Selling online through the eCommerce website has become a cultural business-standard where online buyers can make purchases online seamlessly. When it comes to an online eCommerce website, it could broadly be classified into two business models — An eCommerce store or site and an online eCommerce marketplace model.
In the eCommerce store, the owner typically sells its products, whereas, in an online marketplace website, multiple vendors or sellers will sell their products instead of the owner of the website. They can be run on the B2B, B2C, or even C2C model of business. Thus, an online marketplace can be defined as:
“An eCommerce website where products and services are been provided by multiple vendors and the transactions for each corresponding product is processed by the trustable payment platforms through the marketplace operator.”
An online marketplace can be viewed from two different angles — from the approaches viewpoint and the operator viewpoint. From the approaches’ viewpoint, it can be a generalist marketplace or even a vertical marketplace. While, from the marketplace operator point of view, it can be a pure-play or hybrid marketplace.
Thus, the role of an online marketplace is to connect the buyers with the sellers on the online front.
How does a marketplace operate?
Online marketplaces are good examples of multichannel eCommerce. In the case of a marketplace, the players are the marketplace operator along with the other participating wholesalers or retailers.
The customers order the product which is received by the marketplace operator. This is then sent to the retailers or the wholesalers, who fulfill the order and send it to the customers typically via drop-shipping.
The business model of an online marketplace:
The business model of an online marketplace can be described in brief as below:
- It is a trading income > works on % Sales Commission
- Vendors give the product / upload the product
- Platforms market the product and bring customers
- Customers purchase the product
- Vendors send the goods and get money at the end of the committed period
- Customers find everything at one place at ease
- Platforms earn prestige and get customer base
- They enable small to a big seller
Marketplace — Typical Features
Typical features included as part of a marketplace are as below:
- Vendor Management
- Product Upload / Verify / Showcase Management
- Customer Account with WOW features
- Ad Management / Campaign Manager
- Split Ordering
- Affiliate Program
- Customer Retention / Reward / Recognition Tools
- Multiple Payment Options
- Logistics Management / Panel
- Customer Care / Tickets Management
- Exhaustive Search
- Multi-Store Front
- Multi-Currency & Multilingual
- Distributed Hosting & Load Balancing
- Traffic Routing (GEO Based)
- Data Mining & Business Intelligence Tools
- Automated Taxation Calculation
Marketplace — Big Brands Versus Small Brands
In the typical marketplace model, many brands compete for the user’s attention usually on the same page, next to their nearest competitors. This means that there is extended competition and the flexibility provided is lesser.
This means that though big brands might have an advantage against their smaller competitors, because of their brand being recognized more easily, the smaller brands can get to out-position their competitors on a marketplace.
Marketplace — Some Advantages
Thus, an online market offers the primary advantage of selling goods without the need of a specific online store. This allows a flexible business opportunity for several brands who want to sell online but are not able to invest in their websites.
An online marketplace offers an additional channel to the seller to market his or her products. Besides, there are reduced marketing costs compared to other channels.
As described, the marketplace offers a ready and straightforward way to compare prices as well as products of different brands at a single online destination. Besides, an online marketplace offers a 24/7 opportunity to sell and there is the added advantage of greater transparency.
Thus, a recognized and established marketplace can offer brand recognition and trust to the retailers or wholesale players using the marketplace services. They also have a built-in audience of fans and customers, which means that there is a ready pool of buyers, and marketing costs are lesser.
The players can also use better sales and shipping tools that the marketplace provides. All in all, an online marketplace is a tool that provides a win-win situation for all players in the game.
Hence, at some point, both the customers and the ecommerce vendors or sellers need a place where they can buy and sell products online. And this online Marketplace website alone can deliver such opportunities and platforms for both.
The online eCommerce marketplace hats greater potential than any other eCommerce platform. Are you looking for ways to build your Marketplace and to promote the products?
Reach an expert eCommerce solution provider for better business process scaling among your peer.