Marketplace is the business model in which the company acts as an intermediary between sellers and buyers, offering a digital platform that allows commercial transactions to take place. The marketplace allows several companies to sell their products or services in one place, offering the end consumer a wide variety of options in one place.

The advantages of the marketplace business model include:

  1. Greater variety of products: the marketplace brings together several sellers in one place, which increases the variety of products or services offered to the consumer.
  2. Healthy competition: competition between vendors can lead to more competitive prices and an improvement in the quality of the products or services offered.
  3. Ease of search: the marketplace platform offers search and filtering capabilities, allowing the consumer to easily find the desired product or service.
  4. Greater reach: the marketplace platform can have national or even international reach, allowing sellers to reach a larger audience.
  5. Lower investment: sellers can save on creating and maintaining their own online store, as the marketplace offers a ready-to-use platform.

The marketplace business model has proven to be an interesting option for companies that want to expand their customer base and increase their sales, as well as for entrepreneurs who want to create a new company in the e-commerce segment.

What is marketplace?

There are two types of systems:

  1. IN: System where the owner of an e-commerce makes his storefront available to other sellers (B2C, B2B, D2C etc.).
  2. OUT: System where the owner of an e-commerce is part of an IN system and participates in the evolution of this environment.

Marketplace is a type of e-commerce platform that connects sellers and buyers in one place. It is a virtual space where different suppliers can list and sell their products or services and buyers can access a wide range of products and services in one place.

Marketplaces are commonly operated by companies that provide the infrastructure and management of the platform, while sellers take care of the sale and delivery of their products or services.

Learn how the marketplace works

The basic functioning of the marketplace involves the creation of the virtual space where sellers can list their products or services and buyers can find and purchase those products or services. Marketplaces generally offer tools for order management, payment processing and communication between buyers and sellers, and can thus provide marketing resources to promote sellers’ products or services and improve the platform’s visibility and reach.

Another point worth noting is that sellers generally pay a fee to list their products or services on the marketplace, as well as a commission on sales made. In return, they can benefit from access to a large customer base and brand exposure. Shoppers, in turn, can find a wide variety of products or services in one place and benefit from competitive prices and a simplified shopping experience.

This competition between sellers provides healthy competition that benefits the end consumer, leaving the platform stronger in the face of competition.

Difference between e-commerce and marketplace

Although e-commerce and marketplace are both e-commerce models, there are significant differences between them.

E-commerce refers to the virtual store where a single retailer or company sells its own products or services directly to customers. This means that the online store owner is responsible for the entire sales process, from product procurement to inventory management, order processing, shipping and delivery. Customers buy directly from the retailer’s online store.

On the other hand, a marketplace is a platform where multiple sellers can list and sell their products or services to customers, usually in exchange for a fee and/or commission. The marketplace acts as an intermediary between the buyer and the seller, facilitating the transaction. Sellers are responsible for shipping and delivering the products, while the marketplace manages the platform and processes payments.

Another important difference is that in e-commerce, the retailer has more control over the sales process and customer relationship management, while in the marketplace, the platform is responsible for customer service, payment processing and other aspects related to the sale.

Marketplace: advantages and disadvantages

Just like any business model, the marketplace has advantages and disadvantages. Some of them are:

Benefits

  1. Greater reach: Marketplaces have a large customer base, which means sellers can reach a larger audience than they would in their own online store.
  2. Cost reduction: as sellers share the costs of the platform and marketing with other companies, the total cost can be lower than operating an online store of their own. With higher sales volume the fees charged by payment and delivery gateways can be negotiated.
  3. Ease of use: the marketplace manages the selling process, which can make it easier for sellers to manage orders, payments and shipments. As the platform ready, then all the launch tests should have already been carried out.
  4. Lower risk: Marketplaces can be a good option for businesses starting out, as they reduce the financial risk of investing in an online store of their own.
  5. Agility: Generally, market platforms already have a defined business model, which facilitates the integration of the catalog. Other points that facilitate integration is that payment methods and delivery methods have been defined in advance.
  6. Marketing management: With the business model previously defined, then the marketing strategy model must also have been defined, so the responsibility of bringing customers to the shop windows of its tenants is the responsibility of the platform, which does not prevent the seller from also carrying out its marketing operations.

Disadvantages

  1. Commissions: Marketplaces often charge commissions on sales made by sellers, which can decrease the profit margin.
  2. Limited control: Sellers have less control over the customer experience regarding customer service and product presentation on the platform.
  3. Dependency: Sellers are dependent on the marketplace to manage sales, which means that if the platform has problems or is discontinued, they may lose sales and customers.

Therefore, it is important for sellers to thoroughly evaluate the business model offered by marketplaces.

How to create a marketplace?

Marketplace development requires a lot of planning and investment. Below are some basic steps for setting up a marketplace:

  1. Identify a niche market: choose a specific niche market or sector that is not yet saturated and has room for a new marketplace.
  2. Conduct a feasibility study: assess whether there is sufficient demand for the marketplace and whether there are direct or indirect competitors.
  3. Develop a business strategy: Create a detailed business plan that includes objectives, marketing strategies, pricing, organizational structure and financial projections.
  4. Define a revenue model: Choose a revenue model that is fair to sellers and allows the marketplace to generate revenue, such as charging commissions, transaction fees or paid ads.
  5. Develop a platform: Hire a team of developers to create the marketplace platform. The platform should be easy to use, secure and scalable.
  6. Attract sellers and buyers: promote the marketplace to attract sellers and buyers. Use digital marketing tactics such as paid advertising, SEO, email marketing and social media to increase visibility.
  7. Manage the platform: closely monitor the platform to ensure that it is working properly and that sellers are complying with the marketplace policies.
  8. Maintain growth: continue to attract new sellers and buyers to keep the marketplace growing.
  9. Talk to an expert: Nothing beats contacting specialized companies for building and guiding a marketplace, click here and get started today!
  10. Have mass of tests: Before opening the platform to the public it is essential to have showcase of products, and this requires contract with partner sellers who believe in the business.

Remember that creating marketplace is a complex process and requires many resources, including financial investments, a dedicated team and a solid business plan, sellers who are supporting the business.

Who can sell on marketplace?

The target audience of marketplaces is quite broad, and in general any person or company that has products or services to sell can become a seller. However, each marketplace may have its own rules and criteria for seller approval, depending on the type of products and the audience you want to reach.

Usually, to become a seller on a marketplace, you need to register and provide detailed information about your company or individual, including tax, bank and contact information. In addition, the marketplace may require the seller to comply with certain conditions, such as having a minimum stock of products, offering quality guarantees or meeting predetermined delivery times.

It is worth noting that some marketplaces may have specific restrictions for certain types of products, such as food products, medicines or items that violate copyright law. In cases like these, it is important that the seller carefully checks the policies and conditions of each marketplace before starting sales.

Business models: types of marketplace

There are different types of marketplaces, which vary according to the business model, target audience, type of products or services offered and other specific characteristics. Some of the most common types of marketplaces are:

  1. B2B (business-to-business): Aimed at companies that sell products or services to other companies. Examples include marketplaces for industrial products, office supplies and technology.
  2. B2C (business-to-consumer): Widely used by companies that sell products or services directly to end consumers, such as clothing, electronics and sporting goods marketplaces.
  3. C2C (consumer-to-consumer): This type of marketplace allows end consumers to sell products or services directly to other consumers. Examples include marketplaces selling second-hand goods, freelancing and hosting services.
  4. Services: offers services instead of products, such as transportation services, food, accommodation, among others.
  5. Vertical marketplaces: Focused on a specific niche of products or services, such as sportswear, organic products, or health services.
  6. Horizontal marketplaces: They offer a wide range of products and services from different categories, such as Amazon, Mercado Libre and other generic marketplaces.
  7. Aggregation marketplaces: Does not sell products directly, but brings together products and offers from other marketplaces or online stores, allowing users to compare prices and features of different products in one place.

These are just a few examples of types of marketplaces on the market, and the list may vary according to region or market segment.

Marketplace B2C

The B2C (business-to-consumer) marketplace is a business model that connects companies that sell products or services directly to end consumers. In this type of marketplace, companies can register as sellers and make their products or services available to be sold on the platform, while consumers can browse the products offered, make their purchases and pay directly on the platform. It’s an efficient way of expanding a company’s sales reach, as the platform offers great visibility for products or services, as well as marketing and advertising tools to attract new customers. In addition, the marketplace can offer sellers logistics, payment and customer service solutions, facilitating the sales process.

B2B Marketplace

The B2B (business-to-business) marketplace is a business model that connects companies that sell products or services to other companies. In this type of marketplace, companies can register as sellers and make their products or services available to be sold on the platform, while other companies can access the platform to make purchases. In this case, companies can find suppliers of products or services in different areas of activity, including raw materials, equipment, technology services, among others. The platform offers features to facilitate the search, price comparison and execution of transactions, including negotiation tools, integration with management systems and other customized solutions.

Marketplace C2C

The C2C (consumer-to-consumer) marketplace is a business model that connects consumers who want to sell products or services directly to other consumers. In this type of marketplace, consumers can register as sellers and offer their products or services to be sold on the platform, while other consumers can access the platform to buy these products or services. Sellers can offer used or new products, handicrafts, shipping services, among others. The platform offers features to facilitate search, price comparison and transaction, including seller and product rating tools, integration with payment systems and other customized solutions.

Marketplace platform

The marketplace is a technological system that enables the creation and management of a marketplace, i.e. a virtual place where sellers and buyers can connect to carry out commercial transactions. This platform offers the necessary functionalities to create an online store and provides tools to manage the supply and demand of products and services.

In addition, the marketplace platform is built on software technologies such as programming languages, databases and security systems. The platform should be developed with a focus on usability and user experience, to ensure that sellers and buyers can access and use the platform in a simple and intuitive way.

Some marketplace platform developers offer customized solutions to meet the specific needs of each business. Other companies offer ready-made platforms, which can be configured and customized according to business needs.

Example platform

There are several marketplace platforms available on the market, each with its own specific features and functionalities. However, one of the best known is Adobe Commerce.

Adobe Commerce is a leading e-commerce platform that also offers features for creating marketplaces. This platform provides merchants with the power to create unique and engaging shopping experiences.

The Software offers advanced out-of-the-box features, an unlimited ability to customize, a flexible architecture and integration with other Adobe solutions. It is important to evaluate the features and functionalities of each platform to choose the one that best meets the needs of the business.

Click here, talk to an expert and start creating the marketplace for your business.