The Rise of Marketplaces
How does your retail business benefit from?
20 years ago the first online marketplace appeared, offering products to retailer. These days e-commerce giants like Amazon, eBay, and Rakuten focus on wide range of products – so called horizontal marketplaces, serving consumers. „Fortune“ published a stunning figure of Amazon’s market value – US$ 702.46 billion. It’s an indictor that Amazon belongs to the leaders in the online retail market. But also others have accelerated their growth in online marketplaces for years. It’s not a tendency, the shift to online purchase has begun to transform and shape customers’ buying patterns.
The main characteristic of these online giants is that they don’t operate on local markets (stationary markets) nor do they focus on specific industries, hence approaching broad target groups within the global market. Online marketplaces like Amazon, eBak, Rakuten have well-developed platforms, approaching the global market to satisfy customers’ needs. As consequence, thousands of online retailers have emerged trying to get a piece of the big cake. The main reason is that e-commerce giants ease the way for online start-ups as online retailers don’t necessarily need to invest much in online platforms, warehousing, inventory, nor in logistics. They use the infrastructure of these global online players. There are many online retailers who use Amazon only even though omni-channel distribution enables retailers to get more pieces of the cake by immersing in different markets. It all depends on your business model, marketing and sales strategy, and your budget.
Marketplace is described as medium that allows customers and vendors of specific products and services to interact with each other in order to facilitate and exchange. That is why shopping malls belong to marketplaces as well as online-shopping platforms. The difference between traditional marketplaces like shopping-malls or rural markets and online-shops or online-platforms is that online marketplace are a result of evolved trade solutions. The experience online marketplaces take advantage of derived from those traditional marketplaces. Of course, the rise of the internet and smartphones boosted that process tremendously.
Of course, there’s two sides to everything. Horizontal marketplaces such as eBay have grown rapidly and become complex. As consequence, over-loaded range of products from shoes to cars and thousands of brands and sellers makes it hard for customers to stay with one retailer and makes it even tougher to retailers to engage with customers as online retailers get easily lost on these online marketplaces. In fact, everything that comes easy attracts business people to take advantage of a particular opportunity that online marketplace giants like Amazon, eBay, and Rakuten offer.
The real winner of the interactions between participants of online marketplaces are companies like Google, Bing, Yahoo, Facebook, Twitter, Instagram and so forth as they provide new marketing strategies to reach customers such as search engine optimization, search engine advertisements, social media …. Consequently, online retailers need to invest a lot in online marketing in order to promote their offerings and make themselves visible. Launching an online-shop and / or using online marketplaces requires more than just printing 1,000 leaflets and placing them in a lobby of a building, hoping that any passer-by picks it up and buys your product.
The quintessence of all the written above: Focus on your business model, work out the right marketing and sales strategy tailored to your budget while using all the resources online marketplaces, search engines, social media platforms already provide. In the end, every opportunity comes with a risk that requires a realistic perspective on the overall business model. The most important of all: Your business serves customers, customers don’t serve your business!