Top Marketplace Trends to Pay Attention to in 2019
Online marketplaces are e-commerce platforms where multiple third-party vendors can sell their products and services. As opposed to single vendor e-commerce platforms, online marketplaces provide a platform facilitating the sale of goods between multiple buyers and vendors.
There are many approaches and business models in marketplace platforms. Some marketplaces act as a third-party to ensure secure transactions, while some provide only the platform for buyers and sellers and aren’t involved in any transactions.
While e-trade has become an indispensable part of businesses, marketplaces are becoming an indispensable part of e-trade and numbers back up that claim. In 2017, online marketplace sales accounted for 50% of all online sales worldwide and total amount spent globally on the top 75 online marketplaces was around $1.55 trillion! And as global retail ecommerce sales is expected to reach $4.8 Trillion by 2021, This means there is still a very big share of the pie waiting to be claimed. If companies move fast, there’s still the potential to gain enough foothold to affect or shape industries, similar to Booking.com or Uber.
Most marketplace platforms rely heavily on Customer Relations Management, also known as CRM, to collect and use customer data to offer them more personalised product offers and services (all with customer consent).This type of data can include a customer’s purchase preferences, behaviour, and search history, all of which is utilised by marketers to improve their campaigns.
Although it often raises public debate about the security of personal data, these types of highly personalised marketing campaigns are mostly perceived as beneficial by consumers. However, the emergence of GDPR and other personal data regulations have alleviated most concerns.
Another benefit of marketplaces is that customers around the world can access a range of services and products that might not be accessible from their current location. Conversely, vendors and service providers can generate more revenue from an extended customer pool.
Due to the many benefits (and some controversies) around online marketplaces, the marketplace economy is growing fast as a new business model.
Key Trends Shaping the Marketplace Economy
Tapping into the sharing economy
The sharing economy is when buyers can become sellers and consumers at the same time. Also known as the peer-to-peer trading model, the sharing economy has been thriving alongside the marketplace economy and is well on its way to becoming a whole independent industry.
You might be familiar with the sharing economy-based model Airbnb, a short-term rental platform favoured by travellers and those looking for a break from their current home. Other examples are eBay and Facebook Marketplace, where people can buy and sell products. There are also service platforms like Upwork, where people can hire others to perform skill-based tasks, such as graphic design, copywriting and translations.
These new businesses have created many money-making opportunities for individuals, particularly since there is relatively small investment required to begin. Some people even live on the income from these platforms.
Marketplaces are going hyper-local & hyper-vertical
More competition in the market usually results in more specialised and niche solutions. For example, after the big supermarket chains had been firmly established, we began to see the emergence of discount supermarkets, bulk-buy supermarkets and health food stores. With the near-global domination of online marketplace giants like eBay, Amazon and AliExpress, competition has intensified and the specialisation process has already begun. Examples include Amazon’s launch into country-specific markets (Amazon Turkey being the latest launch) and focus on specific industries (with the recent launch of Amazon Storefronts for small businesses). This type of specialisation has been assisted by advanced CRM systems and data collection technologies, which has pinpointed customer and vendor opportunities.
Community building is the key to creating a band of loyal customers, who can then become brand ambassadors over time.
Leading online marketplaces employ several people to manage their customer relationships. Since there’s no way for customer service representatives to remember every single customer detail and interaction, they need to rely on CRM systems.. These systems provide customer service teams with key customer information in real-time. For example:
- Basic identity information
- Latest customer service query
- History of previous customer service interactions, including subject and summaries
- Purchase history
- Customer feedback or complaints
This information can be updated based on the needs of the marketplace platform, customer consent, and the types and frequency of customer interactions.
This data will help improve the customer support experience and future marketing activities. Some online marketplace platforms also extend their reach by building a community, often on social media. Customers are encouraged to create their own content featuring hero products, as well as provide user reviews and recommendations to their social networks. In our digitally-connected world, this type of influencer marketing is much more effective compared to classic advertising or marketing methods.
Some e-commerce platforms adopt philanthropic causes to extend their influence and create brand ambassadors. There are many creative ways that marketplace brands do this, such as planting a tree on the customer’s behalf for every purchase or donating a percentage of the customer’s purchase to a charitable cause.
This is a selection of marketing techniques that we’ve seen online marketplaces employ.
Disruption of traditional B2C and B2B models
In a traditional business model, there are numerous third-parties involved in finalising transactions between sellers and buyers, including sourcing, transport, shipment, and delivery. Online marketplaces have eliminated the middle man by directly linking sellers and buyers together.
Today, an ad agency in Germany can easily employ a graphic designer in India. A business owner in the United Kingdom can quickly hire a copywriter from Turkey. A startup in New Zealand can find an SEO specialist from Germany. Before the birth of the online sharing economy, this would have been near impossible due to geography and lack of standard international practices.
More business services around marketplaces will emerge
There is still room for more businesses to join online marketplace platforms, peer-to-peer platforms, or platforms based on sharing economy model. Every buyer wants to obtain the best possible goods for the lowest possible prices, which means more competition is always welcome as it encourages innovation. Online marketplaces offer opportunities for everyone, including investors, businesses, buyers, vendors and suppliers. Let’s summarise what makes online marketplace platforms beneficial:
- Online marketplaces can start up with a minimal investment and grow gradually over time.
- Vendors can use CRM in innovative ways to build communities and run marketing campaigns.E-commerce platforms eliminate the middlemen, which results in increased efficiencies and lower costs.
- Online marketplaces are global so people can buy and sell their goods and services regardless of geographical location. They carry a minimal financial risk for potential investors of any size.
What Does This Mean for Investors?
First of all: Opportunity. Online marketplaces and sharing economy-based platforms are a rapidly growing market. There are many business models to experiment and innovations to launch.
Online marketplaces appear to be driven by price but it’s not the only thing consumer take into account when buying. Other key factors include vendor reviews, the number of previous sales and reviews, and vendor responses to previous comments and complaints. It’s important for vendors to ensure their online footprint is reflecting a positive brand and customer experience.
Vendors should also be prepared to sell on multiple online marketplaces simultaneously. According to research comparing eBay and Amazon; 39% of participants were considering expanding into multiple marketplaces.
According to the same research, 29% of participants aren’t happy with their channel management tool.This alone could be an opportunity for investors to consider diving into the online marketplace environment.
Investors can let others do the hard work. Yes, it is true. Today, all an investor needs to do is come up with an original idea, an innovative business model, and then let a third-party handle the legwork for them. This is where Solvea comes in — our team can help investors execute all the software infrastructure so they’re free to focus on growing the business.
In the light of all this information, it’s evident that online marketplace business will continue to grow in the foreseeable future. Now is a good time for new vendors and buyers to invest in this area.