What is a MarketPlace Model? How does it work?

You must have heard of Amazon, Walmart, Airbnb, Etsy, Fiverr Alibaba, eBay, Jet, Uber, Wayfair, Groupon. Any idea what is common between them besides that they are successful?

Well, all of them work on the online e-commerce marketplace concept. They have managed to become a multi-dollar business by connecting third-party sellers and customers.

An online marketplace is a website or an app that is a mediator between the customers and companies or entrepreneurs offering products or services in the B2B and B2C sectors.

The marketplace doesn’t provide products or services on their own. Their task is to provide a platform where the participants interact.

There are basically four different types of marketplaces:

  • Vertical marketplace offer products of the same type from various vendors.
  • The horizontal marketplace offers different products of similar characteristics.
  • The global marketplace has no limitations. They sell various types of products from different suppliers.
  • The hybrid marketplace has its own products and products from other companies. This gives a platform for participants to complete their transactions.

India is one of the Asian countries that have the top marketplaces. 

 Increase Growth & Profit by Creating Your Own Marketplace

Here are the advantages of making own marketplace with the help of peer to peer marketplace builder.

Consider these as they will certainly compel you to create your own marketplace:

1) You make too big too fast

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B2b marketplace solution is seen as a front runner as they possess the capacity for rapid growth. They have to pave the way for a transaction than engaging in the transaction itself.

The workers are not brought into manufacturing, packaging or delivering products. Therefore the only staff which is required is specialists in keeping the platform rolling.

2) Cost-effective solution

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In contrast to the brands that are exclusively selling their brands to the consumers, the online marketplace platform includes both sellers and buyers.

Every deal involves the seller and buyer and it is important that both are satisfied. If the other party is satisfied, they are going to spread the good news.

The best marketplace builder gives the company a wonderful opportunity to take care of its supply that does not require the initial investment in a physical store.

To grab service providers the marketplace offers less fee, earning great potential, superior user experience, and a safer app environment.  

3) The majority risk is not on you

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As a business owner, you are likely to have issues related to delivery, warehousing, logistics or return policy. The essence of providing a B2b marketplace solution is linking sellers with buyers.

Now no burning the midnight oil by overthinking about the perfect equilibrium of supply and demand.

This marketplace marketing leads to no wastage of stock, no considering the best delivery option so it is pocket-friendly and fast.

Basically, you need zero stock or logistics policy. The business moves ahead swiftly when you create your own marketplace and focus on developing the platform.

To resolve this issue, choose the marketplace marketing plan and export your products.

Shipping logistics will no longer be a problem as online marketplaces cooperate with various delivery companies. Then, the cost of sending products abroad will reduce.

4) Boost your branding

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Search Engine and marketing techniques are not the only factors that will reap benefits. Today, it is very risky to sell your products in an international market.

Sometimes factors like the language barrier, high cost, shipping logistics, and imperfect information influence the expansion of the business.  

Pick the most appropriate marketing pricing model and improve your cross-selling while you gain extra profit.

This gives customers the possibility to buy high products of their choice without searching much.

5) Scalable business model

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When you compare marketplace vs e-commerce, the marketplace has a less financial risk you don’t have to invest in inventory.

Managing the marketplace with thousands and millions of products gives countless opportunities to engage customers and create better targeting techniques.

6) Easy management

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When you create a marketplace and the sales-distribution platforms are added to the e-commerce strategy, nothing is a problem and all thanks to the support.

Take the help of marketplace marketing tools and automate the bulk upload of the product information.

This helps in ensuring that the catalog and stock data is uniform across different channels at the same time.

6) Diversification of core business

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For any business owner, having more products displayed on a platform has less business risk as the product selection appeals to more customers.

A media company planning to launch online product sales, having an e-commerce marketplace means additional revenue source and business diversification.

7) Have the widest product range with an online marketplace

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When you compare e-commerce vs online marketplace, they struggle to offer top-tier talents, high-quality goods and conduct a successful purchase transaction.

Despite the efforts, it is a possibility that they can be run by strong competitors.

When there is a good number of sellers offering what customers want, there is zero possibility that they will try any other online platform having less variety.

Today customers want a diverse range of options to choose from. So, build your own marketplace so that you have it all: multiple sellers, a range of products and everything within a single platform.

Furthermore, the labor force doesn’t have to grow on pace with plenty of deals made. This is the reason why the online marketplace expands inventory hassle-free.

8) Transparency

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When you get a marketplace with a service marketplace builder, it gives the customer the chance to compare products from various brands from making a purchase. Price is not the only factor, reviews also play a major role.

These are genuine reviews by customers who have purchased and used the products. A company can instantly have a great rapport with good reviews and can gain a visible online presence.

Interesting monetization options

a) Commission

This one is the most popular model of monetization for marketplaces. Whenever there is a scale on the marketplace platform, you can charge a percentage of a total sale or agree to a fixed fee like Airbnb or Booking.com.

b) Membership fee

If you are not a part of a particular transaction, the commission is out. You can then consider a monthly or annual fee paid by sellers.

c) Listing fee

If you are not charging per transaction, then there is another option to earn money with the free marketplace websitepaid listing on the platform.

d) Freemium

There are customers who want the basic option of the site but they don’t want to pay for them.

Set a few free basic options and wait till they take the bait and display powerful features.

e) Ads & featured listings

In the marketplace, ads can appear in the form of paid listings. This is how Etsy has mastered the art of non-intrusive advertising.

Summing up

Businesses and customers alike look for convenience and a reliable platform where they can easily buy and sell products.

And this is what the marketplace website and marketplace app deliver.

The e-commerce marketplace platform can cater to any niche while addressing different requirements.

The marketplace software has great potential for the ones looking for ways to promote their products and services via multiple channels.

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