Are you struggling to create an online marketplace for yourself? Do you also find it difficult to understand the different markets in the digital space? Or are you simply interested in understanding how to create an online marketplace?
One of the most burning questions so far in 2021 is “How Do I Create a Successful Online Marketplace for My Business In 2021?” With an increase in online activities of businesses and the majority of the workforce taking over the digital space, creating an online marketplace has become an important concern for individuals now entering the e-commerce world! Pew Research Centre has revealed that about 15% of online buyers make purchases on a weekly basis.
If you want to understand what a successful online marketplace looks like, take a look at Amazon! Amazon is one of the biggest players in the e-commerce world and that is why it serves as one of the best examples. While it may take a long time for you to reach that level, once you get started with the right guidance, there’s no stopping you!
Forbes has predicted that the global e-commerce sales will reach as high as $4.2 trillion by the end of 2021. This article is a guide for you to understand the meaning and types of online marketplace and how you can create one for yourself in 2021!
What is an Online Marketplace?
An online marketplace is a digital platform or store where you can find a variety of products offered by countless vendors, shops, and people on that very platform. All products are together on one platform and there are options to choose from a single category of product as well.
Your task as the owner of that marketplace is not just to provide sellers a space to sell their products but also to attract customers for your marketplace. Furthermore, you also have to handle the vendors and transaction processes involving third-party vendors.
Unless you and your sellers employ a third-party vendor for manufacturing and shipping processes, these roles may also fall under you. Owing to the multitude of vendors and sellers carrying out shipment and selling processes altogether on one platform, online marketplaces are also referred to as multi-vendor marketplace platforms. Forrester has predicted that 17% of all transactions are likely to go through e-commerce and online marketplaces by 2023.
What are the Types of Online Marketplaces?
Statista in one of its reports, revealed that 47% of all digital purchases are carried out through online marketplaces all across the globe. Although there are several types of online marketplace, we will focus on four main types of marketplaces:-
- On Demand: The On Demand marketplace is the most common type of marketplace in which the demands of the customers/users are met by a network of suppliers through different offers on the demanded product.
- Managed: This type of marketplace has sellers and manufacturers offering their products on a platform that is managed by a third-party. The third-party vendor looks into all the factors of the marketplace like sales processes, storage of products, seller’s commissions, logistic support, and more. Important types are B2B and B2C.
- Decentralized: This marketplace is also often referred to as the P2P (peer-to-peer) marketplace where there is no third-party monitoring and sellers and buyers are free to buy and sell anything from anywhere/anyone.
- Community-driven: This type of marketplace is not as grand as the other online marketplaces and majorly has local sellers and artisans selling their products on the platform. The sellers are from a particular community or environment and manage all the essential processes in purchase, but there is a supervising management firm above these sellers.
What are the Benefits of an Online Marketplace?
Reports by Oberlo have revealed that, on average, over 2 billion make online purchases annually, and this trend is only rising. Among the many benefits, some notable benefits of an online marketplace are enlisted below:-
- Online marketplaces comparatively have lower start-up costs and lesser upfront costs.
- Online marketplaces are always open for business and have no closing hours, and come with the potential to acquire customers across the globe.
- With online marketplaces, you can easily show off all your products, especially your best-selling items.
- It can enhance the shopping experience through website personalization.
- Hiring employees for online markets is much more convenient as employees can be from anywhere depending on their skills and hiring them is much more affordable.
- You can more easily retarget customers and remarket your products.
- With online marketplaces, you can get access to customer data as frequently as you want and know about your customers from various aspects.
- With drop shipping features, you can process a larger number of orders.
- Online marketplaces allow you to scale your business and grow your sales and revenue through other practices like e-commerce blogging.
How do I Create an Online Marketplace in 2021?
We now come to the most important question – How do I Create an Online Marketplace For My Business in 2021?
Here’s some interesting information: xSellco has revealed that according to e-commerce predictions, there would be a 19% increase in the online sales. Furthermore, Episerver has revealed that e-commerce is going to account for about half of the revenue generated by B2B by 2025.
Here are some steps that you need to follow before and during the creation of your online marketplace. Following these steps properly and with proper attention to detail can help you launch your marketplace and kick-start your business successfully!
- Step 1: The first thing you need to do is authenticate your business idea. To do this, you need to conduct a thorough research and establish connections as you communicate with potential customers, vendors and providers. Another important element of the first step is building your unique MVP or Minimum Value Product. The process of validating and authenticating your business idea should be complete with a detailed SWOT analysis.
- Step 2: As your second step, you need to prepare a marketplace guide for yourself and a plan of action. On the basis of your research and the analysis results, you should select an appropriate e-commerce niche and a business model. One of the most important activities you need to do here is create a budget for your online marketplace. Once you have done this, list out the essential features and plan out the operations of your business. Select an e-commerce platform that suits you for creating your online marketplace. Here’s some more useful information: BigCommerce, through a survey conducted, concluded that millennials and Gen Xers tend to use online shopping methods 50% more as compared to the older generations.
- Step 3: The third step requires you to go in-depth with the finances and the budget for your e-commerce platform. Depending on the cost of building software to be used on the website and on the costs of marketing and promotion of your platform, you need to determine the total expenditure for building the website. Next, you need to acquire the financial assets for the same. Once your platform is ready for launch, market it as much as possible and be ready with an audience that can promote your marketplace once it goes live.
- Step 4: To effectively determine the success rate of an online platform, you would need to have a good pricing strategy. This pricing strategy is directly related to the pricing model on your platform. The four major pricing models at your disposal for your online marketplace are: Ads, Subscription, Commissions, and Listings. On the basis of your niche and research, make sure you implement a model that is flexible and adapts to the changes and trends in the market.
- Step 5: The next step requires you to make the right choice from the innumerable building software available for your marketplace. While choosing the building software for your platform you must ensure that it is in line with the objectives of your business and the users on your platform. Furthermore, it should be flexible to help you deal with the increasing competition in e-commerce and should come with well made business models. Choose software that allows you to focus on your customers and vendors and offer exceptional services and has a robust consumer support system and offers real-time communication.
- Step 6: Now that your website is running for some time, you need to measure its success by understanding and analysing its performance. To do that, you need to look into some business metrics that can help you measure the success of your platform. The main metrics include Customer Satisfaction Metrics, Usage Metrics, and Business Metrics. The Usage Metrics further considered some key factors of measurement like time spent by users, active and new users, and bounce rates. The Business Metrics use Gross Merchandise Value and Net Promoter Score to do the same.
- Step 7: On the basis of the analysis you have made, you need to come up with plans for the future and chalk out favourable marketing strategies to promote your marketplace to a bigger audience. Some of the best and most sought-after marketing strategies include SEO, Email marketing, Content marketing, paid media advertising, and video marketing.
We hope this article was helpful for you in understanding the most important aspects of an online E-commerce marketplace. An e-commerce platform comes with innumerable benefits that are reason enough why an online market is important for your business. Contact Pigeon revealed that the average items ordered online during the COVID-19 increased by about 60%. While the process may take longer than you desire, with the implementation of the right resources, you can be rest assured that you will soon be running a successful online marketplace.