In 2015, the big four U.S marketplaces, namely Amazon, eBay, Etsy and Jet, sold a total of over $100 billion worth of goods. And there’s no sign that these numbers will stop going upwards in the near future. According to the U.S Department of Commerce, online retail sales nearly quadrupled over the 10-year period from 2005 to 2015. Furthermore, this figure is projected to reach around $500 billion in 2018.
Online E-commerce Marketplace – The shopping destination of future
Traditional retailers have started to feel the impact of online marketplaces by making certain changes to adopt the growing trend of online shopping. Recently, Walmart has acquired Jet.com, tapping into the e-commerce competition, as they realized purchasing habits are gradually shifting from physical stores to online marketplaces.
That online e-commerce marketplace is rapidly booming and expected to become the new shopping destination can be broken down into multiple advantages it has over brick-and-mortar retailers. Millions of people shop at Amazon or eBay because of the extreme comfort these e-commerce platforms provide. With just a few clicks, while staying at home, consumers conveniently shop around the website, browse through a vast selection of items, read reviews from other customers, and compare prices before making the final buying decision.
So, is this Opportunity or Challenge for your startup?
The rise of online marketplaces over the last decade is undeniable. Today, we already see the presence of marketplaces for various kinds of transactions, from the simple to the complicated, from this category to the other. It is clear to see that there are huge chances for newcomers to enter such a potential and profitable industry.
But, one thing that might hinder many people from turning their passion into real e-commerce business is the fact that there are too many competitors in the field and that the market will soon reach the saturated stage. However, harsh competition and saturation do not mean your business can’t succeed. Specifically, a saturated market is a market with a lot of opportunities. Only a highly potential industry can attract many businesses to join. Refusing the chance of taking a portion of the cake just because you’re not the first comer means you are letting go of great opportunities to create a better solution for consumers. That said, it could be extremely difficult, if not impossible, for you to compete directly with giants like Amazon or eBay. These players have dominated the market following the horizontal strategy. Their products range widely across different categories and are not limited to any particular industry.
But things always move forward and change so fast, leading to the emergence of a new business path – vertical marketplace. New faces in the market like ThemeForest, Fiverr, Etsy, Uber or AirBnB have successfully built their own marketplace targeting at a specific group of consumers. Instead of going horizontally trying to serve the whole audience, vertical marketplaces focus on a segment and do their best to become the expert in that field.
So, to give a comment on the above question, you can achieve success even in a crowded market as long as you figure out the untapped niche and deliver superior products or services for consumers in that niche.
Once you decided to turn your passion into a business career, there are two important considerations before you take any further moves: choose your strategy as either horizontally or vertically and find an ultimate technical solution to build up your multi-vendor marketplace platform.
Determine your Niche & offer a solution customers can’t refuse
Amazon, as discussed, is an e-commerce marketplace whose products vary horizontally in multiple industries. To compete with big players like Amazon or eBay in horizontal path requires you to be able to offer a super big number of products in different categories at extremely competitive prices. While the vision of this probability does not seem viable, your business has a higher chance of success if choosing the vertical way to cater to a specific need of consumers.
Let’s take Etsy as the example to explain why niche business is advantageous over the horizontal. Etsy is a niche marketplace dedicated to handcrafted and vintage items. It has successfully created a creative community where creative quality is valued over price. Otherwise, these products, if sold on Amazon, would go unnoticed and undervalued since shoppers at Amazon tend to expect greatly discounted and low priced items.
Thus, the first thing to do is focusing on a niche and creating products or services that excellently solve a problem of the audience in that niche. Understand your audience, know their problems, build and deliver a solution consumers can’t refuse, and your product is never wasted.
Not less important, create excellent User Experience on a solid marketplace platform
The solution to a complete online e-commerce marketplace platform is not to be taken lightly. It is the very foundation to turn all your ideas and strategies into a thriving business. The e-commerce platform marks your online presence and is the place your customers visit every day. Needless to say, it’s the part you’re gonna put a lot of effort into.
An effective e-commerce marketplace platform is expected to delight customers with a smooth User Experience. It’s essential to make your customers feel a sense of convenience, reliability, and personalization.
- Make it convenient from search to shop and sell: Your users would much enjoy their journey on your marketplace when every step is simplified and customers feel they could do anything just with 1 click. It’s easy to join, easy to shop around, and easy to checkout. An enormous collection of products in numerous categories would make a good impression on users and expand the time they’re on your site, which in turn increases the chance of more transactions. Furthermore, online users are afraid of painful payment steps. So make it easy to pay by providing the most widely used payment methods.
- Protect users with a safe, reliable system: There’s one clear advantage online shopping has over traditional habit, which is the product reviews from other customers. This is a must-have feature for your marketplace as it not only is useful and creates trust in buyers but also requires sellers to provide quality products/services, which in turn improve your e-commerce platform reliability and quality. Moreover, a secure payment checkout is of utter importance as things are easy to get messed when relating to money. Besides, all tracking jobs should be well taken care of so that your customers don’t have to worry after money is sent.
- Optimize UX for relevant information: A huge selection of products/services is impressive. But what makes your site even greater is the ability to help users quickly find exactly what they need. To do this, a proper system of filtering and sorting functions need to be well designed to provide users with the most relevant data. Also, refund guarantee, flexible dispute management, or instant support service are helpful practices to make customers feel that you really care for them.
What’s next? It’s time to form your ideas into a profitable marketplace business
Giants in the market spent decades to build their own systems to be able to handle an incredibly huge amount of data and maintain a whole sustainable system. And of course, the costs are also as big as the company scale. While such investment is not viable for small sized and tight on budget startups, a practical way is to find a provider, who is the expert in e-commerce marketplace software solutions, for a complete platform exactly tailored for your needs.
MarketEngine – A marketplace solution built from scratch. Starting from $0
Developed by EngineThemes folks, who have years of experience offering online marketplace solutions to small to medium enterprises, MarketEngine is a complete WordPress marketplace plugin dedicated to your niche. MarketEngine is built on the principle of developing a software that makes it as easy as possible for you to create your own multi-vendor marketplace from A to Z. And fortunately, it is designed to cater to any niche, from simple to complex transactions.
If you’re looking for a UX optimized, secure and easy to customize marketplace software solution, MarketEngine is what you’ll ever need.