Marketplace – the future of e-commerce

Just a few years ago, hardly anyone was able to imagine sales conducted in a way other than traditional. Over time, online stores have gained an advantage over stationary ones, but in many cases it is still not enough.

As part of the digital transformation, the major players are focused on sales platforms, which have also dominated the retail sector. Why are marketplaces the future of e-commerce?

Marketplace - enormous potential of sales platforms

E-commerce follows the development path of traditional trade – from small stores to huge shopping centres. In the time of digitization, sales platforms act as huge stationary store. However, a marketplace is more than just an online store. This is a place where products are offered by many sellers at the same time. It can specialize in a specific industry or focus on completely different sectors.

It is characterized by immediate access to an already built, wide range of customers, without the need to make large investments in marketing activities, thanks to the high brand recognition.

All marketplace platforms work in a comparable way. A potential consumer searches for a product, places an order, and makes a payment. Then, the order is redirected to a specific seller, who completes it and sends to the buyer. There is a good reason why more and more entrepreneurs decide to sell their products mainly on the Internet. After all, those are consumers who are more likely to take advantage of online shopping.

The Chamber of Digital Economy states that Poland is the leader in the development of the e-commerce industry in Europe. 90% of Internet users buy online, and the value of the B2C e-commerce market is estimated at over PLN 100 billion. The value of Polish B2B e-commerce is PLN 647 billion.

Marketplace platforms are among the most frequently chosen online shopping channels – almost 2/3 of Polish consumers use them regularly. Research shows that this trend will continue.

What type of marketplace is best for your e-commerce?

Depending on the strategy and needs of a given business, there are three types of marketplaces:

Global Marketplace
The most popular model of sales platform, focusing on an international customer. In short – the one offering everything, for everyone. Examples – Amazon, eBay.

Vertical Marketplace
It offers products from a specific industry (e.g., footwear, electronics) from various suppliers. Its undoubted advantage is the fact that due to the focus on one special category, it brings together a specific group of customers; they are really interested in the offer and determined to make a purchase.

Horizontal Marketplace
This is a combination of the two above mentioned models. It offers products from different industries and from different suppliers; however, both dependencies must have common features, for instance location, or method of making products. Example - Etsy.

Marketplace Platforms – Advantages

The potential of e-commerce has changed this sector irreversibly. What are the benefits of selling with the use of marketplaces?

• Sales growth – Every business is focused on making a profit. Marketplace platforms help you win customers without location limits. However, sellers must ensure a good presentation of their offer.
   
• Cost optimization – If the offer is prepared correctly, sellers can immediately place it through the platform without incurring high promotional costs. Your own website would have to be built from scratch, which generates additional costs of, among others, its design and maintenance of the server and domain.
   
• Acquiring new customers – Customers are more likely to make a purchase in this type of sales channels, because they have access to many products from one place, and thus it is possible to compare products from different categories.
   
• Building trust – Running sales through such platforms translates into greater credibility among buyers, which results from the fact that they know a given marketplace.
   
• Good start – If a given store starts an adventure with e-commerce, it can benefit a lot thanks to the marketplace's brand. The better its recognition is, the greater is the chance that the recipients will be interested in a given offer even if they do not yet know the seller.
   
• Better marketing – Marketplace provides excellent viewability that cannot be easily achieved through your own website. The choice of forms of promotion is wide – sellers can use a banner campaign, Google Ads, and SEO.

Sales platforms – what is the catch?

Undoubtedly, there are many more pros than cons of selling on marketplace platforms. However, there are several challenges that every online seller has to face.

• Strong competition – On such platforms, the seller never has a monopoly – there will always be a large number of competitors who fight for the same customer and has the same offer. As a result, it more difficult to stand out. In such cases price plays a significant role.
   
• Commissions – Although sellers do not have to worry about high costs of promotion, designing, and maintaining their own website, they do have to consider sales commissions and entry fees.
  
  In the case of a marketplace, the most common billing method is a commission model, where the merchant pays a percentage of the sale, which minimizes the risk of consequences concerning lack of finalized transactions.
   
• Dependence on the platform – Sellers must comply with the rules and regulations set by a given marketplace, e.g., 36h delivery, the same return and complaint policy for all users, buyer protection program. Note that this approach may also be an advantage – store owners do not have to set their own rules and regulations, but only adapt to existing, proven solutions.
   
• Reviews and comments – already a few negative reviews for a given product or transaction makes the entire offer of the seller drop by a few points. On the other hand, this makes it easier to highlight those who pay a lot of attention to their customers.

Trends in the development of sales platforms

In the coming years, marketplaces will become the dominant online sales channel. OC&C research shows that by 2025, marketplaces will take over direct spending on e-commerce in the so-called mature categories (i.e., clothing, travel, and books, constituting approx. 50% of  online expenses) and expand their business to new ones: real estate, automotive, personal finance, and insurance or municipal services. The development of sales platforms will result in a decline in direct online trading in some market segments.
 

Development of modern technologies supporting customization

The stores using AR (augmented reality) to test products and services, which are opening more and more often, and the well-known product configurators show that the world of e-commerce is trying to better follow the needs of people accustomed to traditional - stationary shopping.

Although in 2022 these solutions have rather remained ideas, technologies that increase personalization should be taken seriously in the future. In the coming years, brands will create ecosystems to customize the customer service process.
 

Sales platforms as a resale source

An analysis conducted by ThredUp shows that the re-commerce market is expected to reach the value of 64 billion dollars by 2024.That is more than twofold increase in a few years. The largest marketplaces, which specialize in the resale, focus mainly on luxury goods, clothing, electronics, and books.

The used goods market will continue to grow, as it allows both for boosting the purchasing power and developing environment-friendly attitudes, which has been a strong trend in the e-commerce industry for several years.
 

Conclusion

Marketplace is the most frequently chosen solution in the e-commerce. Among the numerous possibilities provided by the market, sales platforms are the most preferred sales channel by Polish consumers.

Thanks to them, entrepreneurs have unlimited possibilities to reach different customers, by presenting the offer in one place. Additionally, marketplaces are more and more often replacing multi-branch sellers, which is extremely convenient for customers who expect modern solutions from brands.