Who would’ve thought the internet would be a game-changer? Indeed, no one in 1983! It’s the year the internet was officially born. Fast forward 37 years to the present day and just the sheer magnitude of the internet and B2B Online Marketplaces will boggle your mind.
🌎 Here’s an overview
Around 4.66 billion people used the internet in 2020, which makes up 59% of the global population!
Now, what if we told you that online marketplaces are the next game-changer? Don’t believe it? Then buckle up, for this article will change your views. Here, we’ll present 9 reasons why we believe online marketplaces are the future.
Let’s begin with the basics.
What is an Online Marketplace Platform?
An online marketplace is a digital platform such as a mobile application or website that connects buyers and sellers. Now we know you’re thinking of Amazon, and you’re absolutely correct!
Amazon is the perfect definition of an online marketplace. Buyers and sellers connect on one platform from all over the world to buy and sell anything that offers value. Let’s discuss other types.
Categories of Online Sales
Online Marketplaces are based on 3 broad categories
The target audience is a group of people interested in your services or business. In the world of online marketplaces, target audiences are subdivided into 3 types: B2B, B2C & C2C.
Focus marketplaces aim to cater to specific industries and businesses—such marketplaces are usually of 2 types: Vertical or Horizontal Marketplaces.
Marketplaces based on management are judged by how much control owners exercise in a marketplace. They consist of 3 types: Unmanaged, Lightly managed, and Fully managed.
We will expand on these concepts below:
Marketplace Types by Target Audience
- Business-to-Business (B2B)
- Business-to-Customer (B2C)
- Customer-to-Customer (C2C)
In a Business to Business (B2B) online marketplace, buyers directly buy products and services in bulk from wholesale suppliers. A third party operates this online marketplace. It provides favorable terms to everyone.
Related Article: Digital Marketing Services for Small Businesses: An Ultimate Guide
The idea behind creating any B2B Online marketplace is to make all transactions digital, provide a great customer experience, and make all financial deals transparent.
Alibaba is one of the biggest Online B2B Marketplaces across the globe.
As is evident from the name, Business-to-Customer (B2C) marketplace refers to businesses dealing with customers. Here, consumers can shop for various goods and services directly from multiple vendors who sell an array of products and services, all on a single platform.
There are lots of famous B2C marketplaces around the world. One of the most famous ones is AliExpress, where thousands of sellers cater to millions of consumers’ needs.
On B2C marketplaces, prices play a key role. Many customers choose an offer only after sorting them by price. That’s why prices usually change very dynamically on marketplaces – for example, Amazon is known for making millions of price changes every day. Smaller players adopted this strategy as well and currently, many of them use price monitoring software to track their competitor’s prices and then use dynamic pricing to optimize the strategy.
If you want to build an online marketplace for yourself, you can contact us here for a quote.
A Customer-to Customer (C2C) online marketplace is another type that is gaining popularity worldwide. The concept behind this type of marketplace is that people can exchange value by offering each other goods and services. Here, the buyers and sellers do not have defined roles. A consumer can also be a service provider.
Think of AirBnB and Uber as C2C, where people provide specific services in exchange for money or other resources that provide them value.
⚖️ Check This Comparison Between Audience Based Marketplaces To Understand Their Dynamics
🍎 Food for Thought
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Marketplace Types By Focus
Marketplaces can be categorized by their focus on the types of markets they wish to serve.
Such marketplaces can be segmented into 2 categories
⬆️ Vertical Marketplaces
➡️ Horizontal Marketplaces
Vertical marketplaces concentrate on a specific region or niche. They focus on selling specific services and products instead of catering to everyone. The most prominent example of a vertical marketplace is Etsy, which focuses on providing unique hand-made products to its customer base.
An Online Vertical Marketplace will best serve you if you wish to offer specific products and services. Having your own website or mobile application that focuses on a particular niche sets you apart from your rivals.
Modern Website Design Plays a pivotal role in achieving that task. It also provides a platform for your business to deliver higher-quality products and services. Online Marketplaces create a personalized experience for your customers.
We built a vertical marketplace specifically for musicians, you can view it here (Pro Musicians List).
In contrast, Horizontal Marketplaces offer products and services to a variety of consumers from various locations. They also deal with serving products gathered from multiple industries. Moreover, This type of marketplace is a one-stop shop for consumers who have various demands.
Think of it as a shopping experience consumers would have in a mall, but only this one will be online. AliExpress, eBay, and Amazon are examples of B2B and B2C when categorized by the target audience
Marketplace Types By Management
⚪️ Unmanaged Marketplace
Unmanaged marketplaces are typically customer-to-customer (C2C).
There is zero monitoring from the owners of a marketplace. Consequently, background checks, quality assurance, or interference are done in its operations. Users judge the quality of a product/service based on its reviews.
These sort of marketplaces usually have the lowest operating costs, thus can charge minimum fees to users. Major unmanaged marketplace examples are Fiverr & eBay
🌓 Lightly Managed Marketplace
Lightly Managed marketplaces take a slightly hands-on approach to maintaining quality and background checks. They are the most likely to invest in customer service and user verification—for example, Uber, Upwork, and Air BnB.
🌕 Fully-Managed Marketplace
A Fully-Managed marketplace covers the complete sales process for sellers. For example, RealReal, a marketplace for luxury consignments, authenticates every single item they sell and manages the sale until it reaches the final customer.
The only thing buyers have to do is make the purchase. Such marketplaces can charge a premium because of high service quality and a great customer experience.
TechNerds combine technology, innovation, intelligence, and dedication with only one aim. To bring your vision to life.
Therefore, consult with us for free right away!
Why Online Marketplaces are the Future?
1. Everything is Online
Coming back to the point we made earlier; online marketplaces are the next game-changer! They are the future.
The world has seen a cosmic shift towards adopting the internet as a staple in everyday lives. Most of us can’t even think of living without it anymore.
Online marketplaces are following a similar trend.
Here are some eye-opening facts
- Total E-Commerce sales have more than tripled since 2014, with revenue expected to cross $4.2 Trillion!
- There are now over 2.05 Billion Online Shoppers in 2020, 55% more than in 2014!
- Moreover, 2.05 Billion online shoppers make up about 27% of the whole global population, which is mind-blowing!
- Over 63% of all shopping journeys begin with Google
- 50% of all E-Commerce purchases happen over smartphones
- 80 % of Online Shoppers and 63 % of Mobile Shoppers in the USA feel that new technologies and innovations enhance their shopping experiences.
- In short, there are over 3.5 billion smartphone users globally, which make up 45% of the world population. By 2025, over 1.74 billion new users are expected to be added!
The impact of digital transformation, coupled with the rise in numbers of smartphone users, is our first reason why online marketplaces will dominate the future.
If you want to see how we bring about a digital transformation for our clients, click here (Digital Marketing).
2. Convenience Matters More Than Ever
When you can enjoy the comfort of making purchases at a time and place of your choosing, with a preferred payment method, while having the product delivered to your doorstep, who could say no?
Likewise, In today’s day and age, people love the power of being able to benefit from goods and services conveniently. It is one of the main reasons why online shopping has taken the world by storm.
Here’s a mind-bending stat for you
97% of consumers say they have canceled a purchase because the service was inconvenient to them!
Consumers care a lot about convenience, which is why online marketplaces will continue to thrive in the future.
3. Saves Consumers’ Time & Resources
Think of all the time-consuming activities you undertake when visiting a physical marketplace;
- Firstly, the long queues you have to wait in
- Secondly, the time you lose over unnecessary buys
- Purchasing at an inconvenient pace
- Waiting for store staff to tend to your queries
- Besides, time wasted in traveling and traffic
Now think of all the ways online marketplaces help us save valuable time and resources.
👋 Bid Farewell to Long Queues
Making purchases from an online marketplace is just a few taps away from your fingertips. Online Marketplaces help avoid long queues, thus saving your time.
🆘 Save Time Wasted Over Unnecessary Buys
When you make purchases over online marketplaces, you save potential time wasted pondering over unnecessary buys. We stave off pointless buying temptations because we are more focused on fulfilling our intent.
🏃 Availing Products & Services At Your Own Pace
No more tension of worrying about time! Most of us have so many commitments in life that it’s often difficult to physically engage in commercial activity. When we finally do make time, we often have to rush because of so many reasons. Online marketplaces allow us to shop at our own pace anywhere, anytime!
⏳ No More Waiting For Store Staff
We save the time we would’ve spent waiting for receptionists, store staff, and other resources to tend to us with online marketplaces. On the other hand, we can post our queries, register our interests, or straight-up make purchases without waiting for anyone.
🚦 Eliminate Time Wasted In Travel & Traffic
Online Marketplaces eliminate the need for you to travel for your purchases. They save valuable time that consumers would otherwise lose in transit.
As times have changed, human beings too, have evolved. Now, they want to spend time in places that provide the most value to them. Likewise, saving time and hassle matters most, which is why Online Marketplaces are bound to grow.
4. Better Discovery/Comparability
Product discovery has taken a whole new meaning with digital marketplaces. Above all, it is much more convenient to find products that might escape consumers’ notice.
When you surf an online marketplace, you get access to thousands of products on a single platform. Items of your interest wouldn’t get lost simply because they are hidden beneath a shelf or not displayed effectively.
Also, Consumers nowadays love to find more about their products, make comparisons, and learn from others’ experiences to make their own purchase decisions. Online marketplaces like Etsy allow consumers to discover and compare products to make the best buying decision.
5. Better Prices
Another reason why such marketplaces are popular among consumers is better pricing. Sellers can discount their products due to the low cost of selling. This is because sellers don’t have to buy real estate for their business, hire staff, or pay any utility expenses.
This positive impact of lower prices trickles down to the consumer and shifts their perception of online marketplaces.
Therefore, more and more consumers take advantage of better pricing, positive consumer perception will only strengthen, which is why marketplaces will grow in the future.
6. Higher quality
The internet is filled with online platforms that only deal with legit products and services.
That is to say, There is now a very small chance of buying products and services of lower quality.
This is due to:
- Presence of Online Reviews
Reading online reviews is standard practice for savvy online buyers. Meanwhile, they tend to go for products and services rated by most people with the highest positivity rating. This ensures that consumers only get a product that meets the standards of the masses.
- Avoiding Emotional Manipulation by Salesmen
Consumers can now avoid being emotionally manipulated by salesmen into buying a product or service. Likewise, they have more room to make informed decisions based on personal judgment.
7. Products Unavailable In A Specific Place/Country
One important world dynamic that can’t be overlooked is the availability of products in a specific place/country. Many products are not manufactured/distributed in different parts of the world, but that doesn’t mean consumers don’t want them.
You see, we live in a globalized world, but all of us can’t be everywhere at the same time. This is where Online Marketplaces fill the void. Marketplaces such as Amazon and Alibaba cater to the needs of billions of consumers from across the globe.
This is expected to grow as economies prosper, and more people become smartphone users.
Did you Know? More than 197 million individuals worldwide access their devices and visit Amazon every month, which is more than Russia’s entire population!
8. Consumer Privacy
Another reason why online marketplaces are expected to grow is that they offer consumers privacy. You can make a purchase, and no one has to know a thing. There are thousands of purchases that consumers don’t feel comfortable making in person or don’t want to disclose to others.
As time progresses, more and more consumers will avail certain services and products online. This is another reason why digital marketplaces have a bright future.
9. Impact of Coronavirus (COVID-19) on Online Marketplaces
In a global survey done by UNCTAD, more than half of the respondents said they expect to shop online much more frequently after the pandemic is over.
Reliance on the internet has also increased many-fold when it comes to news, health-related information, and digital entertainment.
For example, the corona virus has forever changed the way people view shopping.
Many people now prefer to stay indoors, and that trend seems likely to continue for the foreseeable future. Due to this, online marketplaces are expected to grow at a phenomenal rate of 14% until 2023!
🤷 FAQ: That’s all great, but how can i choose the best marketplace model for my business?
As is evident from our 9 reasons, the time to shift towards creating your business’ online marketplace is NOW!
At TechNerds, we do just that. We are committed to bringing your business ideas and vision to life.
That is to say, our team of tech-savvy developers and digital marketers ensures you get the highest quality products and services that stand the most chance of succeeding!
Got an idea? Consult us for free!
Suppose you know which category of marketplace suits YOUR business needs; it’s equally essential to know how you’ll generate revenue.
In the coming section, we’ll cover what revenue generation opportunities each marketplace will offer you.
How can you make money with your Online B2B Marketplace?
A Business to Business (B2B) marketplace serves as the middle link between sellers and purchasers. If you plan to go for B2B, here are the monetization opportunities such a marketplace presents for your business.
Commission-based monetization is the most popular revenue model that applies to all types of marketplaces, including B2B.
To clarify, imagine making a commission on every transaction that happens on your marketplace. As the number of transactions increases, so does the revenue stream. It is also suitable for marketplaces with a low transaction volume.
💰 Alibaba follows a commission-based revenue model. Its yearly revenue was $72 Billion in march of 2020!
💲Listing-Fee based Monetization
In addition to charging a commission on each transaction, some B2C marketplaces like Etsy also charge a fee for listing products on their platform. For example, listing an item on Etsy costs $0.20.
On sites like Craigslist, sellers pay listing fees for better visibility and higher search rankings which are also known as premium listings.
Subscription-based Monetization charges monthly/yearly fees to sellers in exchange for them using specific marketplace features. Consequently, this model is suitable for marketplaces that expect to offer a high volume of products and services.
You can offer several subscription packages to sellers based on marketplace features, the number of products they offer, and higher product listing
For example, 💰 Dollar Shave Club uses a subscription-based model. It currently has over 3.2 million subscribers with annual revenue in excess $100 Million!
How can you make money with your Online B2C Marketplace?
In a B2C marketplace, subscription or membership-based monetization charges a fee to sellers for using the platform while consumers stay free of any charge.
This is ideal for the best online marketplaces to sell baby products that expect to make commissions in the future but have not shifted yet towards making transactions.
This model is suited for B2C marketplaces.
Chances are you’ve heard of Venu, which is a marketplace similar to AirBnB, but instead of offering accommodation services, they offer event spaces.
Venu began validating its business idea by utilizing an invoicing system. After some degree of success, they made the switch to a commission-based model.
Using commission as a charging model for your B2C venture is another way to make money with an online marketplace.
Take TripAdvisor, for instance, which charges 3% per transaction.
💰 Trip Advisor uses a Commission-based monetization model. It’s yearly revenue was $1.56 billion in 2019!
💲Listing-Fee based Monetization
Another way to supplement your income is by charging an extra fee for listing products on top of charging a commission.
Take the example of Etsy that charges $0.20 for listing a product. The price can go higher depending on the quality of the listings you buy. This allows your products to gain better visibility and a higher ranking in search.
💰 In 2019, Etsy generated revenue worth US$ 818.79 million, up from more than US$ 603.69 million in the previous year!
How can you make money with an Online C2C Marketplace?
Offering paid promotions to users is a great way to generate revenue. You can give users a chance to promote their products by charging a promotion fee on your online marketplace. This sort of monetization works best with product-focused P2P marketplaces. Here the focus is on the product rather than the seller.
for example, there are 3 types of paid promotions:
- Sponsored vendor profiles
- Featured products and services
- Promoted products in cart/at checkout
Instagram and OLX both utilize this revenue model by offering the option of paid promotions to consumers.
💰 Instagram hit the $100 Billion mark in 2018!
Third-party advertisements are a trendy model for C2C online marketplaces. As a result, there are several advertising models to utilize for such P2P marketplaces.
💰 Instagram generated $20 billion in advertising revenue alone in 2019!
Here are some interesting ideas that you can pursue your own marketplace in 2021.
Online Marketplace Tips & Ideas Worth Pursuing In 2021
📠 Niche marketplace
Niche Online marketplaces are all about building a product/service that solves a particular industry problem or makes existing practices more convenient. For example, Uber, solved massive transportation problems in countries all over the world.
You can build your own niche marketplace based on the business you specialize in or the industry you target. Similarly, this sets you apart from your competition.
Take a look at lawggle, a niche service marketplace developed by TechNerds specializing in connecting you to legal professionals within minutes. Today, it is solving thousands of people’s legal problems on the go while generating revenue for its owners!
Did You Know?
TechNerds are at the forefront of online marketplace development. We have helped people like you create their own successful niche marketplaces! Got an idea? Contact Us Today!
👔 B2B marketplace
Marketplace ideas are not confined to B2C marketplaces. For example, a B2B marketplace provides a particular service or product directly to other businesses. This could be as straightforward as providing expert services and tools to a specific type of business.
Alibaba is one of the most prominent B2B marketplaces out there if you want inspiration for your own marketplace.
TechNerds‘ 2 Cents: Serve a niche industry rather than try and compete with Alibaba
🕶️ Check out some niche B2B ideas to base your next marketplace on in 2021!
🛒 Ecommerce-based Marketplace like a mobile marketplace app
E-Commerce-based marketplaces have a proven track record if you’re looking for some inspiration. For example, Amazon and Ali Express are prime examples if you’re looking to develop a solid model for an E-Commerce marketplace.
We suggest you add some unique elements to your E-Commerce idea to make it stand out from the competition.
Perhaps you could take inspiration from a niche E-Commerce platform developed by TechNerds which caters to people interested in personal security.
Meanwhile, CrossBreed Holsters have graduated from mainly offering various gun holsters to adding merchandise and belts for sale with great success!
🏠 Accommodation-based marketplace
TechNerds have enabled various clients to get started with their own unique marketplaces.
TechNerds have developed platforms like HOMEKEYINN which is an accommodation-based app for frequent travelers. Similarly, HOMEKEYINN is targeting a niche in the accommodation industry and has the potential to be a massive hit!
We are currently performing SEO for HomeKeyInn and if you are interested in any SEO hacks, do look over here.
Developing accommodation-based marketplaces are another niche you can target. Take a look at AirBnB, which offers vacation rentals to users. They have targeted a niche and are massively successful in it.
🎸 Skills-based marketplace
Did you know that 1 in every 3 Americans is a freelancer? Everyone has a talent. Everyone can offer something of value to another. It is this opportunity that perhaps your next idea can tap.
Half of the American population will move into freelancing in the coming years. Maybe your next idea could change the way people offer their skills worldwide.
Upwork and Fiverr are two great platforms for some inspiration! If you’re looking to be more specific, check out this online marketplace idea developed by TechNerds, for a skills-based niche marketplace.
For instance, TechNerds developed Affinity Ink, making it easier for people to connect with local tattoo artists, tattoo parlors, piercers, and many more. Therefore, It has solved a unique industry problem and is quite popular among the USA’s tattoo artist community.
🚪 Experience-based marketplace
It’s all about experiences now. Every 7 out 10 individuals in the USA prefer experiences rather than just products. What’s the best way to do that? With your very own marketplace! Experience can be narrowed down to travel, music, extreme sports, workouts, and so forth.
For instance, World Nomads is a good example of an Experience-based Marketplace that focuses on narrating inspiring, personalized travel stories.
Read up on how marketplaces improve customer experiences to gain in-depth insights regarding this niche.
🛠️ Housekeeping marketplace
Another huge market opportunity for your marketplace is offering housekeeping services. This can encompass various types of home services, from cleaning, maintenance, and pet care to gardening, painting, and home chores!
For instance, Tidy is a great example of an online marketplace that focuses on providing cleaning services to homes, rentals, and offices in a very convenient manner which is why it is very popular in the Housekeeping Industry.
Online marketplaces are growing at an unprecedented rate. Previously, the focus of such marketplaces was on providing a vast array of services and products. Such types of models are now common (Think Amazon and Alibaba). It will be tough to break into such an established industry.
However, focusing is on shifting towards finding niche market opportunities and providing a more personalized experience to consumers.
For example, studies project that global digital marketplaces, including E-commerce, will reach a new high by 2021. Ecommerce businesses have witnessed a 265% growth rate, up from $1.3 trillion in 2014 to $4.9 trillion in 2021!
To sum up, it is best to seize the moment and make the most of this opportunity now! Despite what most people think, 2020 is the year of opportunities in the world of digital.
So, find your niche now and consult us at TechNerds to bring your vision to life!