In this article, you will learn about 1) the online marketplace basics and 2) top 5 online marketplaces including how it they work and key features and advantages.
ONLINE MARKETPLACE BASICS
More and more people are recognizing the benefits of online marketplaces. By serving as one-stop shops for businesses and consumers alike, they provide a venue for these parties to meet and close a sale transaction.
Do not confuse an online marketplace with a single online shop. They are two different things. An online shop is often owned by only one business or brand; an online marketplace is a collective of various businesses – of varying scales, selling a wide variety of products. Businesses would upload their product inventory to the online marketplace, where they will be made visible to all visitors of the marketplace and be made available for sale. The online marketplace acts as the “showroom” and, in return, the businesses will pay a certain sum of money to the marketplace, depending on the terms agreed upon, or set by the online marketplace.
But why do these online marketplaces thrive? What makes them the “better alternative” to actual shopping for many people? The benefits of online marketplaces generally differ, depending on the user.
Benefits to businesses
- Online marketplaces act as additional sales channels. Where the usual sales and distribution channels of a retail business are limited to their brick-and-mortar store and a couple of local store branches, online marketplaces offer another outlet to sell their products.
- Online marketplaces have a wider reach, able to reach more people, even from clear across the country or the globe. This means that even small businesses have the opportunity to market and sell their products to consumers from other countries.
- Online marketplaces save businesses the cost and time of establishing their own e-commerce website, maintaining their online store, and the often complicated and time-consuming task of marketing their website, generating leads and optimizing the site to get more traffic.
- Having their products displayed on online marketplaces is another form of advertising or marketing, since businesses are opening their products up to comparisons with their competitors.
Benefits to consumers and product end users
- Online marketplaces offer consumers a wider variety of choices of products. It is highly probable for them to purchase items or products that they would not have been able to access if they stuck to the physical stores within their geographical location.
- Consumers can compare products more easily when viewed through an online marketplace, thanks to the tools and facilities made available by these types of websites. They can freely choose the more affordable products, and even choose the modes of shipment and payments.
- Shopping is certainly more convenient when done through online marketplaces, what with the large inventory of different products that they can browse and go over, without going out of their homes. Consumers can also purchase from these marketplaces through their mobile devices anytime, anywhere. No more waiting for the opening time of a store, or hurry to make a purchase before closing time.
- Consumers can do their research prior to buying anything. Online marketplaces have ratings and review facilities that shoppers can go over, in order to help them decide on what to purchase.
TOP 5 ONLINE MARKETPLACES
Let us take a look at the top five online marketplaces today, and what makes them the best in the industry.
Etsy is an e-commerce website that focuses on handmade, vintage, and novelty items and supplies, ranging from art, clothing, craft, food, jewelry, toys, and various knick-knacks. It has established itself as an online marketplace in the tradition of art, craft and trade fairs. It has become hugely popular among creative and artistic individuals who plan to make money from their craft. Even housewives, students, and part-time workers look to Etsy to conduct their side-businesses and as a way to augment their income. Etsy’s focus on handmade products, vintage pieces and unique items differentiates it from other online marketplaces that sell a wide and almost generic inventory of items.
This site was launched in New York City in 2005 and has been in operation since then, with the number of registered users reaching 54 million as of the end of 2014.
How It Works
Sellers looking to sell their handmade products and vintage pieces on Etsy, and prospective buyers who are looking for such products, must first create an account. Creating an account is free.
The seller must pay $0.20 for every product listing made on the site. The listing will be taken down once it has been purchased, or for a period of 4 months, whichever comes first. Etsy will get 3.5% of the selling price of the product once it has been sold, with the rest of the revenue going to the seller.
Buyers, on the other hand will be able to browse through the many products on the site, or do a search using Etsy’s search function. Once the buyer spots a product he wants to buy, all it takes is one click to add it to his virtual shopping cart, and finalize the purchase.
Key Features and Advantages of Shopping from Etsy
- Etsy successfully made hard-to-find products much easier to find. The online marketplace vets the products or items being sold and makes sure that they stick to a certain standard. For example, they must truly be handmade or handcrafted. If they are vintage items, they must be at least 20 years old. In the case of supplies, they must be of a unique nature, adding to their marketability and demand.
- If you ask frequent buyers from online marketplaces, most of them would say that the easiest to use and navigate would be Etsy. The streamlined buying process offered by Etsy is greatly appreciated by buyers. It features a comprehensive search feature, which can be performed per item, per category, or per shop or seller. It even has a color selection feature, which truly comes in handy for buyers that have a specific hue in mind when shopping.
- Etsy takes on the “suggestive” tack instead of being pushy. It has developed a system for tracking the browsing and purchasing history of visitors and buyers, and personalizes suggestions and email notifications for each individual.
- Etsy offers a very good feedback mechanism, where buyers are asked to leave feedback on the shop or seller, which is aimed at improving the customer experience of other, succeeding buyers.
- Sellers are provided with a plethora of marketing and promotional tools for their shop and their products. One of the tools available to sellers is site analytics (through Google Analytics) to monitor visits on a daily basis, as well as the most popular search terms related to your products or your shop.
- Etsy allows integration with Facebook, inarguably the largest social network in the world today. It is easy to add an Etsy tab to the seller’s Facebook account, so the reach becomes even wider.
- Etsy’s customer support is geared towards all its users: sellers and buyers alike. They even provided various modes of communication and interaction, such as online chat, email, or various social media accounts. Among the various e-commerce sites operating today, Etsy ranks the highest when it comes to customer service.
Currently, Amazon is the largest Internet-based retailer in the United States, now selling everything from books and apparel to furniture, food and toys, as well as consumer electronics. It has also gone into selling software, multimedia products and cloud infrastructure services. What started out as an online bookstore has now become a multibillion enterprise, with separate retail websites for 15 countries.
Aside from retail goods and consumer electronics, some of the other products and services available in this online marketplace include digital content such as Amazon Games and Amazon Music, an online store for original and limited edition fine art pieces in Amazon Art, the internet video-on-demand service Amazon Video, and Amazon Web Services, to name a few.
Amazon was founded in Seattle, Washington on July 5, 1994, and has over 222,000 employees in its payroll.
How It Works
Amazon is already its own brand, creating its own line of products and services. However, many of its sales are also derived from third-party sellers. These sellers use this online marketplace to sell their products. The products will be included in the site’s inventory and, once buyers make the purchase, the sellers are in charge of processing and fulfilling the orders.
Key Features and Advantages of Shopping from Amazon
- Being the largest online retailer in the world means that Amazon offers the largest and most extensive product selections. Therefore, even those hard-to-find items, such as books, records, and music, have a higher probability of being found on Amazon.
- The simplicity of the design of Amazon’s interface makes it easy to navigate and browse. Products are categorized accordingly and systematically. Even the search feature is simple, and can give relevant results that are also organized, depending on the filters applied, such as price, popularity (bestsellers), ratings and customer reviews.
- Amazon also has a solid star rating and review system in place. The reviews may be sorted from the most positive to the most critical, further helping shoppers in making their buying decisions.
- Amazon also makes personalized recommendations and suggestions on other products that customers may be interested in, based on their shopping history and the products that they have browsed in the past.
- Buyers get to enjoy several perks, such as Amazon’s Free Super Saver Shipping, which allows customers to avail of free shipping as long they purchase more than $25 of any of the qualifying goods in a single transaction. There is also the Amazon Prime, Amazon’s customer loyalty program, which offers free shipping and other similar perks.
- Shipping options are flexible, since customers can take their pick of the mode of shipping and handling that is most convenient for them, and most affordable. Their international shipping is also highly rated, which explains the high patronage from customers outside of the United States. To ensure the peace of mind of customers, Amazon also made tracking of shipments available through the site.
Bonanza is never far away from the top five of rankings of online marketplaces, and for good reason, too, as it is able to hold its own against the bigger players. It was launched in 2007 and it didn’t take long before it started making waves, having been named by Ecommerce Guide as “The Best eBay Alternative We’ve Seen”. It was followed by more recognitions and awards and, in 2014, EcommerceBytes also named it as the “Most Recommended” as well as “Best Overall” online marketplace.
The business model of Bonanza puts the entrepreneur in the middle of it all. It gives opportunities for entrepreneurs and small businesses to create an online business easily, without having to jump through hoops and loops to do it by on their own. This online marketplace specializes in the selling and buying of items that “aren’t shiny, new and mass-produced”. These include items such as collectibles and novelty items, hard-to-find books, videos, music and records, jewelry, stamps, and sports and other memorabilia.
How It Works
Buyers and sellers can create a Bonanza Account for free, and its integration with Facebook and Google means that users can also use their accounts with these two social media platforms to create an account with Bonanza.
Sellers can make postings and upload pictures of the items they are selling – for free. Similarly, buyers can browse through the items available for sale and place orders – for free. Of course, once they have entered into a sale transaction, that is the only time that they will pay something.
Key Features and Advantages of Shopping from Bonanza
- Listings are free and have an unlimited posting period. Sellers can list their items for sale without having to pay anything. What makes it even better for sellers is that the listings will never expire. It will always appear on the site, unless the seller removes it because it is already unavailable. Sellers also do not have to worry about any monthly store fees.
- Higher share for sellers. Naturally, Bonanza also has to make money, and that is when sellers are able to make a sale. However, they only get a fraction of what other online marketplaces take from the sale. The sellers get to keep around 97% of the money they made from selling on Bonanza.
- Bonanza offers free distribution services. It features one-click publishing, which essentially takes care of the advertising. Every listing made will be sent and published directly to Google, Bing, and all other major buyer channels, including Nextag and Pricegrabber.
- Excellent customer service. Bonanza has always been rated highly for its customer service, as it practices a seller-centric and customer-first philosophy.
- Very good communication channels. When it comes to communication, Bonanza seems to beat all other online marketplaces. A great example would be how it provides every store or seller with a built-in chat function, and also gives them more customization options, so sellers can communicate better and more directly with buyers.
Ruby Lane (www.rubylane.com)
If you are looking for anything vintage, the best online destination is Ruby Lane. It is the largest curated marketplace for art, antiques, vintage fashion, and vintage collectibles. Some of the Lanes, or categories, of items or products included in the site’s inventory include Antiques, Fine Art, Furniture and Lighting, Glass, Jewelry, Silver, Vintage Collectibles, and Vintage Fashion.
Currently, Ruby Lane boasts a list of close to 3,000 dealers from around the world.
How It Works
Independent sellers and dealers will create an account with Ruby Lane, and post and sell items on the site. Ruby Lane does not follow an auction format and instead gives the power of setting prices to the sellers themselves.
There is a $100 one-time setup fee to be paid, which is already inclusive of free listing for the first 10 items, with the seller charged 39 cents for ever succeeding listing. There is also a monthly maintenance fee of $54 for the first 80 items, with a corresponding charge per item in excess of 80 listings.
Before a seller or a shop can get started selling items, Ruby Lane conducts a pre-screening to see if they meet pre-determined standards.
Key Features and Advantages of Shopping from Ruby Lane
- Greater assurance of quality items. The pre-screening of all shops and sellers is conducted by Ruby Lane’s in-house team of experienced art, antiques and jewelry experts and professionals. Ruby Lane also imposes an ongoing monitoring of compliance of the shops with their high standards of quality guidelines. This gives buyers an assurance that they are getting their money’s worth when they buy through Ruby Lane.
- Easy and painless processing of transactions. Ruby Lane is ideal even for new users, because it offers a simple search facility for when they look for items to buy. Once they have made their choice and are ready to proceed with the transaction, the shopping and purchase features are also very easy to follow and understand.
- Referral programs and other cost-lowering opportunities. Ruby Lane also offers ways for shop owners to lower their costs, and one of them is the Ruby Lane Referral Program, where shops can receive an account credit of $100 for every new shop referred to Ruby Lane. New shops are also exempt from paying the maintenance fee during its first month of operation.
- One of the best customer service providers for online marketplaces. Ruby Lane has assigned highly trained staff to help out its users 24/7, whether through email or the site’s live chat facility. For two years in a row (2012 and 2013), it was recognized by EcommerceBytes for being number one when it comes to Customer Service and Communication.
It is safe to say that eBay was one of the movers and shakers in online shopping, so we could not blame it for claiming the tagline, “World’s Online Marketplace”. This online auction and shopping website is now a global operation, having localized websites in more than 24 countries all over the world.
How It Works
To be able to shop and sell on eBay, users can create an account for free. Buyers are not charged for browsing through the items on the marketplace, but sellers are charged with various fees, from listing the items (listing fees) to when they are sold (Final Value Fee on sales proceeds).
Key Features and Advantages of Shopping from eBay
- An extensive and wide array of items for sale. If you need anything, look for it on eBay. That is what most people say, and they are right. eBay has an inventory composed of millions of collectibles, appliances, furnishings, apparel, vehicles and other miscellaneous items. There are also services and intangibles listed. You will find both large and established businesses selling on eBay, as well as little-known and smaller operations.
- Wide variety of payment systems. Sellers on eBay are allowed to offer a variety of payment options. They include Escrow.com and PayPal.
- Offers security in shopping thanks to its return policies. Users can shop on eBay with greater confidence because it has the eBay Money Back Guarantee. If users received the wrong item, the buyer has the option of getting the correct item ordered, or getting his money back. If he goes for the latter option, eBay will cover the purchase price, including the original shipping fee paid on the item.
- Very helpful guides and tips. eBay has some of the best Buying Guides you will see online. These guides help users in making their buying decisions of various products, and also allow users to communicate with each other and share information through the eBay community.
We have only touched on some of the key points that make these five the forces to reckon in the global online marketplace. This list could change in the future, considering how many online marketplaces are being launched, and how the existing ones are making every effort they can to improve their services and be more competitive.