Term
Marketplace
noun
A marketplace is any location that facilities the exchange of goods between sellers and buyers. An online marketplace could be an ecommerce website or app that connects buyers with sellers.
What Is a Marketplace?
A marketplace is any location that facilities the exchange of goods between sellers and buyers. An online marketplace could be an ecommerce website or app that connects buyers with vendors. You can find products across various categories on a marketplace, including electronics, clothing, jewelry, children’s toys, and recreational goods.
Marketplace vs. Online Store
A marketplace is where vendors can sell their products to a customer, which is curated by the platform. It is the job of the marketplace owner to bring together the right vendors and customers to boost sales through their multi-vendor platform. Sellers have a platform and visibility to sell their products, and the marketplace will keep a fraction of the cost for commissions. On the other hand, an online store is a single store selling all its products to online audiences. The marketing and operations are the responsibility of the owner of the website and products.
Unlike online stores, marketplace owners do not own any of the inventory they sell. So, the marketplace owner leaves the operational side of this business to the vendors and focuses more on marketing the platform. The main job of the marketplace owner is to drive traffic to the platform, consolidate vendor data, and turn more visitors into paying customers.
Types of Marketplaces
Many marketplaces operate on a “direct to consumer” basis, meaning the vendors present on the site offer retail items. An ecommerce store UI may be integrated into the marketplace to improve the user experience. In other cases, online store owners may use an ecommerce platform like Shopify to connect a marketplace to their items.
Another popular type of marketplace is wholesale directories. These are sites where wholesale suppliers list their items for sale in bulk. Distributors, retailers, and small business owners frequently visit these sites to find the products they need for resale. Because it can be costly to purchase wholesale items due to minimum order quantity (MOQ), you must be able to apply the right markup.
You can also join a wholesale marketplace. This type of marketplace caters to everyone instead of just professional buyers. Anyone with products that fit the marketplace can sell their items through a seller profile.
The last marketplace type comprises resale websites. Sites like Craigslist and eBay allow anyone with a registered account to list items for sale. The benefit for customers is that they can buy the items in smaller quantities.
Three Key Features of a Marketplace
There are distinct features of a marketplace that set them apart from an online storefront. Here is a detailed overview of these features:
Easier to Get Traction
Online store owners manage their marketing, and they need to develop strategies to acquire more customers. This can be challenging when you don’t have the time or knowledge to run PPC ads or do SEO. Marketplaces are large and handle the marketing side of the business. You just show up and sell. Due to how they promote themselves, thousands of visitors come to online marketplaces each day to find useful and valuable products.
More Customer Satisfaction
There is so much to focus on when running a store: customer services, inventory management, sales, marketing, social media, and so much more. But when you are running a marketplace, your main focus is only to offer your best products or services. There is a whole less lot on your plate, and you can truly focus on adding value for your customers and meet their needs in the best possible manner.
This does not imply that selling on a marketplace is easy. A lot of effort and work goes into curating the products and moderating listing. For example, creating a hyper-vertical marketplace focused on a particular niche requires a lot of work from the owner. The effort often pays off, though. When you get creative with your product listings, you stand out in front of thousands of buyers. A marketplace curated well can become a community of highly satisfied clients.
Customizability and Scalability
A decade ago, customers only discovered your new products if you updated your product catalog. Now, you can update your product information and create a digital catalog with ease. An online marketplace saves you hours of time every week.
Marketplaces also offer scalable business models. If you find that the demand for your product is strong, you can just order and list more inventory from your supplier or dropshipper. Since the upkeep is very low, and chances of scalability are high. This is why marketplaces dominate the world of ecommerce.