How to compete and prosper in the land of eBay, Amazon, and Alibaba
Online marketplaces are one of the most dynamic segments of the 21st Century platform revolution – and they’re booming.
Why? Because they reduce the cost of building an e-commerce presence and make it easier to ensure quality control. Sellers can take advantage of e-commerce and fulfilment technologies without investing in their own infrastructure, while customers can buy everything they need from a single destination. Marketplaces are adaptable to both B2C and B2B markets and have a unique ability to benefit quickly from economies of scale.
Massive horizontal marketplaces like Amazon, Alibaba, and eBay have dominated the scene for more than a decade. Now a study by Shopify suggests that the next wave will be owned by thousands of independents, each carving out a specialised or niche marketplace for products and services – while grabbing market share from global giants that have become too bloated to be useful.
Taking on the global giants
Many businesses are looking at developing their own marketplaces, while others are already using social media as an interim solution, selling products or services to a largely unknown audience with Instagram, Facebook or Pinterest acting as the e-commerce platform.
The trouble with that approach is that social media can’t provide the certainty both parties in a transaction require. How can the customer be sure they will receive the goods they’ve paid for? How can the seller be sure they’ll get paid once a sale is made?
The missing ingredient in that arrangement is trust. Customers want to see clear evidence that the seller is credible, while both buyers and sellers want to be able to track the various steps of any transaction from selection to purchase to delivery through a simple, transparent, easy-to-use technical solution. That’s where marketplaces come in.
Clear benefits with notable caveats
Marketplaces have unique benefits. They involve low capital costs — as product is provided directly by sellers — and with the use of predictive technologies, they can self-correct by proactively flagging the need for more inventory in response to demand signals.
But they have limitations. A predictable level of inventory needs to available from day one. There also needs to be a system of quality control in place before the first offer is made. That makes start-up difficult.
Then when the marketplace is finally up and running, you have to actively maximise sales by knowing which items to surface on the home page and in search. There have to be technologies in place at the backend to analyze overall purchase behavior, read price signals, measure the reputation of individual sellers, understand trends related to time of the year, and more.
The mix of hurdles to overcome makes marketplaces difficult to start, finetune, and scale.
David can still beat Goliath
Despite the technical and business challenges, niche and sector-specific digital marketplaces are poised to take market share from the global giants. The Amazons, Alibabas and Etsys of the world have become so clogged with products, sellers, and categories that finding what you want can be time-consuming and complicated. In many cases, it’s just as useful to use Google to find an item randomly on the web.
Along with watching their products get lost in the shuffle, sellers who use the big name marketplaces also have to live with seeing their company identities submerged under the marketplace’s branding.
By creating your own digital marketplace, you can avoid those problems. That’s where JMango360 and our market-leading digital backend can help.
Putting the mall in people’s pockets
Our technical solution allows individual sellers to create and curate their own stores without the hassle of having to set everything up from scratch. Since e-commerce has rapidly gone mobile, our solution also helps sellers and buyers create purchase and sale journeys that happen seamlessly on their mobile phones.
We see the growth of independent marketplaces as a market correction, addressing the imbalance created by a handful of dominant players and creating a more level playing field for all companies.
For companies with the vision to set up a marketplace of their own, we support their entrepreneurial spirit with a commercial structure that reduces initial investment. As an industry first, as your marketplace grows we re-invest our earnings to make the solution better, faster, easier to use, and more feature-rich.
JMango360’s marketplace solution
With more than a decade of experience helping hundreds of customers create digital business solutions, we’ve created our own proprietary open SaaS platform. It allows us to integrate with the top e-commerce and retail providers and create new mobile solutions in a fast and cost-effective way.
Our fast, flexible and proven technology can accelerate the creation of your own marketplace. From purchase to order management, fulfilment and delivery, we serve global market leaders, as well as small and medium-sized businesses.
Visit our business solutions to find out more.