The 2020 COVID-19 pandemic drove businesses and consumers to online shopping like never before. At the same time, online businesses have been challenged by inflation, supply chain disruptions, insufficient labor, and increasing costs. Employing a marketplace model to expand offerings and increase revenue while distributing responsibility to third-party sellers is one strategy to combat these forces. Online marketplaces provide a tremendous framework and opportunity for businesses to leverage the benefits while also allowing them to focus on their core competencies.
Among consumers in general, “According to U.S. survey respondents, nearly half (43%) of their online shopping happens on marketplaces, and in the future, 92% of U.S. consumers expect to use marketplaces at the same rate or more.”[1] Preferences among all buyers are clearly trending toward the convenience of marketplaces.
What is an Enterprise Marketplace?
Enterprise marketplaces are commerce sites that aggregate curated physical goods, digital goods, and services from third-party sellers into a single view for buyers to browse and purchase. Marketplaces may be enabled on digital channels operated by companies with business-to-business (B2B) or business-to-consumer (B2C) sites. The third-party sellers often fulfill purchases directly while the site owner receives a commission for sales through the site.
Companies may enable marketplace features by integrating marketplace applications, such as Mirakl, into their sites, or may customize a robust commerce platform or develop custom tooling to enable the site features and internal functionality needed to operate and manage the marketplace. In either case, the solution allows site owners to manage seller onboarding, product catalogs, order routing and management, financial management, and seller compliance with marketplace policies.
Marketplaces aggregate offerings from the site owner and third-party sellers for a seamless shopping experience:
- Product listings – Sellers typically create product or service listings, including descriptions, images, and pricing information. The site owner can control whether offerings appear as attributed to external sellers or not.
- Search and discovery – Buyers can search for specific items or browse through categories to discover products they are interested in purchasing.
- Transaction facilitation – The marketplace platform facilitates transactions between buyer and seller, providing secure payment processing and handling logistics, like shipping.
- Feedback and reviews – Both buyers and sellers may leave feedback and reviews for each other based on experiences, which helps to build trust in the marketplace community.
- Seller tools – The marketplace offers tools and features to sellers to manage their inventory, track sales, and optimize their listings.
Marketplace Benefits
Marketplaces are gaining prominence because of the benefits they provide to site owners, buyers, and sellers.
Site owners can offer a more robust shopping experience, increase revenue, and gain access to more customers and data. Here are just a few of the benefits to site owners:
- Increase assortment depth and breadth – Incorporating offerings from third-party sellers allows site owners to provide additional products and services that tell a story on their own or add diversity to an existing product mix.
- Access first-hand customer data – Site owners retain data from both first-party and third-party sales.
- Expand site traffic and customer reach– A more diverse mix of offerings attracts more customers looking for relevant products and services.
- Experience higher recurring revenue at lower marketing cost – Once a buyer or seller is acquired and has a good experience on the platform, they will regularly return to buy or sell new items.
- Benefit from a broader network – High-quality vendors attract more customers, while a growing customer base attracts more vendors. Each buyer is a potential new customer for the entire seller base, and each new seller conceivably can sell products that benefit each buyer.
- Gain buyer trust – User generated content, such as product reviews, influence buying decisions. Visibility into product and seller performance builds consumer trust in a seller, even if the seller is unfamiliar to them.
- Offer competitive pricing – Marketplaces offer competitive prices, better shipping, and more variety by sharing those responsibilities with third-party sellers.
- Develop revenue-generating site real estate – In addition to commissions earned through the sale, there are multiple avenues to generate revenues through monetizing clicks and site real estate, e.g., first page listing and boosting products to enhance visibility.
- Scale at low cost – If built on a cloud infrastructure, an online marketplace can handle expanded traffic with very low additional cost.
Site shoppers benefit from the convenience of a larger selection and even lower prices:
- Shop with convenience – Marketplaces can be a one-stop shop for more product categories and wider selection.
- Compare products – Buyers can easily compare prices and features of different products from multiple sellers in one place.
- Search a wider selection – Online marketplaces often have a larger selection of products than individual stores.
- Score with competitive prices – Due to the competition among marketplace sellers, buyers are more likely to find good deals.
- Get fast delivery – Many online marketplaces offer fast and convenient delivery options.
- Leverage customer reviews – Shoppers can read reviews from other buyers to inform their purchasing decisions.
- Pay with security – Established marketplaces offer secure payment options and buyer protection programs.
Sellers, too, gain advantages from participating in marketplaces:
- Tap a larger audience – Sellers gain access to a larger customer base without a dedicated online store.
- Lower marketing cost – Marketplaces provide reach through the platform instead of individual seller promotions.
- Set up with ease – Marketplaces typically offer user-friendly interfaces for listing and selling products. More sophisticated solutions may also allow sellers to automate data exchange through integrations.
- Process payments securely – The marketplace processes secure payments on behalf of sellers.
- Access data and analytics – Insight into sales and customers for tracking behavior, preferences, and trends for making informed decisions.
- Scale more easily – Sellers can scale through participation in multiple marketplaces without investing in significant infrastructure.
DMI’s Marketplace Expertise
DMI has built custom marketplace solutions and integrated offerings from the Mirakl product suite to enable marketplace capabilities on existing commerce sites. From site customers to third-party sellers to your internal site managers, our team will ensure you consider all the requirements and processes needed to run a marketplace. We can consult with your team to ensure you choose a solution aligned with the unique needs of your company and buyers.
[1] “The State of Online Marketplace Adoption,” Mirakl, January 2022.
