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Marketplaces

What is a marketplace?

A marketplace is a platform wherein 2 or more parties meet and interact for the purpose of trade. This can be physically or online. For example; a shopping mall, or Amazon online where buyers and sellers are brought together. Marketplaces usually gain profits from extracting a percentage of the revenue that has derived from a transaction made on the marketplace. Fixed transactional fees are also common.

Advantages of a marketplace business model:

  • • Similarly to a Freemium model, a marketplace model can benefit from a design that allows adding of more and more users to create a network effect.

  • • Each party benefits from a large network on either side.

  • Value grows as the network increases.

  • • As the marketplace grows, so do your returns. A larger network makes it easier to attract and retain customers, therefore increasing profits as the network grows.

  • • Round-the-clock service.

Disadvantages of a marketplace business model:

  • • It is necessary to have both buyers and sellers. You cannot have one without the other, and unless you have a strong network comprised of both, your marketplace will fail.

  • • In a large marketplace, you must help to connect buyer and seller, i.e. facilitate their search.

  • • A high level of trust and customer confidence must be in place in order for customers to use your marketplace. If a seller on your marketplace jeopardises this, it can have a direct effect on the reputation of your marketplace. It is necessary to ensure you have the measures in place to deal with problematic transactions.

Most famous online marketplaces:

  • ->Amazon: The largest online marketplace in the USA. Began as an online bookstore but now sells all types of goods from food to cars.
  • ->Ebay: One of the pioneers in online marketplaces.
  • ->Etsy: One of the most popular online marketplaces, focusing on vintage, handmade, and hard-to-get items.
  • ->Bonanza: Over 25,000 sellers of fashion, collectibles, home furnishings etc
  • ->Alibaba: Leading marketplace in Asia selling every type of product

By the way, Eloquens.com is also a marketplace, this time for "Business Tools". On this platform, you can publish any tool that has been useful for you in the past and that you would like to share for free or for a price to a targeted set of users. Eloquens is also a new kind of marketplace as all users are identifiable and interactions are highly encouraged between the two parties (authors and users).

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