The marketplace model : reasons for success
In the early 1990s, a young 30-year-old entrepreneur launches an online bookstore. Jeff Bezos has the ambition of building the largest online store in the world, offering anything and everything – starting with books. Realising that he won’t be able to make this vision a reality through a traditional e-commerce website, he instead offers corporate and individual sellers the option to sell their products on a marketplace. At the time, everyone thinks Jeff Bezos is crazy. But today, Amazon is one of the most powerful companies in the world, and marketplaces have established themselves a staple model, for traditional brands and retailers as well as for pure players.
The vast majority of popular e-commerce sites also host a marketplace. In its 2018 report on French e-commerce, [https://www.fevad.com/bilan-e-commerce-ventes-internet/], the Federation of e-commerce and distance selling (Fevad) found that marketplace sales represent 30% of these sites’ turnover. Our partner Mirakl announced in early 2019 that purchases made on the marketplaces running on its platform doubled in 2019, reaching a total of over a billion US dollars [https://www.mirakl.fr/mirakl-depasse-le-milliard-de-dollars-de-ventes-annuelles-sur-ses-marketplaces-clientes-2/] – a significant milestone.
So what is causing this tremendous success?
A win-win model
The marketplace ecosystem has three main players: operators, sellers and buyers. And the primary reason for the model’s success is that it offers great benefits to each and every one of them!
The operator is like the conductor of the marketplace, establishing the ground rules and ensuring that exchanges are made in optimal conditions. Operating a marketplace also means being free from stock and logistics constraints, which is why more and more operators are opting for this model. As the platform grows and gathers more sellers, the offering and pricing become more competitive.
For third-party sellers, the marketplace is a new distribution channel – and an amazingly efficient one! – increasing online visibility and making it possible to acquire new clients and grow sales.The seller leaves most marketing to the operator and reduces technical costs. And there’s the added benefit of tools and services provided by the marketplace to facilitate sales.
Finally, for the buyer, a marketplace is the best place to find everything he or she needs (very much like a mall). They have access to a great range of products offered by a variety of sellers, but enjoy a unified shopping experience. It saves them research and shopping time, and it allows them to save money by easily comparing the different offers. For companies, the B2B marketplace simplifies all purchasing activities, which are usually complex, and sometimes even offers a very high level of supplier certification. In any case, marketplaces bring buyers both security and comfort.
A growth lever for e-commerce
Marketplaces tackle new challenges in the e-commerce sector, and as shown in the numbers above, they represent a tremendous growth lever both for pure players, which act as intermediaries, and for hybrid operators, who get to generate extra revenue and capitalise on existing infrastructure to explore new online commercial horizons.
One of the inherent strengths of the model is its scalability, making it adaptable to any type of activity. B2B, B2C, C2C… General marketplaces offering products and services in a wide range of categories, or vertical marketplaces specialized in a type of object or segment, such as Etsy with handmade products or ManoMano with home improvement… There is almost an infinity of marketplaces to trade physical and immaterial goods and services.
Marketplaces, as a sector, are successful. But building and operating a successful marketplace is far from easy, and presents many organisational challenges. Marjory helps operators launch their platform faster, more easily and at a lower cost, thanks to an innovative solution that combines advice with the aggregation and orchestration of the whole range of marketplace service providers. So you can make the most of the opportunities presented by this new model!
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