The concept of a marketplace is fairly universal, but when it comes down to establishing your own, it becomes clear that there are many variations out there. Smart businesses craft their marketplaces around the needs of their core customers, and these needs have to drive every decision along the path towards building your own.
Crafting a marketplace that caters to a particular type of buyer not only drives traffic from willing shoppers, but also helps merchants to understand how they can successfully sell in your marketplace.
Etsy.com is a great example: people shopping/selling here are generally looking for craft products and unique gifts. Merchants know that they can use the marketplace to offer their small-scale, custom-made goods to buyers looking for unique and one-off products. These common threads – custom, homemade goods – tie merchants and buyers together and drive added value for both parties.
In another example, take contract/landscaping. These marketplaces are setup to offer job-related products like power tools as well as more ancillary items like coolers for lunches on the job site. At the end of the day, everything is geared towards the buyer and their unique needs.
You can set up a marketplace to supply unique goods and services to a particular niche of people. Panjo.com supplies all sorts of different enthusiasts with the products they need to support or show off their hobby, no matter how arcane.
If you have access to a wide variety of goods and can compete on price, logistics, or other operations, you are well positioned to set up a general marketplace. This is what Amazon, eBay, or any other one-stop-shop, executes by offering a wide range of goods or services.
No matter which direction your marketplace goes in, being able to add value to your customers’ lives is of paramount importance. This means knowing your customers, what they come to you for, and what else they might need to compliment their lifestyle and purchasing habits.
Only once you understand these needs can you can start looking at technology to match those needs.
There are 3 technology pillars that enable digital marketplaces.
- Content Management System (CMS) – This controls the content and front-end experience that customers, sellers, and the market can see.
- Commerce Functionality – for your team to manage the eCommerce aspects of the site.
- Seller Portal – this can be part of the eCommerce system, an extension, or a standalone system.
Some of the big names in the industry (SAP Commerce Cloud, Magento Commerce, WordPress with Marketify, CS Cart, Shopify with Marketplace, Sharetribe, Mirakl, etc.) provide marketplace solutions for digital retailers looking to get their feet wet.
Each one has its own pros and cons depending on the type of marketplace you are trying to setup, but most have a core set of features that will enable you to run a marketplace.
Marketplaces – just like any other eCommerce application – need to be able to handle certain functions for each type of user. While this list is by no means exhaustive, these are baseline requirements that need to be met but marketplace technologies.
For the customer, the experience should be no different than if the marketplace actually owned all the products it sells. Products and information need to be easy to find, clearly displayed, and simple to order. Engaging, intuitive, and fast experiences are what today’s shoppers crave.
Taxonomy Management – Managing taxonomy is key to having a good site experience for your users. The taxonomy is what drives the products into categories that the users can then browse through and find what they are looking for. As a Marketplace administratoryou need to balance between having enough categories to make products easy to find, but not so many that they are too hard to use.
Product Attributes – Managing attributes allows you to do many things with products such as faceting and searching. Product attributes (such as size, color, etc.) are needed to make sure that the customer can find the type of product that they are looking for without having to know your site as well as you do.
Price Ranges – This can be a handy way to avoid mistakes from data entry ($10 items becoming $1,000 with a missing decimal point), while also making sure the site is carrying the types of products that you want to present to your customers.
Customer Service – Eventually there will be a dispute about a product that was either not sold as it should have been, not delivered, or just needs to be cancelled. Being able to own the relationship is vital to the survival of your marketplace.
Payments – Managing payments and payment types that are accepted needs to be done from the administrator level to make sure that when you take a customer’s payment the administrators have a safe and efficient payment service setup.
Order Management – While mostly this falls on the seller you do need to make sure orders are being moved through the process and monitor Sellers that are not meeting minimum standards.
Seller Management – The reality is that at some point a Seller may be making the experience on your site worse by either not shipping products, not meeting SLAs or many other issues. Being able to reprimand, communicate with, and if needed close down a Seller on your marketplace are all necessary functions.
Order Management – Managing the orders is the Sellers main job and making sure they are shipped on time and then that data is sent back to the Marketplace administrators so they can collect their profits.
Sales Management – While this may seem like a duplicate, managing the prices and inventory is another very important task. If the Marketplace is selling it, you as a seller need to be able to fulfill the order. Keeping prices and inventory update is paramount.
Product Management – If no one can find your products or they cannot find enough details to make a decision then customers will not buy your products.
Customer Service – Just like the Marketplace administrators’ sellers need to have a customer service aspect as well. Things do come up where a customer needs to do an exchange or return and the Seller needs to be ready to handle this.
FUTURE MARKETPLACE OPPORTUNITIES
As with most of the digital commerce world, the most lucrative opportunities lie in the B2B realm. The B2C world has opportunities as well, as many sites are encouraging 3P sellers to list their products, but the scale and use cases in B2B commerce are too large to ignore.
There are already many marketplaces today, and we are sure to see more out there. Who will be the next Etsy? Or who will be the next Amazon? Only time will tell.
One thing is for sure, though: marketplaces are here to stay, and when leveraged correctly, they can ultimately revolutionize your business.