Learn what makes your online eCommerce marketplace great in 2022 despite huge competition here.
Online stores seem to be everywhere just like the bread and butter of eCommerce retail sales, but did you recognize that above 62% of online sales are made through online marketplaces? This indicates there exist massive business opportunities for investors, entrepreneurs, and established retailers, both within the B2B and B2C sectors.
In a recent study, 22% of respondents from the eCommerce sector said that they had invested in building a marketplace within the last year while ‘Selling and Advertising on Marketplaces’ were highlighted together of the highest 5 trends for positive ROI.
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Online Ecommerce Marketplace: An Overview
An online store is usually an online shop where one retailer offers its products and services to clients. In an online business environment, Marketplaces have wider ecosystems where the buyers can find a variety of competing products from various third-party vendors, sold at different prices, with varying delivery times, different customer ratings, and so on. In simple, Online Marketplaces are the hubs like model giving customers more choice at comparative price.
Most people know the marketplace model from eBay and Amazon; it’s a framework during which any company or individual can display products—like the advertisements during a newspaper—and pay a commission to the location owner from each sale. It’s an efficient sales method for vendors, because the sites have massive reach, also as an excellent business model for the creators of the marketplace as they’re not physically involved in most transactions.
How most of the online marketplace works?
While you’ll not be ready to replicate Amazon or eBay and build an online eCommerce marketplace, newer marketplaces can still prosper by that specialize in one geolocation or product niche. So, you would possibly build a marketplace for animal medicines in Hungary and invite third-parties to sell on your site and have great success.
“The main reason why online marketplace businesses have been opted by many entrepreneurs is that it scales so well is that you simply don’t get to have your inventory to run one. Airbnb doesn’t own any hotel rooms, but it’s already considered one of the most important companies providing short-term accommodation within the world. This is often a very attractive proposition: you’ll build an enormous business without having to spend tons of cash to shop for the initial inventory, and thus taking over tons of risks.”
However, online marketplaces aren’t just subsequent Zalando, Amazon, or Airbnb; established businesses are moving from online eCommerce to a marketplace model because it allows them to bring third-parties into their sales channels. These sales channels offer a more complete customer experience. It’s easier, quicker, cheaper, and simpler than building the products that those third-parties provide or becoming an expert in their realm.
We’re getting to check out both of those business templates and discuss what makes an honest online marketplace.
The biggest online marketplaces within the world
We’ll let the numbers do the talking. Amazon is pulling about 5 billion visits a month towards it and continually increasing in popularity.
What Makes An Online Ecommerce Marketplace?
In our next articles, we’ll be watching some specific features of marketplaces—such as delivery, returns, and checkouts—as well as the way to set about building with a tech team. Today, we’re watching the five big questions you would like to ask and answer before you begin building.
5 questions to ask when building a multi-vendor marketplace
1. What’s our niche?
Essentially, the question could even be ‘Who are our users?’ If you check out the list of top 20 marketplaces worldwide, 17 sell products altogether categories, and every one of them operates in massive global or regional markets. The prospect of taking over the large players is long gone.
Even with all the VC backing within the world, no new marketplace will make a dent in Amazon’s business. Therefore, if you’re brooding about launching a standard marketplace, you would like to differentiate yourself by going for a smaller customer segment and carving out your niche:
- Build a general-purpose marketplace for one country or maybe one city
- Sell just one category of products, e.g. pet products, life assurance, golf supplies
- Find something unique, sort of marketplace that only uses cryptocurrencies (which were highlighted as a ‘game-changer’ trend in our 2020 Report)
Marketplaces operate equivalent to the other business in this way. You shouldn’t be too general, because the big players have already taken the bulk of the business.
2. How can we solve the chicken-egg problem?
Once you’ve got a marketplace up and running, the business model is often very profitable. However, all sectors have unique challenges and, when fixing a replacement marketplace, getting started may be a big issue. It’s called the chicken-egg problem.
Which comes first: the vendors or the buyers? Is the main question goes around the online marketplace sector? How does one convince third-party vendors to hitch your platform when there’s no established client base? But how does one get shoppers to browse and buy if nobody is selling on your platform? And, how does one get investors to return in with funds if you’ve got neither?
The answer is to create a quick, usable MVP that doesn’t cost the world and has only enough features to draw in the primary vendors. It becomes your proof of concept. You’ll soon get a thought of if your business is attractive from the number of users. You’ll then be ready to reinvest profits to make a more robust, feature-rich platform, and attract investors.
3. How one can convert first-time browsers into buyers?
User Experience is everything in today’s eCommerce. Sites got to be beautiful and intuitive. We sleep in a world during which nobody goes to read the ‘How to buy’ page. Users expect to seek out products in just a few clicks and to shop for them without obstacles. Remember, every product you offer is out there elsewhere and may be found with a 5-second Google search. Your marketplace must be faster and more convenient than that!
The more products you’ve got, the better it’s for users to urge lost. You would like categories and products to be logically and neatly-ordered
Make sure you’ve got an inquiry feature that’s visible and works fast, preferably with predictive text capabilities
Ensure that users can buy and organize delivery from multiple vendors during a single checkout, otherwise, your marketplace has no advantage over users shopping in separate stores
Design your store to seem and work equally brilliantly on mobile devices and desktops. 80% of store visits are now mobile and it’ll soon account for half your sales.
Employ UX experts to style your store but accept that it’s always a matter of trial and error. UX and UI are often constantly improved through A/B testing. Building with APIs allows you to make multiple versions of your store, which may be live at an equivalent time, with slightly different elements like button colors or CTAs.
“If it is often a test, test it. If we can’t test it, we probably don’t roll in the hay.”
4. What technology should we use?
When choosing your technology, the standards you’ll search for during a marketplace are many equivalents as for the other online business or digital transformation project:
- Build an MVP as fast as possible
- Make sure that load times are fast and downtime is nominal
- Protect customer and partner data in the least stages
- Move faraway from monolithic systems so you’ll easily add and improve features
- Build an app or web for mobile and desktop users equally from the start
A marketplace may be a complex system employed by perhaps many third-party partners with catalogs including perhaps many product variants. If successful, your marketplace also will get to handle thousands and thousands of orders at a time.
NOTE: The record was set by Alibaba in November 2019 at 12,000 orders per second!
5. What level of customer service can we get to deliver?
Your marketplace must offer an equivalent or better customer service than the other online or brick-and-mortar store. Meaning that questions got to be answered, returns and refunds got to be easy for patrons, and it all has got to be done promptly. However, marketplaces face a minimum level of challenge that online eCommerce stores encounter.
End customers are buying from third-party vendors who are liable for the standard of the products they deliver (and often for the delivery itself if you’re not warehousing third-party products). Therefore, being an online marketplace owner, you’ll not be a part of such a transaction but once if your customer has a negative experience, then they’re going to associate it together with your marketplace and tell others.
To make sure that you simply provide the extent of service customers expect, there are three belongings you got to do:
- Be transparent
- Be available
- Keep up the standards
Wrapping up
If you’re building an online eCommerce marketplace or want to understand more, look out for subsequent articles during this series during which we’ll discuss specific features that you simply can replicate from leading global marketplaces. You’ll also contact us to build your dream eCommerce marketplace.
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