Why online marketplace business success lies in engaged user base in a crowded eCommerce environment in this blog.
Marketplace business is moving nowhere, but to the place where other industries dreaming of landing. With that notion, the global ecommerce market share is booming in a great way and expected to reach peak success with a net worth of $45.60 billion, as reported by eCommerce experts.
How the online marketplace business gained such huge popularity?
It’s actually simple, online marketplaces like Amazon, eBay, Etsy have continued to grow and still seen major traction along with the sudden change in the consumers’ purchase behavior. Many studies show these eCommerce marketplaces are proven to be a great choice amongst consumers and businesses.
For today’s omnichannel consumers, it is important to offer extensive and seamless shopping experiences. Such intuitive experience can only be provided by the online marketplaces, this has made 74% of online shoppers go with marketplace websites to make purchases rather than buying from the individual stores.
But there is no surprise in a shift in the consumer behavior and eCommerce sector because these marketplace platforms use the advanced technologies that made consumers accustomed to instant gratification.
Why online marketplaces are easy to love(consumers & sellers)?
For sellers, the online marketplace is the only key tool that changed the retail world for multiple good reasons with its powerful business models. It holds the potential to untap and solves sophisticated business problems by tapping the potential and resources that exist.
For consumers, these all-in-one marketplace caters to the shoppers who are inpatient and offer them to access the products at competitive prices under a single roof rather than having to compare price from many individual stores.
Where the marketplace business platform differs?
Online marketplaces are gaining all demand with their competitive pricing and convincing render with the advanced business model. Even conventional businesses have started exploring new opportunities to boost customer engagement via marketplaces.
With this continuous proliferation in recent years, eCommerce marketplaces are actually making huge expansion, but how huge they are? What makes it big?
In this blog, we’ve just clubbed three of the major takeaways gathered from successful online marketplaces.
Things to consider for online marketplace business success
Marketplace Business liquidity stands tall
You know what, the prime value of any online marketplace lies in its ability in offering smooth and seamless business transactions between buyers and sellers who registered with the platform. So any marketplace business that looks to hit the top position in the list, must aim to reach more number of user retention, both the buyers and sellers.
Let’s start by defining the liquidity in terms of marketplace business model as these platforms are two-sided, say, buyers and sellers:
Marketplace liquidity can be categorized into two types:
- Buyer’s liquidity, and
- Seller’s liquidity
Buyers’ liquidity represents mostly the conversion rate of request or search leads to successful transactions. For instance, on Amazon, it could be the percentage based on the search sessions in a given month that result in a purchase.
It is basically measured with the percentage of conversion over the searches over a period kind of metrics.
Sellers’ liquidity represents the utilization rate of listings on the marketplace or conversations of listings of supply-side into successful transactions. Similarly, as mentioned in buyers’ liquidity, for instance on the Amazon marketplace, it is measured between the percentage of the stock sold at the beginning and end of the month.
It is basically measured with the turnover rate of inventory and listings on the marketplace kind of metrics
So in order to step ahead of the market competition, it is important to measure and apply the appropriate metrics to monitor its performance, and in particular liquidity.
Value Creation for both buyers and sellers
This booming nature of online marketplaces demands the owners to provide additional value for both buyers and sellers to make them stay on the platform as long-term retainers. It is important to create such value to be on the top and remain competitive amongst the best market players.
Here offering value to buyers can be a little easy, it can be discounts, offers, coupons, but how would you give values to the sellers?
Look at Amazon, they have launched special training programs to the platform’s top sellers to make them retain. Such programs have got good appreciation and support from the sellers and enjoy such benefits eventually.
Keep long-term marketplace success as the top priority
In order to succeed in the marketplace business, it is important to accumulate more loyal and engaging customers and vendors rather than relying upon and planning to grow users in the short term. Such long-term growth requires constant innovation to meet the ongoing and futuristic demands.
While all those web traffic will only feed those who look metric in just with numbers, but quality and trust stand all time and serves any marketplace in the long-term. It means one can measure the marketplace performance with the loyalty of consumers and the trust of sellers. Hence, to create a value-added platform for merchants and users to transact, the core function of the marketplace must not be neglected.
In simple, no online marketplace should step aside of the prime step while climbing on short-term goals such as improving traffics and sales growth alone. Arguably, web traffic is important, and it’s crucial though, but it can’t even be compromised with quality assurance.
Thus, attaining the ultimate aim of retaining users and merchants can be accumulated only if the marketplace maintains a bare minimum level of standard of quality.
How marketplace business success defined in future?
So what’s next? What’s your move after looking at all these success factors? There we say, Online marketplaces are here to stay, there is no other go. In fact, even a simple ecommerce store can now become huge, can have a broad market reach, and more valuable than the biggest current eCommerce players.
But the hinder is the sellers, they used to move on if there are no sales or if nothing comes in. Only the best-in-class marketplaces with huge traffic will be able to stay at the top in this highly competitive market.
Leave those competitions behind, are you ready to start your own online marketplace and gain success in the eCommerce business?
We can help you with that. We’ve developed a complete marketplace solution that is robust, scalable, and highly flexible to have marketplace success.