What Makes a Marketplace Thrive?

Learn how successful markets tend to enjoy incredible network effects that result in a winner-take-most dynamic. Find out how selling goods and services through online marketplaces can help online marketers expand customer exposure.

What Makes a Marketplace Thrive?
Markets are complex ecosystems in which customers can find a range of different or competing products from multiple external suppliers. These products are sold at different prices, with different delivery times, customer ratings, and more. Marketplaces focus on giving customers more choice and convenience. An online marketplace is a website or application that makes it easy to shop from many different sources. The market operator does not own any inventory, their business is to present other people's inventory to a user and facilitate a transaction.

A great example of an online marketplace is eBay, which sells everything to everyone. In the subscription revenue model, one or both buyers and sellers are charged a recurring fee to access the marketplace. Customers benefit from a great experience or they can save money, while sellers can acquire customers who are more likely to spend money.

Successful markets tend to enjoy incredible network effects that result in a winner-take-most dynamic. For the winners, this is very rewarding and very defensible. Unlike companies in most technology sectors where there can be multiple winners, market dynamics offer no prize for second place. The seller can then ship the products individually to the marketplace and the products ordered by customers will be delivered and fulfilled in the marketplaces.

Probably the most widespread form of market approaches is charging a commission for every successful transaction. This type of market would directly target non-consumption and potentially take advantage of non-production, allowing homeowners to capitalize on the equity of their home without having to sell the entire house. Conversely, when you shop at Swiggy or Zomato, two of India's main food and essentials markets, you'll find several sellers of the same products, which is an example of a market. Sellers invest their money in markets in exchange for widespread audience access from platforms.

For customers to trade in your marketplace as easily as possible, you need to make it as easy as possible. And while market businesses are complex to execute and manage, disruption in markets is paradoxically less overwhelming than it seems. Simply put, selling goods and services through online marketplaces can help online marketers expand customer exposure and increase sales compared to selling solely on an online website or mobile application. On the other hand, the catalogue offered in the markets is in the hands of external sellers, so investment in stock management does not exist (apart from hybrid markets).

A market allows buyers and sellers to find each other, facilitates their transactions and generates income through market fees. On the other hand, sellers want to get ahead of their competition and therefore study the market extensively. The role of a market owner is to bring together the right suppliers and customers to drive sales through an exceptional multi-vendor platform: sellers have a place to gain visibility and sell their products, and the market owner earns a commission on each sale. For example, when people place orders on popular marketplaces like Amazon, they feel more confident that their orders are in good hands than on any random website seen on social media platforms and other selling platforms.

Numerous companies large and small, including now Walmart, the second largest e-commerce site in the country according to comScore, allow users to offer their own products in markets that are emerging on several e-commerce websites. Sellers upload their products to markets and markets showcase and market products to relevant customers based on keywords and other SEO optimizations.

In conclusion, selling goods and services through online marketplaces can help online marketers expand customer exposure and increase sales compared to selling solely on an online website or mobile application. Marketplaces provide buyers with more choice while allowing sellers access to a larger audience than they would have otherwise had access to.