In today’s technological era, it is difficult for any business to survive without an online presence. Without setting up your business on an online marketplace platform, it is impossible for any business to optimally and effectively market its products.
Many substantial and promising ideas have failed, as they are unable to make a proper business model, make poor software choices, and lack in creating a lasting online presence. These businesses end up shutting down in the survival stage itself. Easy as it is to run your own marketplace in this era, you need to make sure that you research properly and choose the best online marketplace platform that runs parallel to your business requirements.
What is an online marketplace platform?
An online marketplace platform brings together sellers and customers under a mobile app or a website. An online marketplace helps sellers sell their products and generate revenue for themselves and the marketplace.
Examples of online marketplace platforms are Amazon, Etsy, eBay, and Uber. It is easier to set up your business in an online marketplace than maintain and generate revenue from it.
Evolution of online marketplace platforms
Marketplace’s inception goes back to the time when the first-ever product was sold. A marketplace is where multiple vendors sell their products and is the best place for a buyer to compare the prices of different vendors and make an informed choice based on their needs and desire to purchase the product.
With the advancement of technology in recent times, there are numerous multi-vendor marketplace platforms that can help you build online marketplaces where buyers and sellers meet to buy or sell a product or a service. It is evident that the online marketplace industry is growing at an accelerating rate.
Every online marketplace is trying to outdo its competitors by coming up with new and innovative ideas to make sales.
Sites like Amazon and eBay are the best examples of how to build a marketplace to attract more vendors and buyers. Amazon, back in the 1990s, started with the first-ever online bookstore. Now, it offers everything from music to food and apparel to furniture.
In recent days, it is easier to find all the products and services that one would ever need or want online than looking for it offline. Consumers nowadays prefer the ease and comfort which they can avail of while shopping online. This shift in their behavior has given a lot of businesses the opportunity to shift online and increase their online presence.
Why are online marketplaces great businesses?
Any marketplace has a capacity to widen its horizon tenfold as there is always a potential for growth. There are a lot of reasons why there is rapid growth in the online marketplace platform industry, such as scalability, network effects, and technological advancements.
The main reason behind the online marketplace’s success is that there is no need for any seed inventory. For example, the products listed on Amazon are not owned by Amazon; they do not store them in their warehouses. They merely act as a link between the consumer and the vendor.
Network effects in the simplest term mean that if you get one user, the rest will follow. More and more people will want to affiliate with you if you begin to acquire new customers. This cycle boosts the growth of an online marketplace platform tremendously.
With technological advancements, it is very easy to launch a website or a mobile app within days. The ease with which a business can maintain its inventory and other details online makes online platforms a great place to market its products.
How to build an online marketplace platform?
It is a lot easier to start an online marketplace platform nowadays. With a proper strategy and the right implementation, it is very easy to create a platform like Amazon or eBay. With efficient planning, you can create an excellent online marketplace at a reasonable rate.
Step 1: Research and choose a niche
Image Source: Multimerch
When you plan to launch a new online marketplace platform, it is important to concentrate on a specific niche, rather than competing with big names such as Amazon, OLX, or AliExpress.
It is easier to garner attention to a particular and unique niche than attract customers to something that already exists in the market. It is easier to create demand for a specific niche market.
Step 2: Choose a sustainable business model
It is necessary to have a proper plan before jumping straight away to the implementation part. There has to be a proper revenue strategy to how you will charge the consumers for using your platform.
There are a lot of factors to consider while choosing the right business model, such as types of platforms, participants, and niches.
Step 3: Solve the problem of whom to attract first
It is crucial to decide whom to attract first, the consumer or the vendor. Ideally, it makes more sense to attract the right vendors first, as, without them, there will be no room to attract consumers.
You must develop new strategies to promote your online marketplace platform to attract vendors and customers to use your platform. Celebrity collaboration, live events, good deals, are some of the ways to attract a crowd to use your platform.
Step 4: Design a user-friendly app or website
It is essential to have good features and functions on your website or app to give the users a smooth experience, giving them an incentive to revisit your platform. This will help generate more revenue for your online marketplace platform. You need to define the functions for both buyers and vendors individually to make their experience better.
It is important to keep adding new features and functions to your platform as you grow.
Step 5: Choose a proper framework
To create a sustainable and advanced platform, it is important to choose the right instrument and framework to design your platform. Proper tools and their integration is necessary to make a more maintainable and scalable product.
Challenges faced while building and marketing an online marketplace platform.
Starting an online marketplace platform is difficult as it requires handling both buyers and sellers at the same time. Some of the challenges faced are:
1. Customer service
When a customer visits your platform, he comes in the hope of availing of the best customer service. Any difficulty that a customer faces while using your platform results in the downfall of your platform’s impression instead of the seller. One bad customer review can cost your platform a lot of users.
2. Demand supply gap
Both buyers and sellers are customers in the eyes of an online marketplace platform. If the sellers aren’t satisfied with the business they are getting by using your platform, they will back off, and the same applies to the customer when they don’t find their desired products. Both parties create demand and supply for an online marketplace, which needs to be balanced.
3. Data security
Data breach is a common term these days. With the increase in the use of online platforms, a lot of data breach cases have been reported as well. When a buyer or a seller uses your online platform, they are choosing to rely on you and your platform.
It is important for you to make sure that your online marketplace platform is using the right technology, is secured, and has all the right protections that a customer expects.
4. Financial uncertainty
In case of recession market volatility or market fluctuations, a lot of businesses can get affected. Online platforms are not immune to these factors either. They need to come up with strategies to retain customers, boost their performance and make sure that they keep on changing with the changes in the market.
For example, during the pandemic, when the world was under lockdown, big names such as Zomato and Swiggy stepped up. They started providing groceries and other essential items as well. This helped them and the other grocery vendors survive in such times.
There will be a lot of technological advancements in the coming year. A further boom in the online marketplace platforms is guaranteed in the foreseeable future, which is why each business needs to generate an online presence to boost its revenue and growth in the market. It is very easy to launch and maintain an online platform with a good strategy. Talk to the Yelo team to know more!