Online marketplaces are quite peculiar beasts of business and require unique approaches to help navigate a marketplace to success.
Marketplaces are in the business of connecting two parties – supply with demand, and they can be classified into different models.
This article explores the primary marketplace types and looks at approaches to manage them effectively.
Different business model types for online marketplaces
Different types of online marketplaces based on business models:
What: B2B (Business-to-Business) marketplaces are platforms where businesses can buy and sell goods or services to other businesses.
There are two types of B2B marketplaces: vertical and horizontal. Vertical marketplaces provide online access to businesses vertically across every segment of a particular industry sector, while horizontal e-marketplaces suggest services in different industries, connecting buyers and sellers across different regions or industries.
Examples: Etsy Wholesale, ThomasNet, Alibaba, Bark.com, FoodChain, 3D Hubs, Fiverr, UpWork
What: B2C (Business-to-Consumer) marketplaces are platforms where businesses sell their products or services directly to consumers.
Examples: Amazon, ASOS, Booking.com, Deliveroo, Farfetch
Hyper Local Marketplaces
What: Hyper-local marketplaces are platforms that enable buyers and sellers to connect with each other within a specific geographical area or region.
Examples: JustPark, Gousto, Instacart, TaskRabbit, Zipjet, Streetlife
What: D2D (Direct-to-Door) marketplaces are platforms where consumers can buy and sell products and services directly from other consumers, typically in their local area.
Examples: Shpock, Depop, Vinted, Olio, Gumtree
What: C2C (Consumer-to-Consumer) marketplaces are platforms where individuals buy and sell goods or services directly to other individuals without the involvement of businesses or intermediaries.
Examples: eBay, Facebook Marketplace, Preloved, VivaStreet
What: P2P (Peer-to-Peer) marketplaces are platforms facilitating individuals to buy and sell goods or services directly with each other.
Example: BorrowMyDoggy, TaskRabbit, BlaBlaCar, Fat Lama, Hubble
C2B (Consumer-to-Business) marketplaces are platforms where individual consumers offer products or services to businesses.
Examples: The Plum Guide, Sooqini, Gekko, TrustedHousesitters, Skillbridge
Next, you need to identify how your marketplace is managed. Marketplace management can be broadly categorised into these four approaches:
- Curated (lightly managed)
- Fully managed
Unmanaged marketplaces such as Etsy, eBay, and Fiverr, operate mainly as peer-to-peer platforms and do not invest in quality assurance, background checks, or feedback analysis.
Customers largely rely on product reviews to make their purchasing decisions. Craigslist is another example of an unmanaged platform that offers sections for jobs, housing, for sale, items wanted, and discussion forums.
Curated marketplaces, often also referred to as lightly managed marketplaces, such as Uber, Grubhub, and Shutterstock, invest in quality control but not to a great extent.
These platforms guarantee the accuracy of the content and may offer services such as address verification and client services to settle disputes.
Uber verifies drivers’ IDs and bans drivers with consistently poor ratings from using the service, thereby managing interactions between drivers and riders.
Fully managed marketplaces
Fully managed marketplaces, such as Opendoor, Luxe, and thredUP, monitor access to the market, supply, operations, and transactions.
For example, Opendoor can help you sell your property in just a few days by buying it, making repairs if needed, and putting the house on the market.
The company handles the whole process, and the only inspection you have to go through is the one from Opendoor to confirm or adjust your offer.
Finally, decentralised marketplaces invest heavily in infrastructure to build reliable solutions for exchanging goods and services.
These platforms rely on the blockchain, a decentralised ledger technology that is confidential for non-participants who have no right to interfere with interactions on the platform.
Decentralised marketplaces are not owned or controlled by any entity, and networks of participants can exist within a blockchain. No one can ban agreements made on these platforms or dictate who is welcome to use them.
Users on decentralised marketplace platforms utilise e-wallets to carry out transactions.
The system employs well-designed smart contracts and incorporates certain aspects of traditional lending practices.