It’s time for retailers to build and launch their online marketplace, but why?
First get an overview about it and go deeper further!
The concept of a “Marketplace” has not born overnight or last year or a decade before. It is found in the late 14th century where it acts as an open space probably a market was held to foster the exchange of goods in economic trade.
You could find and buy everything that you need, to mention, the best things about the older marketplaces are you can get right from eggs to coal to meats to linen from a variety of vendors. The marketplace platform was the heart of any town back in the days.
Fast-forward the whole thing to today, everything related to digital eCommerce and omnichannel retail sector redefined this online marketplace business concept into new dimensions.
Today, these multi-vendor marketplaces represent a huge opportunity for businesses to serve shoppers the products they’re looking for, at a competitive price with a great user experience.
Similar to the 14th century kind of thing, today’s modern online marketplaces collect the goods of third-party vendors rather than transacting goods and payment on a town square, it occurs on a centralized eCommerce platform.
This, in turn, provides the consumers with a wide variety of products and their relevant choices. All this simply boosts the site traffic and improve the customer experience to provide a wholesome shopping experience. Thus, I’d say you can earn incremental revenue with an efficient cost structure.
Why Retailers Should Launch Their Own Online Marketplace in 2022
Let’s find some good reasons retailers to launch an online marketplace website that can be a major source of growth and success:
Retailers – go and expand your product variety in your online marketplace website
Once the retailer adds up with the marketplace, there is a huge chance to extend its product variety and inventory availability. This applies to both pure-play online retailers and multichannel retailers who also sell via brick and mortar.
Just look at the growth of Amazon’s Marketplace. Third-party sales on this platform account for 54% (or 54 billion) of Amazon’s annual sales (as of 2019.)
Reduced inventory risk – Make a note on this online retailers please
There will be multiple risks and expense factor always hinder the Inventory expansion in the traditional retail model. Because in the conventional model, you’ve to plan, prepare, buy, store, and ship the products without having any prior knowledge if customers truly desire them. This often leads to a poor experience and could make you waste tons of dollars and time.
But a marketplace allows you to increase your product assortment without taking on the perils of merchandising, buying, warehousing, and shipping; its risk-free product expansion. And you get to let your customers tell you what they like and don’t, and use that information before investing in in-store product expansion.
Monetize new traffic with marketplace website
Monetizing the site traffic is a new trend that one should not ignore. As there is a significant growth in the new sellers/vendors and their products help retailers increase their brand footprint online.
All of these new product pages are optimized and indexed in Google. This increases the chance of boosting your site’s online presence and product offers. The more the products the more love you get in back from Google, this, in turn, increases the traffic to reach new customer acquisition!
Improved customer experience with a smooth launch
At any point, online buyers want multiple product choices at competitive prices. Above this, they expect a no-lag shopping and user experience. Only a true online marketplace model can deliver this omnichannel relationship between a seller/vendor and its audiences online.
This can provide a reliable shopping journey for online shoppers along with better loyalty and their potential to become future advocates.
Drive profitable growth
Many financial analysts say that the margins related to Amazon’s aforementioned marketplace activities to be about 90%. This is comparatively less to a 5% margin on direct sales on the physical store. The reason is so obvious because no retailers cost of goods sold on this Online Marketplace model.
Marketplace platforms like Magento, PrestaShop could make it easy to onboard any new third-party sellers & products with minimal overheads. This will definitely expand the product scale in a cost-efficient manner. Then it’s driving increased traffic, sales, and even to 30X more profitable dollars on those sales than traditional owned products.
Wrapping up – being online retailers, jump into online marketplace business today
To become successful and to grab the wide eCommerce business opportunity of online potential. So when creating an online marketplace is the best choice to enhance and in some cases disrupt an existing business model – for the better. Whether you’ve launched to create your multi-vendor online marketplace, or are trying to understand the value of doing.
So, consider the eCommerce marketplace platform as a way to create sustainable & profitable growth, differentiate your business, improve your customer experience, and accelerate your eCommerce business to new heights.