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What is E-commerce Marketplace?

The E-commerce marketplace or the online e-commerce marketing is a place or a website where one can find different brands of products coming from multiple vendors, shops or person showcased on the same platform. The marketplace owner is responsible for attracting customers and the processed transactions, while the third party vendors deal with the manufacturing and shipping. Online Marketplace streamlines the production process through one simple portal, where the manufacturers sell their products directly to the consumers, therefore avoiding the stagnant process of stocks holding. This kind of supply chain management is usually referred to as the “Dropshipping” method.
Companies like Amazon, eBay, and Flipkart (India) have experienced massive success in the eCommerce marketplace business model. This OmniChannel model has so far proven to be the most profitable business in web eCommerce. The entire marketplace runs on one software infrastructure, allowing all the vendors to sell their goods under the umbrella of one website. In terms of revenue, these companies take a percentage of the sales on any product sold across the platforms.


Types of Online Marketplace

There are different types of e-marketplaces based on different business models or their method of operation – These are the following e-marketplace
• Buyer-oriented e-marketplace – This marketplace is run by a body of buyers who want to establish an efficient purchasing environment. This helps the buyers to lower their administrative costs and get best prices from the suppliers. The suppliers can also use the buyer oriented e-marketplace to advertise their product to the set of relevant customers. An example of a buyer-oriented portal that links many suppliers to a few buyers is the Exostar.
• Supplier-oriented e-marketplace – This marketplace is operated by a large group of suppliers for establishing an efficient sales channel and increase their visibility and get leads from a large number of potential buyers. This type of Supplier-oriented e-marketplace are also called as supplier directory and are usually searchable by the product or the services being offered. The buyers can also access information about the suppliers, products or the region that they are not familiar with. Successful examples of this business model are (CCO) Cisco connection Online which operates Cisco’s electronic marketplace.
• Vertical and horizontal e-marketplaces – Vertical e-marketplace provides online access to businesses vertically across every segment of a particular industry sector such as automotive, chemical, construction or textile. Buying or selling using Vertical e-marketplace helps increase the operating efficiency while decreasing the supply chain and inventories cost and procurement time. A horizontal e-marketplace on the contrary connects buyers and sellers across different industries or regions. It will allow the buyers to purchase indirect products such as office equipment or stationery.
• Independent e-marketplace – It is usually a business to business online platform operated by a third party and is open to buyers and sellers from a particular industry. You can register to these platforms and get access to classified ads, request for quotations and place bids on several products from your industry sector. Participation in these online auctions and exchanges mostly can be done through a minimal payment of the registration fee. Some popular examples of Independent e-marketplace are, etc.


Benefits of Marketplace Ecommerce

Business Benefit

  • A marketplace allows the business or platform operators to charge a cut on the products that the vendors sell therefore exponentially increasing the profit opportunities.
  • E-marketplaces provide a transparent purchasing process as factors such as the prices of the product and availability of the stock are all accessible on a single platform in an open environment.
  • Better opportunities for suppliers and buyers to establish new trading relationship either within or across their supply chain.
  • Time constraints for trading across geographies is eliminated because of the online platform which operates round the clock.

Benefits for Buyers

  • The buyers get a wide variety of options on products to compare on a single website. Thus helping them find the most reasonable price for the best quality product.
  • Real time updated information on the price and availability makes it easier for the buyers to get the best deal.
  • The buyers can find trusted established vendors and build a trading partnership by dealing exclusively with them.

Benefits for Sellers

  • Smaller stores or vendors who are not sure about establishing their own eCommerce website or want to reduce their marketing costs can align themselves with these larger businesses and gain visibility through their fulfillment options.
  • Regular exchange of quotes between the new and the old vendors is possible, thereby streamlining and maintaining- standardization.
  • The platform acts as an additional sales channel to market and sell their products.
  • Enables oversea sales by providing opportunities to trade in the international e-marketplace.


E-Commerce Marketplace Challenges and Solutions

• Seller and buyer retention – While the most important challenge has always been to attract buyers and sellers to trade in the e-commerce marketplace, the second next crucial problem is to make them active users of the platform for a long time.
The issue of buyer retention can still be solved with the help of marketing, wide range of sellers’ availability and improved user experience, however engaging lot of sellers at once is always a problem. Therefore the business owners should always come up with new ideas of how to keep the sellers engaged for a long time at the same time increase their base. E-commerce Marketplace can typically solve the issue by providing an easy way to engage the sellers with the relevant buyers and consecutively provide them with additional features and benefits to expand their business on this platform.

• Connecting buyers with relevant sellers- This process plays an important role in engaging the buyers and sellers to the Marketplace. To solve this issues the platform owners should use different methods like tracking buyers and sellers behaviors driven on-site search system, personalized emails based on the algorithms, auto filling sellers account, providing handy and user friendly navigations, etc.

• Buyers trusting the sellers – Trust between the buyers and the sellers plays a very critical role in achieving a conversion. To build the trust, the platform owners have to fall back on traditional way of feedback giving it a digital twist. Features such as ‘Testimonials’ – which will speaks volumes about the authenticity of the product and the buyer, an actionable ‘Rating’ system- where everybody can easily rate the products, sellers and the services, or Social Proof- since customers don’t trust machines, they trust people and experiences, this can make a great impact in socially proving your testimonial and ratings through people who have used it.

• First Impression is the best impression- This proverb is true to its truest sense when it comes to eCommerce 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 application would prompt your customers to keep coming back to you.

• Price competition can pose a problem- In large marketplaces, price competition can pose a huge problem. Vendors can choose to compete for the lowest price, which may serve the customer but could end up earning lower profits for both the marketplace and the vendor.

• Quality assurance can also be an issue – Marketplaces may not always have control over the quality of products or timeliness of delivery. One way to combat this is to establish a review system, allowing consumers to give feedback on specific third-party sellers and products. Some marketplaces like eBay will move the seller down in search results or downgrade their account due to negative reviews, while other sites like Amazon leave it up to the consumer to penalize a vendor based on poor reviews. The right enterprise software platform can help you manage these aspects of quality assurance.



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