Why Online Marketplaces are Essential for Success
Online marketplaces have been thriving for the past few years. Since the model has proven to be successful, major online entities like Amazon, Best Buy, Sears, and Walmart, have all added marketplaces to their operations. Whether you are a big or small brand or retailer, there is an opportunity for you to capitalize on the marketplace model. In the changing world of commerce, as more and more business moves online, it makes increasing sense to push your presence in the marketplace arena.
What exactly is a marketplace? – It is literally like having an online storefront. First-party businesses like Amazon have a marketplace where third-party sellers can have a store and sell their products. Order fulfillment is sometimes done by the marketplace operator, depending on who it is. It is a very effective portal for connecting buyers with sellers.
Why a marketplace? There are several reasons:
- Commerce is increasingly taking place online. Sears and Macy’s closing physical locations while investing more in a comprehensive omni-channel strategy at the same time, is a tell-tale sign of the changes times.
- It adds another channel to your mix. If you are a small brand with your own e-commerce site, being a marketplace seller will expose you to a wide range of consumers who could be looking for products like yours. Think about this. In February 2014, Amazon.com had 124,632,113 unique visitors (data source: www.compete.com). Which individual seller can boast of such numbers?
- If you are the marketplace operator, you can ensure that consumers don’t leave your site by adding third-party sellers and increasing assortment by default. If you don’t carry something, but the third-party seller does, everyone wins.
- You get to build a whole new set of audiences without actually going through the trouble of doing it yourself. You can place your product across various available categories and customize your offerings.
- Even if you are a big brand, you can still benefit from having a presence on a marketplace. According to a report published in January 2014, eBay is going to launch a portal called ‘The Plaza’, where brands will be able to sell directly to consumers. Japanese e-commerce site Rakuten.com has several high-end brands like Chanel that sell through their website.
- Competition. This is a factor that benefits both customers as well as sellers. More competition means that weaker products will get filtered out and the customer will get the best possible product offer. If marketplace sellers can analyze their own and their competitors’ inventories, availability, pricing, etc., they can devise a well-informed and effective selling strategy.
- Another advantage for the consumer is that they are exposed to very wide range of products to choose from. The assortment on these websites is very rich. Once a consumer lands there, he/she doesn’t have to leave.
- Portals like Rakuten.com give brands and merchants the opportunity to build their own identity and value within the larger marketplace.
These are but some of the advantages of having a strong marketplace presence. Commerce is changing at a very rapid pace. Marketplace owners, businesses, and consumers, all stand to gain for from this method. Brands and retailers need to keep up with the trends, or they will get lost in the noise.