MARKETPLACES Written by Divij Batra OVERVIEW Marketplace

MARKETPLACES

Written
by Divij Batra

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OVERVIEW

Marketplace
– a platform that facilitates the exchange of a product or service, enabling
those looking to provide that product/service (sellers) to connect with those
seeking that product/service (buyers).

There
are three types of marketplaces:

·        
Vertical

·        
Horizontal

·        
Global

A
vertical marketplace sells products from many sources but they are all of one
type.

A
horizontal marketplace sells products of many types but they all share a
characteristic.

A
global marketplace sells everything!!

Marketplace
as a business is growing rapidly, want to know how it works? How to make it
more effective? Read along…

HOW
TO GET GOING

Let
us take an example of FlipKart’s Marketplace, which has become quite prominent
in India and let’s understand the steps to start a marketplace.

STEP
1:

Create
your account with the basic information to get going.

STEP
2:

Setting
the Pickup Location from where the FlipKart Team can procure your product or
service and display is on their site for sale.

 

STEP
3:

Next
step is selecting which product or service you are going to deal in.

STEP
4:

Last
step is to just fill in all the details of the business and get going!!

 

 

 

INFLUENCER
MARKETING FOR A MARKETPLACE PLATFORM

Influencer
marketing is typically promoting a brand or service through a person with a
large following on social media.

It
is a simple trick followed by many marketplace platforms these days. The best
example of this is when Mariah Carey
rented an Airbnb in Israel, the company grabbed the opportunity. They gave her
the reservation for free in return for a sponsored post that attracted nearly
45,000 likes.

NETWORK
EFFECTS

This
effect states that products become more valuable to each user as the number of
total users increases.

While
all marketplaces benefit from network effects, not all network effects are the
same. Network effects can be looked upon from three angles.

The
first is the traditional two-sided
marketplace, with customers and providers. Examples are eBay, Airbnb. The
more customers you have, the more attractive the marketplace is for the
providers, and vice versa.

The
second is an asymptotic network effect.
Examples are Uber and Ola, it means that after you have reached a certain
threshold, the network effect loses its power. As an example: once you have
more than 400 drivers using your app in a city, you can’t really improve the
customer experience by getting more drivers on board. It will take the same
amount of time for you and for a competitor which has 300 cars.

The
third is a platform marketplace. A
good example of this is Apple’s App Store, where developers sell apps to the
owners of Apple devices. The same logic applies here the more developers you
have, the more customers benefit.

 However, the point to notice here is that this
type of network effect creates lock-in because the services offered by the
providers are intrinsically linked to the platform. The developers cannot reach
these specific customers in any other way, or sell the same exact app anywhere
else. The customers will not get similar apps anywhere else. So, the idea is to
build this type of a platform, that’s extremely powerful.

DOS
AND DON’TS FOR A MARKETPLACE

1.      Initially
it should focus on a single vertical (product or service category) and a single
city, offering a great customer experience, and offering a great provider
experience.

2.       Productivity is the North Star for a
Marketplace Operator, a constant and dependable target towards which you
navigate the development of your marketplace.

3.      Identify
who your customers and suppliers are!!

4.      Identify
the benefits your customers and supplier want!!

5.      Focus
on SEOs

6.      Content
Marketing is a good tool in attracting customers

7.      E-mail
marketing is a very handy tool for reaching out to your existing customer base

8.      Policies
governing customer reviews and brand representation

9.      Responding
to customer queries on time

 

HOW
TO GROW YOUR BUSINESS ON A MARKETPLACE

Let us understand this
with the help of an example, for this section let us take the example of
Facebook Marketplace.

You can access it by
clicking on the below icon on Facebook, the app will make use of the GPS to
look for products displayed near you.

Now
how to use this Marketplace to grow your business.

1.      Increase
awareness of the Product or Service

Marketplace provides
you with a perfect platform to make your brand discoverable to the public, the
more people know about your product the more they will buy from you. It almost
double the number of interactions you have with potential customers right now.

2.      Helps
in building trust before the transaction

On
Facebook the profile of the person is given from whom you are going to buy the
product and you know as a customer what you are getting into. Trust me it is a
very good thing!!! This helps in building a conducive environment.

3.      Market
Research

The most crucial aspect
to consider will growing your business is to do a proper market research to
find out which are the products that are more popular and catches the eye of
the customers. The idea is to show case those products that will attract more
customer.

 

4.      Test
out new Markets

Doing
a business helps in exploring new markets which you would not have done
otherwise in a cost effective manner.

Commercials

A third party
marketplace will incur some or all of these fees:

• Listing fees

• Percentage of sales

• Monthly subscription
fee

• Payment fees (e.g.
PayPal)

 

What information should
be put on a marketplace?

A supplier should make
sure he put up information on the marketplace about his products. Since it is
not your own site should put up all the data about the product because the
marketplace operator will not do it on their own.

This being said, the information a
supplier provides should not be a copy and paste of the catalog description
because it will cause an error in the SEO by making the marketplace content a
duplicate. The idea is to write a unique and rich descriptions for the products
in the marketplace.

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