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On Demand Businesses 101

Online Marketplace: New challenges to overcome

A marketplace is a platform that connects third-party merchants or retailers directly with customers. An online marketplace acts as a middleman between retailer and customers and usually takes a commission on each sale. There are actually multiple revenue sources for an online marketplace. Likewise, there are multiple online marketplace models as well. eBay is a pure online marketplace platform where only third-party merchants sell inventory. Indian online marketplace Flipkart comes under the hybrid model. The company also sells inventory along with third-party merchants and retailers. Then comes Hybrid + Physical marketplace that has the combination of both online marketplace and physical stores in the traditional way. Walmart goes from traditional to online marketplace whereas Amazon goes from an online marketplace to set up physical stores.

The Future of Online Marketplace

The concept of the online marketplace is changing. The line of differentiation between traditional stores and online marketplace is minimal. Even the biggest marketplace such as Amazon and Walmart have hybrid + physical presence in the competitive industry. Addition of store has certain advantages to retailers for offering an omnichannel experience and better control over logistics. The future of the online marketplace is in a different direction. The online marketplaces are building an ecosystem to seal the customer by not only offering the huge list of products to purchase. Instead online marketplaces are taking a different approach by building an ecosystem to retain the customer by offering each and everything customer wants. Marketplaces started offering entertainment, financial services, and payment to offer everything customer needs at one single platform. Amazon is the best example to consider changing the face of an online marketplace.

Online Marketplace

Key benefits for selling through the marketplace

The potential benefits may vary depending upon the industry and business. However, there are potential pitfalls for online marketplace too.

Benefits of the online marketplace:

  • A new channel for sellers to market their products and to generate additional sales.
  • Online marketplace opens the door for the seller to expand business internationally.
  • The online marketplace is a great platform to reduce marketing cost when compared to other platforms to generate sales.
  • An easier way for the seller to build trust between seller and buyer.
  • Updated information on price and availability of product helps the buyer to easily secure the best deals.
  • A convenient way for the buyer to compare and search for multiple products offered by multiple sellers.

Potential pitfalls for selling through an online marketplace:

  • Largely dependant upon technology
  • Higher transparency of price increase the competition among sellers
  • High cost to keep up to date or to update the technology
  • Buyer personal information security issues
  • Marketplaces can limit the branding of online presence for the seller.
  • Marketplaces can inflict the direct communication between seller and buyer.

Despite all these advantages and disadvantages of an online marketplace, it is quite hard to run online marketplace business. Online marketplace business has sellers and buyers both as their customers. Its difficult to attract customers without sellers and similarly its difficult to bring sellers onboard without the buyers on the online marketplace platform. The major challenges involved in online marketplace are:

Customer Service:

The customer comes to an online marketplace for best customer service. Online marketplace platform attracts customer in the name of the marketplace, not on the sellers. Any issue faced by customer or buyer results into the brand image of online marketplace instead of the seller. The online marketplace must create an environment that both buyer and seller together are responsible for the growth of the marketplace.

Supply-Demand Gap:

Online marketplace runs on fulfilling supply-demand gap. Buyer and seller both are the customers for an online marketplace. If the sellers aren’t getting sufficient business, the seller will back off and if the buyers don’t find the required products on the marketplace, the marketplace will lose the buyer. The seller creates the supply and buyers creates the demand for an online marketplace. The online marketplace has to balance the supply and demand.


Online marketplace branding is the major challenge. When a buyer buys from an online marketplace, they remember the marketplace they bought the product from. Important to realize, buyer, don’t remember the seller who supplied the product. Getting your brand to recall by the buyer for their next purchase is hard. If the buyer doesn’t remember the online marketplace brand name, they aren’t the loyal customer. Online marketplace offers discount coupons and promotion campaign to build the brand name. Customer retention must be the focus of an online marketplace instead of customer acquisitions.

In the final analysis, the online marketplace is full of challenges. Online marketplace war can’t be won without technical advancement. It is because the online marketplace platform is the only place where the customers reside. Online marketplace platform must be user-friendly and able to do all the activities. Tiger is a platform to build a feature-rich online marketplace platform that offers a complete marketplace suite for your business. Tiger provides Dynamic Marketplace website, Adaptive Marketplace App, Admin Portal and User-Friendly merchant Panel.

Get in touch with us if you want to build the next big online marketplace! And let’s begin your journey to success.

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