If you frequently shop online, probably you already have used a website and, when choosing the product, realized that it wasn't really the website that was selling it, but another store. This is an online marketplace.
Here is a real example: you decided to buy a cell phone brand X at Amazon.com. For a long time, the devices available on the site were sold and delivered by Amazon.
Currently, however, when searching for a cell phone on the site, you will see a few options from different stores selling the device, which will require you to choose one of them.
It usually says “Sold and delivered by” and the name of the store that is actually selling the cell phone. Amazon website worked as a showcase.
As we said, if you've already gone through this experience, then you already have an idea about how the marketplace works. If not, don’t worry we are going to explain it.
- What is an online marketplace;
- Types of online marketplace;
- Advantages of operating in this model;
- As well as the disadvantages.
- Have a good read!
What is an online marketplace?
A marketplace is like a virtual mall. In other words, a website where several stores offer their products and the consumers choose among them.
For the concept to be clear, just think about the Free Market. Consumers search for a product on the platform and find offers from different companies.
Consequently, he is able to choose the supplier that seems to him the most advantageous, considering the evaluation that this supplier has on the website, the freight price, the delivery time, etc.
The pioneer in marketplace in the world was eBay. Launched in 1995, the company initially brought together collectors and customers who wanted to buy rare items.
The sale took place in the auction format, being based on bids. Over time, the platform evolved until the direct purchase of products took place.
In Brazil, one of the first companies to offer the marketplace service was Mercado Livre, launched here in 1999. Currently, Amazon and B2W (the merger between Submarino Americanas.com that took place in 2006) are also among the giants of this type of service in the country.
In the first quarter of 2019, for example, B2W's marketplace increased 52.2% compared to the same period in 2018 and reached 61.2% share of the company's total GMV.
It’s important to mention that not all models are the same. See the corresponding types and characteristics below.
Types of online marketplace
What will determine the types of marketplace is precisely the category of business that will be carried out by the platform. Among the main ones, we have:
- B2B – the acronym stands for Business to Business. It is the platform model that intermediates business between two companies, which usually need to restock (contact suppliers) or resell products. E.g.: MercaChefe.
- B2C – acronym for Business to Consumer. In this model, companies sell directly to the end customer. E.g.: Dafitti.
- C2C – the acronym stands for Consumer to Consumer. It is the model in which consumers sell to consumers. E.g.: OLX.
If you've just opened a business and maybe you are thinking about taking it to the marketplace, you've already noticed that first you need to know who your customer is. Defining a persona helps and make this process much easier.
Furthermore, it is interesting to consider the advantages and disadvantages of this model. Therefore, we have separated some information, so that you can make the best decision.
What are the advantages of an online marketplace?
The marketplace can be very advantageous for businesses that are starting, precisely if they want to expand their range of views and sales. Then get to know some advantages of this business model.
This is a first immediate advantage of the marketplace. When you make your products available for sale on large sites such as Amazon and Mercado Livre, you cover a wide range of consumers.
This advantage is combined with visibility. Being in a marketplace allows different people to have access to your product, diversifying customers and discovering new market niches.
Saving money with marketing and advertising
Allied to a large and consolidated marketplace, there is no need to invest a good part of your budget in advertising for the website – as you would do on your own page.
Creating an e-commerce from scratch, thinking about layout, information to be inserted, security and usability, is much more difficult – and expensive – than using a ready-made platform.
Reflect: if you were to buy a cell phone over the internet, would you buy it in an unreliable website or in a platform already renowned in the market?
Of course, the consumer doesn't want to risk losing money. Therefore, selling your products through a reputable and trustworthy website increases the credibility of your business – and, as a result, your sales.
And what are the disadvantages of this model?
At first glance and with the benefits we have listed, there seems to be no better decision than adopting the marketplace model in your company. However, there are some disadvantages:
Commission by sales
Clearly, a platform would not allow you to sell your products for free. After all, it is a business and, like all of them, it needs to have a financial return.
Therefore, those who sell on the marketplace need to pay a commission for the platform, which can reach 25% of the product's value depending on the site.
In Mercado Livre, for example, a fee is also paid to advertise, depending on the type of ad contracted. It also charges for managing the sale related to the use of Mercado Pago.
If the company's only sales channel is the marketplace, it ends up becoming dependent on it. If the site decides to close down, for example, the business will need to restructure itself to find another way to make its products available to customers.
By being inserted in a large marketplace, the smaller business ends up losing the strength of its brand.
As much as the site shows you are the seller, the customer may disregard this information or even forget about it. It is still common for the customer to indicate the marketplace as a popular website, and not you.
So, when thinking about adopting the marketplace or not, it is good to consider whether you want to strengthen your brand in the market or whether you want to make your sales more robust.
Little data on customer experience
It's important for your company to know if the customer's experience on the site was positive or not, right?
On the marketplace, however, you do not have control over this process, as the purchase is made through the platform. So, you end up not having access to this data.
You could see that the decision to choose or not to operate in the marketplace business model is something that should be well thought by you. Evaluate the various variables carefully to decide on the best option.
Now that you know what marketplace is, you must be thinking about how to create a successful marketplace, right? One of the most important parts is customer service. A good ticketing system can help manage customer requests. So, read the exclusive content we've prepared on this subject: Ticket system: 5 reasons for you to hire one.