Get to know in depth what is marketplace and how it works

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Get to know in depth what is marketplace and how it works

Nowadays there are many people who sell goods to Marketplace and gain a big profit from it. Along with the development of technology and the massive use of the internet, the marketplace role of the buying and selling process becomes important. This is because the buyer has more choices of goods sought and also the purchase process is quite easy.

Not only for ordering goods, according to Lengow, more than 60% of sales have occurred through the marketplace, and some of the most successful companies around the world such as Airbnb, Amazon, Uber operates with this model.

On the surface, it looks like the management and knows the ins and outs of the marketplace is far more complex than other similar businesses, because it is a multi-vendor platform.

In fact, this is a very lean business model and can be scaled included for beginners. So, how do we really define Marketplace, and what’s the difference with online stores and business classified ads? Read on this article

Difference in marketplace with an online store

Online Marketplace is a platform where vendors can gather to sell their products or services to a customer base dated.

His own role is to unite the right vendors and customers to encourage sales through a multi-vendor platform. The seller also has a place to get and increase visibility and sell their products, using certain features that are usually paid.

Online shop, on the other hand, is a single store that sells its own products online. All marketing and operations are managed by companies that have websites and products.

Online Marketplace usually does not have inventory sold by their platforms, unlike online shop owners.

Therefore, Marketplace submits a more operational business side to vendors while focusing mainly on promoting their brands with the intention of directing traffic to the platform and changing site visits to sales.

Examples of marketplaces with a large scale and large inventory in the world are like Amazon, Rakuten or eBay or special platforms such as Etsy (Crafts), Runnics (sportswear for running) or others.

In Indonesia, there is a well-known marketplace such as Tokopedia, Bukalapak, Shopee, or Lazada.

Instead, online stores are only one company, such as Zara, Apple or Nike, which sells its own products online through their online stores.

3 main things in the Marketplace

To help business decide which model is the most suitable for them, we have explored several marketplace features that make it different from online stores, and which makes it attractive to digital entrepreneurs.

They allow the ease of inventory management (in most marketplaces, they do not require stock held by the market), they are more measurable and allow market managers to focus more on end users. Here is a more detailed overview:

No need to save stock

Marketplace is a big business dealing with many vendors, who provide their catalog, and usually carry more inventory than online stores.

Does this mean they are more complex to be managed? Not necessarily. In fact, what often happens is the opposite.

As an online store owner, you are required to manage their own stock and inventory, they usually need to invest large in the acquisition and warehouse management when starting a business.

On the other hand, the catalog offered in the marketplace is held by an external vendor so that investment in no warehouse management is not separated.

Get more customer satisfaction

When operating an online store, there are many things to think about: inventory management, site management, customer service, marketing, sales, social media, content, and more.

Conversely, while running a business in Marketplace, the main focus is to offer the best platform for users: market vendors, and customers where they sell.

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This means they can really focus on adding value to their users and optimizing various things to meet their customers’ needs as well as possible.

Of course, no one said that running a marketplace online business was easy. Many work done for curation and moderation of content. Creating a hyper-vertical market, for example, which focuses on a certain niche requires a lot of hard work from marketplace owners in finding sellers and entering the right product.

The effort paid off. With the number of vendors who sell under one roof, Marketplace is a very attractive place for consumers to find cheaper options and new alternatives. MarketPlace is well managed, can be a large community with customers and sellers who are very satisfied.

Slim and scalable business model

Online Marketplace offers the owner of a very lean business model and can be scaled. Some of the largest companies in the world provide a good example. Uber, for example, doesn’t have my own car. Airbnb does not have an apartment, and Amazon does not have most of the goods and services they sell.

While other conventional businesses need to sell more goods, or services, to achieve break-even points, Marketplace ensures they focus on platforms, reaching more consumers, and ensuring the economic scale achieved.

That is, different from other digital business, eCommerce owners may also be surprised by what they can achieve with a relatively small team

Advantages of Selling Goods in Marketplace

  • Marketplace website is very popular. They have obtained a very large customer base. So they get millions of customers visiting the site every day. You can use a large customer base without making new requests for your product.
  • Your product can be directly recognized by existing buyers.
  • You can get trust as soon as you upload your first product for sale because customers really trust marketplace so they already know you as a trustworthy seller.
  • You don’t need to have any IT website or infrastructure to sell your product. You can use the marketplace structure for yourself. So, you save a number of budgets when selling in any marketplace.
  • You don’t need to worry about your product inventory. Some marketplace sites like Lazada or Blibli handle your product inventory in their own warehouse. This is another big advantage of cutting budget warehouses and management of your inventory.
  • Almost all marketplaces have their own customer support team and they handle every question about your products and services all the time for you.
  • All marketplace sites have their own Escrow payment services. This means customers with confidence to pay your product with many choices. They know that there is a dispute, Marketplace will not release the payment of the seller and the dispute will be completed quickly.
  • Many sites allow shipping products and shipping management with their own courier services. You can take advantage of this shipping service as a marketplace seller.
  • If you sell new products, you cannot assume whether this product will be received by prospective buyers or not.
  • In this scenario, you can test products with any famous eCommerce site. You can make or import several sample products, and try to sell it on the website wherever you want. If the buyer receives your product happily then you can create or import this product in large quantities and be sold with different marketing channels.

Lack of selling goods in Marketplace

  • Each marketplace site runs a different promotional campaign and marketing. They allow various discounts at different times to sell more products. Even though you can sell more products, profit margins become less even in sales. Because you have to lower the price to allow more sales.
  • Buyers at eCommerce are not your own customers. You share a customer base with another seller. You lose the opportunity to cross sell and upselling your products at various stages in the Marketplace.
  • You have to compete with different sellers in the marketplace that sells the same product as yours. You have no control over prices and profits because both are always competitive.
  • If you are a big brand and sell premium products at affordable prices and good product quality, you will not look different among price competition on the market. Because many times the customer judges the product based on the price range in any great eCommerce.
  • Many marketplaces always focus on products, they don’t focus on the seller. This means that they always care about large sales volumes not about profit and seller margins.
  • You cannot optimize the search engine (SEO) for your brand or product exclusively on the Marketplace site. You don’t have any direct control on the page where your product is displayed.
  • Customer analysis and customer relationship management (CRM) are an important part of every online sale. Marketplace does not provide much detail about your customers. And also you can’t directly contact customers or prospective customers at any eCommerce.
  • If you are a startup, you may not have detailed tax registration such as VAT, service tax, or GST at the initial stage. Marketplace sites wherever requires this legal document to be the seller on their website.
  • We already know that the Marketplace site always has an escrow system. They hold payments for your product for a certain time until the product reaches your customers. They always have their own refund policies that have a major effect or contrary to your own policies.
  • Usually, buyers in unfaithful marketplace. They are not your fixed customers. They occasionally visit and buy any product if they have big discounts. There is no guarantee that the customer will return to buy again from you.
  • Marketplace does not allow direct interaction or communication between buyers and sellers. The reason is that sellers may sell their products directly to customers later, to cut costs taken by the market as commissions per sales.
  • Different marketplaces allow various types of products. They have a list of prohibited products that you cannot sell on their site. If you deal with this type of product, you are not allowed to become a seller in any marketplace.
  • As a seller, you might want to adjust your store page to attract prospective buyers, but in the case of the Marketplace site, you cannot adjust your store page or product. You have no control over this layout and setting.
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Conclusion

That is a complete explanation along with the advantages and disadvantages if you make sales in Marketplace. There is nothing wrong if you intend to make sales in Marketplace, but it’s good too you have other marketing places such as offline shops, social media, and online stores for your own products.

In order for your business to grow and increase the number of customers you don’t forget to advertise through the Froggy Ads service, you can start by advertising your product, so that later you can increase visitors on your online business portal. FROGGY ADS is an online advertising service that can help you control all your product campaigns. Helps you target the targeting target you want and give you many choices to market your product.