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Marketplace - what it is and how it works, pros and cons The e-commerce market is considered the fastest growing. According to forecasts, in 2023 the volume of online trading will double. And this does not take into account sales of games, tickets, prepared food and services. Moreover, according to a Forrester Research report, in 2017, half of the world’s online purchases were made through marketplaces. Today you will learn what a marketplace is and how it works, how it differs from an online store. How to get on the marketplace and make money. We will also look at the types of marketplaces, their advantages and disadvantages. What is a marketplace in simple words Simply put, a marketplace is a trading platform where services or goods of other companies are sold. The marketplace is similar to a hypermarket: there are different sellers in the same area, and customers can shop in different stores while being in the same building. There are two types of organization of the work of marketplaces. Some, like Ozon, work on behalf of their brand. Other platforms provide a catalog of attracted companies. In this format, sellers sell products on their own behalf, but according to the rules of the marketplace. The marketplace acts as a link between the buyer and the supplier. Its goal is to ensure effective interaction. Typically, marketplaces do not deal with order formation and subsequent delivery, but only accept an application from the customer and transfer it to the seller. They provide marketing support and drive traffic, and are responsible for usability and analytics. The main objectives of such services are to make the search for goods/services convenient for users and increase sales to companies. Scheme of operation of the marketplace Structure of a classic marketplace: product catalog - similar to the showcase of a regular online store, but with the addition of information about products from the supplier; block for registration and authorization of buyers and sellers; partner’s account – where the seller adds products, monitors turnover and receives sales data; buyer's account - works like in an online store; software for managing search and statistics; payment system; modules for reviews, communication between suppliers and clients and dispute resolution. Features of marketplaces: There are third party sellers. The same product can be offered by different companies. The same payment and delivery rules are established for all participants. Goods and services can be placed on the trading platform. The marketplace is monetized through a subscription fee, commission, or a percentage of sales. This is interesting: 10 best services for accepting payments on the website How is it different from an online store? Beginning entrepreneurs are often interested in the differences between an online store and a marketplace. What is more profitable and what is easier to make money on? As mentioned earlier, the online store offers products from only one supplier. A marketplace is reminiscent of an exchange with different types of goods from different suppliers. In this case, buyers will have a large selection of the items they need, and sellers will receive a wide customer base. Essentially, a marketplace is an online market where a buyer and seller meet, communicate and conclude a deal according to the rules established by the service. In your online store, you dictate the terms yourself; the entire resource with a unique domain name belongs to you. But you will also have to create, promote, and support the trading platform. Differences Online store Marketplace Positions in search results Getting to the Top requires a lot of work and investment. Leading. Geography It is difficult to scale sales outside the country. Large marketplaces have customized international trading processes. Maintenance Requires a lot of time and effort. But you can maintain contact with the client using bonus programs and promotions. The intermediary effectively serves both the buyer and the seller, creating added value. Employees For a successful launch you need a programmer, web designer and internet marketer. You just need to post content on the trading platform. Development time: A week for a template version and 2 months for a unique one. Items can be posted in one day. What products to sell Depends on many factors. Cheap and seasonal products sell best Both formats have their own characteristics. Your online store is a business card, your brand. Marketplace – ready-made tools, entering a new market and expanding the customer base. Types of marketplaces Marketplaces vary in services, products offered, and type of participants. When it comes to trading participants, there are three standard models: B2B – a business makes purchases from a business; B2C – business sells to ordinary people; C2C – goods and services are offered by non-entrepreneurs. Thematic classification of services: Services (DogVacay, Booking.com). Products (AliExpress). Information (HeadHunter). Investments (CircleUp, Kickstarter). How to get on the marketplace and make money The conditions for placing goods on the marketplace may vary. The market plays the role of a product aggregator, collecting and systematizing information about products from different stores. The buyer compares offers and then goes to the supplier’s website. How to get on the marketplace and make money Another case is when the seller and the marketplace enter into an agreement, according to which the seller receives an online storefront, a payment system, marketing and technical support. Sometimes the service may be responsible for delivering orders. This is how AliExpress works, Promua. The marketplace sells some of the goods through a supplier, and buys some of them, stores them in its warehouse and sells them on its own behalf. Earning money on the marketplace The Goods service works differently. The seller himself is responsible for the entire complex of operations from placing an order to receiving the goods. How is it different from an online store? To start working with a marketplace, you need to register as a legal entity and prepare information about the company - usually sites carefully check new sellers. Choose the marketplace that suits you. Register, provide information about the company and your niche. Fill out a commercial proposal with detailed information about the form of the enterprise and the brand. Read the terms of cooperation and accept them. Submit the statutory documents. Fill in the information about your counterparties and enter the details. If you already use electronic document management, indicate the operator. Or select it from the list to receive an electronic signature. Submit your request for moderation - most often you will receive a response within three business days. Pros and cons of the marketplace First, we list the advantages of such services for sellers: a constant flow of target audience due to the popularity of the trading platform; opportunity to expand sales geography; reduction in advertising costs; quick start; no need to create and promote the resource yourself. Among the disadvantages of marketplaces: high competition on the site; dependence on the rules established by the service; fewer opportunities for communication with a potential client; It is problematic to increase loyalty through promotions and special offers. | |
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