What are the Types of Marketplaces

by GK October 11, 2017
Types of marketplace

An eCommerce marketplace is a website or a platform that facilitates shopping from different sources. The marketplace operator might own the inventory or just present other people’s inventory to customers to facilitate a transaction. A marketplace is built to acquire and accommodate numerous vendors and customers. Participants can interact with each other or develop a hierarchy of the entrepreneur-client. Depending on where a client gets products or services, there can be two types of marketplaces.

Online to offline

This marketplace structure attracts users online, but the client gets the service offline. For example, a customer chooses a product on the web but receives it at the shop. Or picking any service online like home cleaning and the service gets delivered at home.

Online eCommerce

In this type of eCommerce marketplace, everything happens online. Only the product delivery happens offline except for some services where no delivery is required at all. For example, you book a movie ticket online, pay online and then receive it via email or in your smartphone. Another example is where you buy an app in the apple store and use it on the internet.

Different types of marketplaces

There are different online marketplaces based on their mode of operation and business models.

B2B or Independent market place

An independent marketplace is basically a business to business or B2B eCommerce platform operated by a third party. It is open to both buyers and sellers from a particular niche. You can register to these marketplaces and get access to ads, quotations, and also get access to place bids on different products from your sector. Participation in these business channels can be done through a small registration fee. Some popular examples of independent online marketplaces are eBay and Alibaba.com.

Buyer oriented eCommerce marketplace

Buyer oriented eCommerce marketplaceThis type of marketplace is run by buyers as an efficient purchasing platform. This platform not only helps buyers to cut down the administrative costs but get the best price from suppliers as well. The suppliers can leverage the benefits of the platform to advertise their items to the set of the target audience.

Supplier oriented marketplace

Supplier oriented marketplaces are run by a set of suppliers with an intention to establish efficient sales exchanges to earn leads from potential buyers. These platforms are also renowned as a supplier directory with the ability for buyers to retrieve more information about the products, suppliers they are not aware of. The popular example of supplier oriented model is (CCO) Cisco connection Online that operates on the Cisco online platform.

C2C and C2B marketplaces

C2C marketplace

Both B2B and B2C are intuitive concepts for us, but the idea of C2C is different. What does a consumer to consumer eCommerce model look like? Built mainly because of the growing consumer confidence in eCommerce sales, these platforms allow customers to buy, trade and sell products in exchange for a small fee paid to the platform. However, starting a C2C marketplace requires careful planning. Many auctions and classified sites have opened following the success of platforms like Craiglist and eBay but closed down due to its unsustainable business model. Another type of marketplace is C2B eCommerce where consumer sells goods and services to businesses and is roughly similar to a sole proprietorship serving a bigger business. Reverse auctions or service providing platforms like TaskRabbit, Upwork and common blog monetization techniques like affiliate marketing and Google AdSense comes under this category.

Government or public administrations eCommerce

Government or public administrations eCommerce

Now that we have discussed primarily on eCommerce retail platforms, we will talk about another type of structure where the government or public administration conducting transactions with consumers and businesses. B2B or B2A are marketplaces for a business whose clients are solely government or types of public administration. The popular examples include Synergetics Inc that offers contractors and services for government bodies. C2G or C2A are typically individuals paying the government for taxes or tuition fee to universities.

Types of eCommerce business revenue models

As there are different types of marketplaces, these marketplaces widely differ in the business revenue models they follow. Here are popular business models the above-discussed marketplaces use.

Dropshipping

In this digital era, Dropshipping is the most common and simplest form of eCommerce. It allows you to set up an online store and sell products without stocking up an inventory. This frees you from managing inventory, warehousing store, dealing with packing and shipping. Despite its simplicity, it doesn’t offer much control to you in terms of product quality, packing, and shipping. If your sellers are slow, doesn’t offer great quality products, or mess up the packaging, it would be upon you and your brand.

Wholesaling and warehousing

Wholesaling and warehousing businesses demand a lot of investment even to begin with. You have to manage inventory and stock, keep track of orders, packaging and shipping information and have to invest in warehouse space as well. Wholesale businesses are all about volume, you can also push your products to Google, Amazon or eBay if you want to make more sales.

Private manufacturing

If you have got an excellent business idea but doesn’t have the money to build your own factory, this business model might be the right one for you. Brands that manufacture products offsite for sale send plans to manufacturers who produce the items. Either they can ship directly to customers or third-party sites like Amazon or the brand selling the final product. On-demand manufacturing let you quickly change suppliers if you encounter issues with product quality. With this business model, the startup costs are quite minimal and it is a great way to test a new product or a business idea.

An online marketplace is a platform where buying and selling goods and services happen. Each platform comes with unique, flexible business opportunities. The potential advantages of different types of marketplaces vary between business and industries and indeed between buyers and sellers. An online marketplace is a website that serves as a platform offering products or services in the B2B or B2C sectors in general. In most cases, marketplace owners don’t offer any product or services themselves, they just offer a platform where the participants interact. Considering eCommerce growth and areas untouched by technology, businesses can utilize the marketplace business model to build their unique and creative solutions.

Buyers and sellers alike seek a reliable and convenient place where people can buy and sell products and that’s what exactly what a marketplace delivers. Marketplaces can cater to any industry and niche. Online marketplaces have great potential and are of great interest to businesses who are looking for different ways to promote their products and services through different channels.

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