Thanks to the convenience of their one-stop-shop model, digital marketplaces have become a rising force in global e-commerce. But what makes them different from traditional online retailers? And more importantly, how did they achieve such popularity?
The answer (and the main difference) lies in sellers. In the case of the latter there is just one — the store itself — while the former gather numerous vendors, who offer a wide variety of products and competitive pricing. This business model seems to correspond well with customers’ needs, as digital marketplaces constituted 41% of all digital commerce sales in 2017 alone. This figure is predicted to keep growing.
Marketplaces are becoming increasingly popular among sellers due to the ease with which one can set up a storefront there. They offer sellers an entire suite of ready-made solutions and payment processing tools, as well as give access to a large customer base. There is no need to build online presence from scratch, which often proves troublesome for emerging businesses. These platforms are, more or less, an easy “in” to the world of e-commerce.
Taking a look at the other side of the equation, marketplaces are also remarkably convenient for customers, who can browse tens of thousands of products in one place from various sellers. There is no need for them to visit separate sites in search of the product they are looking for. Thanks to direct competition between sellers, buyers can choose the best offer for themselves, based on factors such as price and the quality of customer service offered by a particular vendor.
Marketplaces are also as safe as traditional online stores. Such platforms utilize advanced security measures to prevent fraud and sellers themselves work hard to ensure that they receive the best customer ratings possible. Simply put, the better feedback they get, the more products they sell and the bigger their business grows.
Nowadays, you can buy almost anything on a digital marketplace, from washing machines to subscriptions for online services. Let’s take a look at a few popular marketplaces and the kinds of products and services they specialize in.
Launched in 1995, eBay offered collectibles at first. Over the years, though, the auctioning site transformed itself into the world’s largest online marketplace, where not just individual sellers, but entire businesses flocked, often enjoying remarkable financial successes. Today, eBay faces fierce competition from giants such as Amazon, Alibaba.com and Rakuten.
Airbnb and Uber are quite unusual among marketplaces, since they offer services rather than goods – homes for rent and transportation services, respectively. These two sites have become an enormous success, offering viable and wallet-friendly alternatives to hotels and taxis.
Etsy is based on a premise similar to eBay’s, but there is one major difference: Etsy is a commercial outlet for handicraft artists, hobbyists and professionals alike, who can sell their work (e.g. paintings, jewelry and housewares) through the service. Aside from sales, a strong social factor comes into play, as the platform fosters collaboration and creativity through streamed workshops, discussion groups and other events.
Until recently, G2A.COM was a digital marketplace in the truest sense of the word. Aimed at gamers, the platform allows customers to purchase digital game keys for affordable prices, and then receive and activate them in a matter of seconds. Now, the catalog has been expanded well beyond its initial offer, and the marketplace’s customers can even purchase physical products (such as gaming hardware) on the site.
It seems that global e-commerce is embracing the marketplace model, with more and more companies working on similar solutions. Facebook, for example, is developing their own platform, and Google seemingly aims to transform the entire World Wide Web into a single, huge marketplace. And while online retailers still hold firm, digital marketplaces are bound to thrive and innovate the global market.