Marketplace: Meaning & Definition
eCommerce expansion has enabled consumers to find a mind-boggling variety of products online – that, too, on a single platform. They compare features, read reviews, and contrast pricing before they finally choose the retailer they want to buy from.
However, this customer-centric shopping experience was not always mainstream. It was the advent of marketplaces that made online shopping so convenient, flexible, and diverse.
What are marketplaces? How do they work and what are their benefits? This article provides answers.
What Is a Marketplace?
An online marketplace is a type of eCommerce platform that allows multiple sellers to sell their products or services to consumers.
In an online marketplace, the marketplace operator provides a platform where sellers can list and sell their products, and buyers can browse and purchase them.
The operator typically charges a commission for each transaction and/or a fee for using the platform. Examples of online marketplaces include Amazon, eBay, and Tmall.
Today, marketplaces have become an essential part of eCommerce, offering benefits to businesses and consumers alike. These platforms promote a company’s visibility and reach. At the same time, they enable customers to access products across the world as well as make informed purchasing decisions.
Types of Marketplaces
At ecommerceDB, we distinguish between two types of marketplaces: hybrid marketplaces and third-party-only marketplaces.
- Hybrid marketplace: It is a type of marketplace that combines elements of a traditional online store and a marketplace. In a hybrid marketplace, the platform sells its own products from its inventory while also allowing independent sellers to list and sell their goods on the same platform. Examples of hybrid marketplaces include Amazon and JD.com.
- Third-party-only marketplace: It is a type of marketplace that only provides a platform for independent sellers to sell their products. Examples of third-party-only marketplaces include eBay, Lazada, and MercadoLibre.
What Are the Advantages of Marketplaces?
Marketplaces are popular because they come with a host of benefits for customers and business owners. They also evolve to address changing customer needs, which keep them a reliable platform for online shopping around the world.
Some advantages of marketplaces are:
- One-stop shopping: Marketplaces streamline the online shopping experience by bringing together many sellers on a single platform. Customers can choose multiple products from various categories and purchase them in one go. This eliminates the need to buy each product from a different website.
- Diverse products: Customers can access products from local and international sellers. They can choose from a global range of manufacturers and sellers, thus promoting constant innovation. They may also find specialized or niche products on marketplaces.
- Best pricing: Multiple vendors list their products on marketplaces. The visibility and structure compels them to offer fair and competitive pricing so they may stand out amongst their competitors. Customers may also find good deals and discounts in dedicated seasons, which may not be very common on single-seller platforms.
- Customer reviews: Shoppers can safely rely on reviews from users who have bought a product in the past and experienced how it works. They may refer to reviews and ratings to make informed purchasing decisions.
- Personalized shopping: Customers can compare products from various sellers and learn which options suit them best in terms of product features, shipping offers, and ratings. Marketplaces also often provide recommendations based on previous shopping trips, thus providing a personalized shopping experience.
Marketplace: Key Takeaways
- Marketplaces bring customers and vendors together on a multi-seller platform where online buying and selling takes place.
- Sellers can list their products on the platforms for a diverse audience, meanwhile customers can choose from a wide variety of product catalogs available online.
- Some platforms may sell products from their own inventory as well as allow independent vendors to sell theirs. They are called hybrid marketplaces.
- Some platforms allow only independent vendors to sell their products. They are called third-party only marketplaces.
- Marketplaces provide a one-stop shopping solution to customers, where they can access a wide range of products from different sellers.
- Marketplaces promote transparency in pricing. Furthermore, customer reviews are informative and help people make better shopping decisions.