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what is a Marketplace?

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A marketplace is an online marketplace where several brands come together under a single platform to sell their products. It is a form of collaborative ecommerce in which a customer, by accessing a single website, finds a wide variety of offerings available for comparison.

What is a marketplace?

This term always requires the online modality, although if you want to find its equivalent in the physical market, it would be more accurate to compare it to ashopping centre. A space where several brands meet. In fact, it could be said that the marketplace is even more advantageous than a typical shopping centre, because in the latter you must enter each shop individually and you cannot be in all of them at the same time. On the other hand, in a marketplace you can use filters and search engines that allow you to search for a specific product in all the shops at the same place.

The marketplace functions as an intermediary between the seller and the buyer. It creates an online space where you can bring together small individual ecommerce in exchange for a monthly fee or commission on the sale. Marketplaces are therefore more appropriate for companies that sell products and not services, although there are also marketplaces for the latter.

The users who most frequent this type of online sales are young people between 25 and 34 years of age, who are more accustomed to online sales and who make purchases more focused on the search for a specific product at the best possible price and quality.

As it is a large online shop where different sellers are located, competition among them is great, especially among those who offer the same product. Therefore, to overcome this competition, the selling company has to devote much of its efforts to a good brand image. Generate a very favourable and visually attractive first impression, so that the product attracts the customer's eye. In addition, invest time and staff in defining the product, give an image of transparency and traceability. The more information a customer has about a company and a product, the more reliable they will feel towards it and the more likely they are to decide to buy it.

Types of Marketplace

  • Depending on the actors involved:
    • B2B: Business to Business: The marketplace focuses on companies that offer their products to other companies, usually suppliers who sell their products or raw materials in a marketplace for other companies to buy them.
    • B2C: Business to Customer - perhaps the most familiar, as consumer users we tend to be, where brands, businesses and companies offer their products for sale so that customers, individual users, can buy them.
    • C2C: Customer to Customer: individuals who want to sell their products to other individuals. These are frequent in the case of second-hand sales, examples of which are platforms such as Wallapop or Vinted.
  • Depending on the offer:
    • Generalist: A marketplace where all kinds of products are sold, depending on the variety of the companies that are part of this marketplace.
    • Niche: A marketplace that is much more specialised in one type of product or service, or failing that, in one sector.

Benefits of the marketplace:

  • Wide reach: It offers a place with many visits for those small businesses that by themselves would not be able to attract so many users. It is true that, at the same time, it is about placing a business next to others, among which competitors can be found. However, bringing together all the companies in one place provides added value to the site that translates into an increase in visits that would not be achieved in any other way.
    For the same reasons, it is also suitable for companies that do have a website but do not have much reach.
  • Advertising and positioning. The website itself tries to position itself as an independent entity and with this, it positions the rest of the businesses that make it up. It uses the products of the sellers as advertising for the site to attract customers. This translates into an increase in advertising for your products, without having to make a large investment in it. In addition, advertising is one of the sectors that requires the most investment within a company, as well as one of those that brings the most benefits.
  • Cost savings: The marketplace assumes most of the costs, which makes it the main attraction for the companies that participate in it. That is why there is usually a monthly fee to join these online marketplaces as well as a commission for each sale. It is the platform's way of making its economic efforts profitable. Companies, for their part, save on all the costs derived from creating an individual ecommerce, even a physical business with its staff and rent.

Disadvantages of the Marketplace

  • Pérdidas de leads y clientes de menor calidad: Los compradores que adquieren esos productos a través de un marketplace no son verdaderos clientes ni leads de la empresa en que lo compran, sino del marketplace. En lo que se refiere a visibilidad, el comprador será más consciente de estar comprando dentro del marketplace que de tu empresa. Esto se traduce en que los clientes que gana la empresa son de menor calidad. Su recorrido del comprador no se ha realizado únicamente en una empresa y, por lo tanto, su conocimiento e información sobre la misma es menor. En consecuencia, las posibilidades de conseguir clientes fieles, incluso promotores, son menores que en una venta directa en negocio propio. En lo que se refiere al intercambio de información, los datos de mayor interés se vuelcan en la página del marketplace y no en la de la propia empresa. Por lo tanto, aunque se puedan conseguir datos sobre los clientes o prospectos, la riqueza de las bases de datos que se crean a partir de marketplaces es menor.

  • Payments through third parties: The platform through which payments and collections are made is that of the marketplace, not one of its own. This means that although there is a cost saving by delegating this task, there is also a delay in the collection of the income. The marketplace platform takes days, sometimes weeks, to send the income to the account of the company that has achieved the sale. In addition, as an intermediary, it is very demanding with the balance of the business and its liquidity, because as we said before, the customer is more aware of buying in the marketplace than in a specific business. Any bad experience that the customer has, will affect the marketplace to a greater extent.

  • Commission to the marketplace: A balance must be struck between increasing the number of sales and reducing the profit from the monthly fee and/or product commission.

Some current examples of marketplaces are the Facebook Marketplace, Amazon Prime, Aliexpress, Mercado Libre or Google Shopping.

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