The marketplace industry is expected to grow from its current $15 billion estimated overall value to $335 billion by 2025. That makes now a great time to invest in a new marketplace business. However, for many, launching a marketplace can feel like a daunting task. The back office, vendors and buyers are all separate facets that must be carefully considered pre-launch. All of this can make launching your marketplace seem a stressful, almost overwhelming, undertaking. The truth is, it doesn’t have to be.
Before the dominance of e-commerce, shopping was traditionally a tactile experience for consumers. That explains why clothing stores have fitting rooms, book stores allow a flick through, and wine galleries hold tastings. Some of these experiences clearly are not replicable online, but with 60% of sales happening through online marketplaces, online retailers have to find a way of recreating this interactivity with products prior to purchase. The answer? High-quality photos. Indeed, images are more important than ever in getting consumers to buy a product.
One of the great benefits of starting a marketplace over an online store is that there is no need for marketplace owners to invest in stock, since external vendors are responsible for upholding the inventory of their products. That is not to say that marketplace managers can wash their hands of all responsibility. Indeed, the quality of content sold on a platform — take Amazon as a prime example — is often attributed to the marketplace platform itself. In fact, their brand reputation often rests on their ability to offer the best quality, and widest variety, of the products their customers are interested in.
According to Lengow, over 60% of sales already happen through marketplaces, and some of the most successful companies worldwide (Airbnb, Amazon, Uber) operate under this model.
On the surface, it may seem like marketplaces are much more complex than other, similar businesses, due to their nature as multi-vendor platforms. The truth is the marketplace model is surprisingly lean and scalable for new startups. So how do we really define a marketplace, and how does it differ from online stores and classifieds businesses?
In 2019, building a marketplace business is an attractive proposition. In fact, online marketplace revenue is expected to double by 2022. Furthermore, more specialised, niche marketplace businesses are increasingly cornering their respective markets with great success. In addition to that, the rising prevalence of ready-made marketplace SaaS solutions makes it easier than ever to get started and launch a new marketplace.
The marketplace industry is currently going from strength to strength. 60% of digital sales are carried out through online marketplaces already and the number of new marketplaces is growing rapidly. With the sector becoming increasingly competitive and customers placing high demands on UX, the importance of technology to the success of a marketplace has never been bigger. As a result, choosing the right software to power an online marketplace has become a space all of its own. With so many different options available, it can be challenging to select the right marketplace technology for a particular business. To help marketplace owners decide on the type of platform for them, in this article we have focused particularly on why Software-as-a-Service (SaaS) solutions are the way to go for new marketplaces.
Commissions are by far the most popular revenue model for digital marketplaces. Although they might come under different names by different marketplaces - Amazon calls them referral fee, eBay has final value fees and Etsy refers to them as transaction fees - they are all the same thing: a percentage or fixed amount that a marketplace chargers a vendor for each sale they make on its platform.
Technology is the backbone to any digital business, let alone marketplaces. Indeed, choosing which technology will power the marketplace business is as important as deciding on the revenue model or how to brand the marketplace. A marketplace can be built using several different technology solutions: from open source software that the marketplace’s engineers can code themselves, to a SaaS e-commerce solution like Shopery. This is not a choice to be taken lightly: once you have picked your marketplace technology, it will have a sizeable impact on your budget, your in-house talent needs, internal processes and the overall scaling of your business.
“Frictionless” vendor onboarding and management, “transparent” vendor transactions and commissions, and effortless catalogue management are some of the glowing remarks Shopery Marketplaces received from software review platform FinancesOnline. In recognition of these achievements, we were awarded with the Premium Usability award for 2019.