The marketplace business model: a new approach

Do you remember the first time you visited the Airbnb website? All of a sudden, you had access to thousands of accommodation options in hundreds of global destinations. In a few clicks, you could to rent a room in someone’s home in Tokyo’s Shibuya neighbourhood, sleep in a cabin in the middle of the Norwegian forest or book a holiday home on a paradise island. Today, it’s hard to imagine planning a vacation without the private accommodation platform. Airbnb, Uber, Amazon: these companies revolutionised their respective sectors with their innovative vision and platform mentality. Whether or not these web giants can be called “marketplaces” is debatable, but the fact is that they all contributed to the emergence and popularity of this new economic model. And new economic models push significant changes in mindsets.

A new way of doing business

Marketplaces have brought various disruptions to the world of e-commerce. First, it is a shift of the traditional economic model, from disintermediation to reintermediation. New market entrants got to define this new business model, but for incumbents, it has meant a complete turnaround of the positioning strategy… which has been particularly challenging, since marketplaces somehow feel “unnatural” compared to the way they usually do business.

Marketplaces have also turned suppliers into clients in their own right, and a key element of the ecosystem. Third-party sellers’ satisfaction, and more importantly their loyalty, has become more important (and more complicated) than that of buyers. Platforms are waging a fierce battle to attract and retain as many sellers as possible. This often involves offering and putting in place extra services as a selling point for marketplaces.

A radical change of mindset

In this new world, the operator must imperatively develop a “seller-centric” mindset, on top of a “customer-centric” focus. For example, the e-procurement marketplace launched by Accor is a good illustration of this change of approach, which can sometimes be radical for a large group. With the opening its brand to include franchisees not required to purchase from the Accor Group, it became essential to develop a competitive offering in order to ensure a consistent customer experience. To achieve that, Accor decided to turn its purchasing department into a marketplace, allowing franchisees to buy directly from suppliers on a platform controlled by the Group. This is complete u-turn for Accor! The same people who used to manage supplier accounts now manage the accounts of sellers that have become customers. Where the system used to be structured in a way that “stepped on” suppliers (with strong-handed price and end-of-year discount negotiations, playing on competition, etc.), it is now oriented towards seduction (to attract and create loyalty with vendors that franchisees can’t find anywhere else) and collaboration (to help them develop and add value to their offering).

An agile organisation

Embracing such changes requires high agility and a strong leadership. Upon launching a platform, a company’s agility relates to its organisational maturity. A marketplace only has one goal: operational excellence. Startups must therefore be able to manage fluctuations with a small team, while having the power to handle capacity building. 

Agility also means being able to add services. Once the marketplace is deployed, once this formidable project is finally off the ground, it needs to be continuously improved and updated according to market needs. This is very complicated, not from a technical standpoint, but from an organisational one, because implementing new services has an impact on operational processes.

Marjory supports marketplace operators in these two crucial stages – capacity building and addition of services – by setting up business processes that combine automation and human intervention.

We are convinced that marketplaces are going to become the port of call for the great majority of goods and services trade on the internet, offering opportunities for all stakeholders. This is why we help these platforms launch and grow their business in a simple way and according to their individual needs.

Author: kamel@marjory.co