What is Marketplace and how important is it

The e-commerce market or the Marktplace is a place or website where you can find different brands of products from different suppliers, stores or people displayed on the same platform. The website owner is responsible for attracting customers and processed transactions, while third-party suppliers handle manufacturing and shipping.

The Marketplace streamlines the production process through a simple portal, where manufacturers sell their products directly to consumers , thus avoiding the stagnant process of warehousing stocks. This type of supply chain management is generally called the “Dropshipping” method, that is, the online store does not keep stock of products.

Companies like Amazon, Wallmart among others have experienced enormous success in the Marketplace model. This model has so far proved to be the most profitable business in E-Commerce. The entire market is run on a software infrastructure, allowing all suppliers to sell their products under the umbrella of a website. In terms of revenue, these companies obtain a percentage of the sales of any product sold on the platforms.

Online market types

There are different types of Marketplaces based on different business models or their method of operation .

  • Buyer-oriented electronic market : This market is managed by a group of buyers who want to establish an efficient purchase. This helps buyers to reduce their administrative costs and get better prices from suppliers .
  • Supplier-oriented electronic market : This market is operated by a large group of suppliers to establish an efficient sales channel and increase its visibility and obtain leads from a large number of potential buyers.
  • Vertical and horizontal electronic markets: The vertical marketplace provides online access to companies vertically in all segments of a specific industrial sector, such as automotive, chemical, construction or textile.

Buying or selling using the vertical marketplace helps to increase operational efficiency while decreasing supply chain and inventory costs and acquisition time.

A horizontal electronic market, on the contrary, connects buyers and sellers in different sectors or regions. This will allow buyers to purchase indirect products, such as office equipment and / or stationery.

Independent electronic market: It is generally an online business platform for companies operated by third parties and is open to buyers and sellers in a certain sector. You can register on these platforms and have access to classified ads, request quotes and bid on various products in your industry sector.

Participation in these auctions and online exchanges, for the most part, can be done through a minimum payment of the registration fee.

Marketplace Benefits

Business Benefit

  • A Marketplace allows platform operators to cover a cut in the products that vendors sell, increasing profit opportunities exponentially .
  • Marketplaces provide a transparent purchasing process, as factors such as product prices and stock availability are accessible on a single platform in an open environment.
  • Better opportunities for suppliers and buyers to establish new business relationships within or through their supply chain.
  • Time restrictions for trading between geographic regions are eliminated due to the online platform that operates 24 hours a day .

Benefits for buyers

  • Buyers get a wide variety of product options to compare on a single website . Thus, helping them to find the most reasonable price for the best quality product.
  • Updated real-time pricing and availability information makes it easy for buyers to get the best deal .

Benefits for sellers

  • Smaller stores or suppliers who are unsure about how to establish their own e-commerce site or who want to reduce their marketing costs can align with these larger companies and gain visibility through their service options.
  • The platform acts as an additional sales channel to market and sell your products.
  • It allows sales abroad, offering trade opportunities in the international e-commerce market.

Challenges and solutions

  • Retention of sellers and buyers. Although the most important challenge has always been to attract buyers and sellers to trade in the Marketplace market, the next crucial problem is to make them active users of the platform for a long time.
  • Connecting buyers with relevant sellers . This process plays an important role in involving buyers and sellers in the Marketplace. To solve these problems , platform owners must use different methods, such as tracking buyers and sellers, behaviors directed to the site, personalized emails based on the algorithms, convenient and easy to use navigation, etc.
  • Buyers trusting sellers . Trust between buyers and sellers plays a very important role in achieving a conversion . To build trust, platform owners have to resort to the traditional way of giving feedback, giving it a digital touch.

Resources like “Testimonials”, which talk about the authenticity of the product and the buyer, an actionable “Evaluation” system, where everyone can easily evaluate products, sellers and services, they trust people and experiences , this can have a great impact to prove your testimony and social assessment through people who have used it.

  • The first impression is the best. This proverb is true to its true meaning when it comes to E-Commerce Marketplace. It is very important to provide the best user experience to your customers on any device through which they are accessing your platform. Easy to understand and access the app would attract your customers again.
  • In large markets, price competition can be a problem . Suppliers may choose to compete for the lowest price, which can serve the customer , but may end up generating lower profits for the market and the supplier.
  • Quality assurance can also be an issue. Marketplaces do not always have control over product quality or on-time delivery. One way to combat this is to establish a review system, allowing consumers to provide feedback on specific third-party products and sellers.

Some Marketplaces lower the seller in the search results or downgrade their account due to negative reviews, while other sites allow the consumer to penalize a supplier based on bad reviews.

Learn how to attract more customers who are likely to place an order at your store and turn them into loyal buyers. Please contact us!

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Published by Abdul Rimaaz

Abdul Rimaaz business consultant is trained to advise your marketing plan. It can advise, for example, improvements in terms of your company's Internet presence, position one of its brands or implement new strategies to win customers. Being a business consultant is not an easy task and I have thought to summarize, for this entry in Business United Kingdom.

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