgency to solve this dichotomy is growing. Chinese giants in the marketplace space, known for their agility and cost-efficiency, are rapidly expanding into European markets. Platforms like Temu and AliExpress are setting new standards for speed, pricing and flexibility, and sellers from these regions are bringing lean, scalable models that challenge traditional infrastructures.

Marketplace operators in Europe now compete not just on customer experience but also on how attractive they are to sellers. Offering elevated fulfilment models going beyond the traditional norm is a competitive necessity.

To make FBS viable at scale, marketplaces need to rethink logistics, and for this, they should start at the first-mile.

The first-mile opportunity

In an FBS model, the first-mile is where seller experience and customer satisfaction intersect. If collections are slow or inconsistent, sellers feel unsupported, and customers face delays.

By streamlining their first-mile logistics, marketplaces can:

• Improve seller onboarding and retention by making fulfilment feel effortless
• Maintain delivery speed even with dispersed sellers and volumes
• Scale FBS operations without investing in centralised infrastructure

This is where DeliveryApp adds strategic value. Our platform and hyperlocal network enable rapid, tech-enabled first-mile collections designed specifically for the needs of FBS marketplaces. We help marketplaces deliver speed, reliability and support, without compromising flexibility.

Fulfilment as a seller experience strategy

Marketplace growth depends on more than just attracting customers; it hinges on attracting and retaining the right sellers. As FBS marketplaces continue to rise, platforms that invest in smart, scalable fulfilment will be best positioned to lead.

Supporting seller autonomy doesn’t mean sacrificing operational excellence. With the right logistics partner, marketplaces can offer both and turn fulfilment into a strategic advantage.