What is a marketplace?
A marketplace is a distribution platform where various brands, companies or stores offer their products and services, increasing the number of options available on marketplaces, attracting more visitors and generating more sales.
In other words, it is a large e-commerce where other stores sell and, one could say, it is an online version of offline shopping centers, where many products from different vendors can be found in the same place.
YOu surelyknow many marketplaces, but some of the most popular ones are Amazon, AirBnB, Aliexpress or eBay.
1. Difference between marketplace and ecommerce
A marketplace is a platform that acts as an intermediary between sellers and buyers, a large virtual showcase where buyers access many brands, products and stores that sell the products through the platform and sellers can reach a very large audience.
Therefore, a marketplace is the intermediary between seller and buyer; It is the marketplace that manages the collection of the sale and even, under certain conditions, the shipment (so there is no contact between the seller and the buyer).
On the other hand, an ecommerce is a web page that is owned by a specific brand or by a store, where they are directly responsible for selling the products, for managing payments, shipping and possible incidents.
Therefore, an ecommerce establishes a direct contact between the seller and the buyer.
2. Types of marketplaces
We can find three types of marketplace, taking into account the type of item they sell:
- Product marketplace. On this type of platform, you can sell or buy any type of material good.
- Services marketplace. In this type of website, you can sell or buy services, such as ticket sales services, flight reservations, hotel reservations, etc.
- Marketplace for job information. Where companies that need staff connect with the professionals who are looking for job opportunities and vice versa.
In the three previous cases, two clearly differentiated groups can be distinguished:
- General marketplace. Where you can find products of a very diverse nature and from very different sectors.
- Vertical or niche marketplace. This type of platform offers products or services of a very specific category.
3. Marketplace: advantages of buying or selling
We are going to show the advantages of using a marketplace, both from the point of view of the buyer (end customer) and from the point of view of the seller (business that sells on a marketplace platform).
Advantages of buying in a marketplace
Buyers who use a marketplace to make their purchases benefit from:
- They can access a wide variety of products, brands and services using the same website or app. Therefore, they can easily compare prices between different sellers and obtain very reasonable prices.
- They can obtain very precise information on the actual availability of the product, as well as estimated delivery times and shipping costs.
- Marketplaces publish offers almost constantly to encourage purchases, so they are always offering discounts and very beneficial promotional campaigns for buyers.
- Shipping costs are low or non-existent, because as they generate a high volume of sales, they have advantageous agreements with delivery companies or their own delivery service.
- As a general rule, the products have useful comments from other buyers, information that helps any potential new buyer to make the right purchase decision.
- Like any website, a marketplace is accessible: every day of the year, 24 hours a day. Therefore, in a marketplace you can buy any day at any time of the day.
Advantages of selling on a marketplace
Buyers, as we have already seen, benefit from buying on a marketplace. The same happens with companies that choose to sell on a marketplace, in which case some of the advantages they get are:
- They can use it as an upsell channel, where they sell items they don’t want to offer on their other channels. You can sell products from previous versions, etc.
- It allows them to reach a huge number of potential new customers that, otherwise, it would be very difficult for them to get and give visibility to their catalogue comfortably.
- Depending on the conditions of the marketplace, with a minimum investment (a monthly fee or a commission per sale), they can sell their products without having to create and maintain their own e-commerce.
- Payments derived from sales are managed directly by the marketplace, which saves resources for the seller.
- They can create cross-selling strategies more easily and thus increase the average ticket, related searches are vital for this purpose.
4. Disadvantages of selling on marketplaces
The phrase “not all that glitters is gold” could not be more appropriate for this situation. Since those interested in selling on a marketplace will also encounter a series of inconveniences, such as:
- Creating a brand image on a marketplace is very complex, since the marketplace’s own brand will usually be stronger and more popular than yours.
- It is necessary to get a lot of sales to generate a relevant income.
- Maintaining the product catalog and stock in the marketplace platform can be very complex the more sales you make, through any channel.
- There is a lot of competition, your competitors also offer their products on the same platform.
- Prices must be constantly reviewed and margins must be very tight, to get ahead of your competitors.
- There are strict rules that limit how you can display your products.
- The customers who buy from you are actually customers of the marketplace, you don’t have their contact details, so you can’t create follow-up campaigns or offer them new products.