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Is the Marketplace Model Right for Your Business?

Learn all about this business model and if it’s the right one to help you grow your business and boost sales.

what is marketplace

The increasing presence of technology in our daily lives brings changes in how we relate to each other and, of course, influences our buying habits. 

The opportunities for interaction and doing business offer new possibilities, including platforms, tools, and different buying and selling models.

One of the models that have become popular among both entrepreneurs and customers is the online marketplace.

The concept comes from a model that is quite familiar: the places where you shop, such as markets, stores, or shopping malls.

You’ve probably seen many of them online; platforms that bring together many sellers, offering a myriad of options to consumers and helping entrepreneurs reach a wider audience. 

And it’s a very profitable business model, too. According to Statista, in 2020, Amazon was the leading online marketplace in the United States with a gross merchandise value (GMV) of 475 billion dollars.

Have you ever considered joining a marketplace to promote your business? Let’s learn more about this model!

Post index MenuIndex
  1. What is an online marketplace?
  2. How does an online marketplace work?
  3. Benefits of an onlne marketplace?
  4. Marketplaces for online products
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What is an online marketplace? 

A marketplace is a place to shop, a type of virtual store window that showcases products from several brands or companies to customers.

Considering the universe of online sales, this model works as a collaborative e-commerce platform. But there’s a difference between them.

E-commerces are online stores of a certain brand or company. It uses the B2C concept, i.e., Business-to-Consumer, which directly relates customers to the company. 

Thus, e-commerce is an online store that sells only products of the company itself. 

A marketplace, on the other hand, gathers several companies on one platform. 

The best example to define it is a shopping mall, but in an online environment.

This model, in addition to putting customers in contact with the products of several stores, also allows business to be conducted between the companies involved, using Business-to-Business and Business-to-Consumer or B2B2C, among others.

Customers have access to a diverse catalog and make purchases through a platform that isn’t responsible for the delivery or warranty of the product, which is the responsibility of the chosen brand. 

So, there’s an interaction between the customer and the company at the moment of the purchase, and also between the companies themselves on the platform. 

In the U.S., the most popular online marketplaces are eBay, Bonanza, Ruby Lane, and Etsy, according to a 2021 survey from Statista.

Choosing the best platform for your business is an essential step of selling online. Keep reading to learn how an online marketplace works and its benefits.

How does an online marketplace work?

A marketplace model may contain diversified products or target a specific segment, such as electronics, literature, or apparel. 

This will depend on the identification of niches and the openness of the digital medium, with it being a potential online business element.   

Overall, this model is structured on three pillars: 

  1. Platform, 
  2. Vendors,
  3. Customers.

The platform is the intermediary for the transactions. It has two access levels, one for store owners and another for customers.

Vendors are like partners who offer their services at the site where they are able to organize the products to be offered, as well as combos or promotions. 

They are also responsible for the information about their goods and stores and also for maintaining the efficiency of the sales flow. 

Vendors are able to identify trends or activities that lead customers to their products, which allows them to invest in more effective solutions to win over customers and sell more

For customers, the business works like a traditional online store, because its access and purchases are made on one website. The difference is there is a much bigger catalog, where buyers can compare prices, products, brands and choose their favorites. 

The marketplace platform operator is responsible for managing these accesses and transactions. And also for the strategic actions that will promote the flow and boost sales on its website. 

A good platform allows for easy and intuitive browsing and usability both for vendors and buyers.

It must also have easy product selection and payment methods, facilitating interaction and the possibilities of purchases. 

Another important element is the advertising channels. Investing in ads, paid traffic, blogs, videos, email marketing, or messages to showcase your business can be a good strategy.

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Managers must study their audience to understand the segment, evaluate actions capable of attracting customers and boost sales. And also those capable of generating customer loyalty. 

Metrics and tracking contribute to the assessment of the results and the improvement of strategies, and can also be shared with partners at certain levels.

Prioritizing quality is what builds a good reputation in the marketplace, establishing authority and credibility in the business, turning it into a benchmark, and being advantageous for all those involved. 

Benefits of an online marketplace 

For the three pillars (platform manager, partners, and consumers), the marketplace model can offer many advantages.   

Reach a wider audience 

Especially for small and medium-sized digital entrepreneurs, the platform can be a way to reach a bigger audience in the online market, ensuring access and visibility to their products or services. 

With a wider and more diverse audience, there’s a bigger possibility of more purchases being made by the same person. 

Convenient and safer for customers

Being able to browse and compare many brands in one place creates a positive experience for customers. 

In one marketplace, they can find solutions for many of their needs, with the possibility of making a larger purchase.

Making payments is also easier to do, and good platforms offer a lot of security for transactions. 

Low investment

Another advantage is the low cost. The platform is ready to use, and sellers can focus their investments on sales strategies. They don’t need to worry about inventory, and sometimes, not even about shipping. 

Track metrics and results

The marketplace model also allows for sellers to monitor their sales and results.

Sellers can monitor their performance indicators, the so-called KPIs. That makes it easier to analyze performance and build strategies to grow. 

Online marketplaces for online products

Online marketplaces are thriving and can be a great option for your business. 

If you’re a content creator, there are online marketplaces focused specifically on digital products, such as Hotmart

And you haven’t created a digital product yet, Hotmart can help you with that, too. Discover how Hotmart works and join the creator economy today.