What Is An Online Marketplace?
It refers to an ecommerce store where products are listed and sold by several third-party vendors. The website owner doesn’t necessarily store or sell physical inventory rather they present other sellers’ products.
Marketplaces act as intermediaries, linking buyers and sellers, and frequently managing transactions, payment processing, and occasionally logistics.
What Are The Types Of Online Marketplaces?
There are four types of online marketplaces:
- Vertical Marketplaces: These marketplaces sell one type of product or service from different sources. They offer a range of solutions that target a well-defined user base. Myntra is an example of a vertical marketplace.
- Horizontal Marketplaces: A horizontal marketplace allows the combination of markets with retailers of varied industries in a digital one-stop platform for more coverage of audience needs. Flipkart serves as a horizontal marketplace.
- Global Marketplaces: Such marketplaces sell physical goods, facilitating trade and exchange of services. Customers are drawn towards such marketplaces as they can conveniently get diverse products and services without navigating to different sites.
- Service-Based Marketplaces: Such websites sell services instead of products. Freelancer and Urban Company are examples.
What Are The Benefits Of Online Marketplaces For Sellers?
- More People Can See Your Products: For instance, Amazon already has a lot of users. It implies more product visibility. It can be helpful when your brand is just starting and needs more people to know about it.
- Takes Care Of Shipping And Delivery: Sellers need not worry about logistics on online marketplaces as shipping, delivery, returns and exchanges are taken care of. It will also save a lot of money.
- Builds Customer Trust: Customers trust online marketplaces such as Amazon and Flipkart, which means they are more likely to trust your brand.
- Offers Easy Customer Service: Marketplaces enable a brand to provide incredible customer service that can handle returns exchanges, payment for delivery and more.
- Less Trouble With Technology: Online marketplaces have people in charge of all the technical aspects of the site. It enables these platforms to handle huge traffic without crashing too often.
What Are The Drawbacks Of Online Marketplaces For Sellers?
- Competition: Online marketplaces pitch your products next to those of competitors, making it harder for small businesses to stand their ground and combat the heavy discounts and sales the giants offer.
- High Commission Fees: Online marketplaces charge anywhere between 20-40% commission fees from sellers.
- Payment Delays: Unlike buying something from a store, the money doesn’t directly go to the seller in online marketplaces. It takes a few days for it to get to you after the order is placed and the sale is made. The marketplace is the first to get the money and service fees and other costs are considered before giving the money to the seller.
- Costs Of Social Media Marketing: Social media marketing is essential to attract new customers and help them spot the brand in online marketplaces.
What Should A Startup Consider While Choosing An Online Marketplace?
Identify your goals. Be it targeting maximum markets, maximising brand awareness or boosting sales. Your intentions should align with the offerings of the marketplace.
Analyse reach, buying patterns and demographics to gauge visibility and sales potential and ensure the platform aligns with your target audience. Evaluate seller support quality and financial implications (from listing fees to commission rates).
Understanding sales data, conversion rates and marketplace performance will help spot opportunities for a successful venture. Finally, make your product stand out and identify potential buyers with features such as sponsored product campaigns and targeting options.
