Online marketplaces have experienced a real boom in recent years and have now become an important sales and marketing platform for many companies. But what is the nature and efficiency of marketplace business model and how can you use them to advance your business?  Here we explain its important points.

 What is the difference between a marketplace and a platform?

The biggest difference lies in the type of interaction enabled. Marketplaces are primarily transaction platforms that support buying and selling. However, platforms enable a wider range of interactions, from transactions to content sharing to networking.

What is the marketplace business model?

Marketplace is a global term that means a platform where buyers and sellers interact and transact. The role of marketplace operators is to connect the right customers to the right sellers so that the advertising and sales of products and services can be done optimally. In simple words, it works like this: a vendor displays its goods at a third-party platform (a marketplace) and a customer purchases these goods. Everything from tangible goods to services and digital goods is offered in Marketplaces. Here are some examples of marketplaces and their revenues.

As you see, all of these markets make a huge amount of money even though they don’t produce or sell anything themselves.

Different types of marketplaces

marketplaces can be classified based on various criteria, including:

• Based on the type of people or companies interacting through the marketplace:
• B2B or business-to-business: the model when both vendor and customer are companies, not individuals;
• B2C or business-to-client: the model when a vendor is a business and a customer is an individual;
• C2C or consumer-to-consumer: the model when both sides are not entrepreneurs and can be both vendors or buyers.

Here are some examples to make it more clear:

Of course, most of the successful businesses combine these three groups and thus reach a larger target market. However, startups need to define their target market precisely because they need to know who will pay for their services. Knowing who has more value on your platform, the seller or the buyer, and understanding who is the seller or the buyer is critical.

• Based on the type of things sold on the marketplace:
• Service
• Products
• Based on the number of players interacting and transacting on the platform:
• Two-sided
• Three-sided
• Multi-sided

Benefits and Impact of Marketplaces

Marketplaces enable efficient interactions between buyers and sellers, providing a convenient platform for transactions. They help grow various companies and industries by making them accessible to a wider audience and facilitating commerce.

What points should be considered in choosing a marketplace business model?

When choosing the online marketplace, there are several decision criteria to consider:

• The type of products and the company’s target group: Each market has its target groups and focus, so you should choose a market that is more suitable for your target group and product range.
• Fees and Costs by each marketplace: Businesses must carefully consider selling fees, monthly subscription fees, and other costs to ensure they can operate profitably in the marketplace.
• The available services and tools on the marketplace: For example, some marketplaces offer advanced customer analysis tools to be able to specifically address customer needs. Other marketplaces offer fast and uncomplicated logistics and shipping processing. The services and tools available may vary depending on business needs.
• The sales and growth potential in the marketplace: Some marketplaces have higher revenue potential than others based on audience, geographic reach, and available tools and services. Companies should therefore conduct a thorough analysis of marketplace data to assess the revenue and growth potential in each marketplace and make a decision based on the company’s individual needs and goals.

Conclusion

Due to the digitization of most activities and businesses, many companies and businesses want to have access to online markets and potential customers in addition to their traditional markets. Therefore, marketplaces are a very good option due to the diversity of their fields of activities, but choosing among these many marketplaces with different business models requires analysis and proper knowledge of them. The United Techies Company has valuable experience in this field and can provide you with valuable services and guidance.