Online Marketplaces- The Time Is Now!
“In a crowded marketplace, fitting in is a failure”
I recently moved to a new city for work and have been ordering my dinner from some restaurant around the city every night. I have not the slightest idea of the whereabouts of the restaurant, but every time I order, I know that most people find the food to be good, the delivery to be quick and a list of the best dishes to order from. That’s all it takes for me to decide what my dinner is going to be. I order my food and pay through the easy range of options. Once ordered, I forget about it and get back to work until the delivery guy rings in. Well, that easy!
I personally believe there are two types of people in this world; ones who just live in it, the others who make it a better place to live in. Online Marketplaces are the latter!
Over the last 2-3 years, thousands of online marketplaces have popped up in different corners of the world. Where many of them are not as popular and successful as some, all of them are making lives easier in some way. I sometimes wonder, what triggered this boom in marketplaces and if it is a smart decision to get into the ocean of marketplaces that already exists?
What is an Online Marketplace?
By definition, an online marketplace is a website or app that facilitates shopping from various sources. This was the foundation on which marketplaces like Yelp were built. However, online marketplaces have been redefining themselves. Today, online marketplaces are two-sided online markets that facilitate a customer and seller to come together. Service Marketplaces like Upwork and Fiverr bring together freelancers and independent workers. Rental Marketplaces like Airbnb provide a platform for sharing economy. Well, the one thing that remains constant is that a marketplace merely facilitates transactions and owns nothing but the platform.
Growth of Marketplaces
The boom of online marketplaces could be attributed to three very simple factors; the attractiveness of an asset-lite business, technology becoming accessible to masses and the consumer need for choices.
One reason why online marketplaces are lucrative for entrepreneurs is that they require no inventory storage. You are merely a facilitator for sellers to list their products and services and for users to search and access them. This drastically reduces the infrastructure cost of the business.
With the development in technology, it has become easier for business to develop their own marketplace platform. Online marketplace software makes it easy to create customized online marketplace platforms within minutes. Consumers today, don’t like looking at products from a single retailer. They look for platforms which will provide them with choices.
As of 2017, peer-to-peer rental marketplace Airbnb had 150 million users and 640,000 hosts around the world.
Started in 2010, Fiverr has more than 3 million gigs listed in over 100 categories across 196+ countries.
And there is so much more data from where that came from. The opportunities in the online marketplace space are not debatable; if the business solution aims at solving problems in the community.
The ‘Chicken and Egg’ problem
One of the biggest problems faced by online marketplaces is that both sellers and buyers are directly influenced by each other. Without quality seller options, customers won’t visit the marketplace and without customers, quality sellers won’t list their products and services on your marketplace. This usually results in a supply and demand gap in the marketplace. It becomes difficult for a growing marketplace to understand how to crack this dilemma.
Besides this, a few other challenges faced by new online marketplaces are
- Delivering customer experience/ delight.
- Providing good customer service.
- Building relationships with sellers and customers.
- Preserving customer and seller data.
Breaking Through The Clutter
Although there are a few challenges in operating a marketplace, the opportunities for growth are immense. You could create your own marketplace for anything under the sun; product selling, providing services, collaborating professionals, and freelancers, or renting spaces and goods.
Ian Friedman, Co-Head Goldman Sachs Investment Partners advises,
“For marketplaces to succeed they must do three things well:
- reduce friction in both selling and buying to create sufficient liquidity on both sides on the marketplace
- engender a greater level of trust and transparency to encourage participation, and
- create both proactive and reactive mechanisms for addressing inevitable issues that come up between marketplace participants”
There are a lot of online marketplace startups being discovered and funded every day and the market only gets bigger.
Get Started then.
And even if you do not have a business idea for a marketplace, there are a lot of inspirational ideas on the internet. Just remember, all it takes is an intent to solve a problem in the community.
If you want to experience how easy and quick it is to create your own marketplace platform, check out Yelo today. With Yelo, create your own customized marketplace website/apps for selling products, providing services, collaborating freelancers or renting spaces within minutes.