Marketplace is one of the most popular business model which ecommerce uses in Europe and around the world. Most of all, because it is simple, scalable, does not require huge investments. But also because it addresses some important consumer needs. Sounds great? Well, it is not that easy.
Marketplace as a business model
A marketplace business model is usually based on a web platform where demand (customers) meets supply (providers of product and services). Giving the opportunity to meet, the platform usually “taxes” transactions, taking a small (or big) “middleman” commission.
The scale, competition of suppliers and relatively low costs of infrastructure allow to keep the prices and the commissions low. How great is that? Firstly – the market is democratized, old fat cats are challenged. Secondly – new businesses get access to a large volume of potential clients, who gain easy access to products and services, and ability to search and choose the best offers.
Moreover, marketplaces, in most cases, are easy to scale up, both at home and foreign markets. Sometimes it is enough to have a localized version of web service and a universal payment solution. Scaling up abroad is a natural direction of development. If it is so easy, why is it so difficult?
Egg vs. chicken dillema
No one buys – because no one sells – because no one buys. Certainly it is crucial for a healthy and sustainable development of the platform to achieve a balance of demand and supply. A limited offer does not encourage users to visit. In consequence, a lack of visitors does not encourage suppliers to jump on the platform.
Google keeps the gate
Even if your platform is absolutely great, know one will know it, if it is not on the very first page of search results on Google. Therefor, you have to work really hard on your SEO (who doesn’t?) and compete with others, or investing in AdWords.
As google search is a sort of a marketplace itself, it is not enough to provide a special place where supply meets demand. What you need is…
… that is additional services and benefits for clients using your e-market. It can be an e-shop infrastructure and tools, such as website, CRM or digital payment gate. Also, you can win suppliers with marketing tools and possibilities, as well as with reputation and trust which comes with the brand. It can also be additional services for tenants, such as booking options and calendars for service providers. To sum up – anything which can lower the costs, improve customer experience, and in effect, attract new end-customers and/or decrease retention of existing ones.
… Or simply a competition by similar marketplaces fulfilling a similar need. The challenge is as old as commerce, the digital era just made it more vivid. Jumping from one market to another when is so much easier online. It takes two taps. The remedy? You can look for it in the offline world as well. Just look at shopping malls. Extra services and attractions such as cinemas or food courts can win customers loyalty. When location is not in a play, the one which fulfill all of the users’ needs will win.
The risk of by-passing
Research Offline, Purchase Online (ROPO) – a well known nightmare of many offline retailers has its own reverse incarnation. Let’s call it… BDSM – Buy Directly, Search in a Marketplace. It refers mostly to booking services, such as booksy.com (beauty and hair salons), docplanner.com (doctors appointments) or booking.com (hotels and accomodation).
Capital as a crucial competitive advantage
This refers to every startup and every new business. It is capital that enables you to advertise, to build a solid user base, to keep prices, fees and commissions low, to resist and operate, waiting till your competition will bleed out of money, close the shop or… sell it to you. Well, nothing new under the sun. Winner takes it all.
And this is the very downside of digital marketplaces and platform economy. Once one platform grows big and strong, generously fed by investors’ money and Google or Facebook ads, it disrupts its market niche, wipes out traditional competitors and monopolizes access to certain services. It may charge and impose its rules, both on buyers and sellers. Just like in traditional economy.
We all know marketplace stars, such as Airbnb, eBay, Uber or TaskRabbit. Here is a list of less known marketplaces, selected by experts from Enterie – a tech PR agencies network.
Marketplaces to watch – interesting examples
In case of Booksy the offer is simple: matching health and beauty services providers (hairdressers, barbers, massagers, tattoo shops and many others) with potential clients. As a regular user you can easily find, make an appointment and rate local salons. Suppliers are provided with additional benefits, such as booking calendar. Booksy, having Polish origins, is currently present on 6 continents, in 29 countries including most of western European markets, US, Japan, Nigeria or Australia. It claims to process over 1 mln bookings a month.
Briefly is a Polish digital platform that connects customers with venues to book a place for a birthday party, wedding, team building party, etc. The team believes that finding a right venue for a private party or company event should be as easy as ordering a Christmas gift online. And it is, also from the perspective of venue managers, who are provided with a bookings management software. At the moment it is available only in Poland.
Catawiki is one many Dutch international online success stories. This online auction platform was founded in 2008 as an online community for collectors. Today, it is an international auction platform that is available in 16 languages, including Chinese. Most items offered via Catawiki are not easily found in any store and many have a fascinating story attached to them. And this is a true need, which collectors seek to fulfill. Catawiki secured a $75 Million investment and was recognised as the fastest growing company in Europe. It holds over 300 auctions each week and draws 14 Million visitors per month, from all over the world.
ePRICE is an Italian marketplace with 3 million Italians ready to buy from you. It’s safe and easy to use, convenient and close to the client, with qualified support and Pick&Pay points.
The operation is similar to that of eBay, where with a few simple steps you can publish all (or some) of your products on the eprice.it portal.
It is a German open online marketplace for fair-trade, sustainable and high quality products. Fairmondo.de is a typical broadliner, so you can buy products from many categories, such as food, books and media, kids, sport and leisure, clothes, and many more. Fairmondo is not backed by investors, but by private individuals and commercial traders who have participated in the cooperative. It also engages volunteers. At the moment it is only availablein Germany.
Immobiliare.it is the number one real estate marketplace in Italy. It was launched in 2007 with the aim of offering the best platform for the publication and search of real estate ads. Why is it successful? Mostly because of its disruptive nature, challenging traditional real estate agents and high commissions.
Just Eat is an online takeaway platform where takeout restaurants post their menus, and users can order from website or app to get the food delivered by Just Eat. It was founded in Denmark in 2001,and is now available in 13 countries, with UK headquarters, and listed on the London Stock Exchange. Just Eat has a market share of more than 75%.
Without saying, Marktplaats.nl is the biggest and most well-known online marketplace in the Netherlands. Created in 1999(!), Marktplaats now boasts 7,3 Million monthly visitors. The platform allows both businesses and consumers to sell and buy almost anything, via 36 product groups and 1.800 sections. Since 2004, Marktplaats is part of eBay. Well, as we know, capital is king.
This pure French player has been Launched in 2013, it generated 89 million euros of business volume in 2016, including 75 million euros in France. It is now 290 million euros, including 250 million euros in France. To be continued…Europe’s leading DIY and gardening site boasts more than 20 million hits per month for 2.5 million active customers. It focuses on serving professionals and consolidating its presence in Europe to become more attractive than the Amazon ogre for DIYers. They just raised 110M€.
ProntoPro is the first marketplace in Italy that helps you find the professional you are looking for with a single click. Do you have to organize a move? Find a painter? Or an English teacher? With ProntoPro it’s easy to find a qualified professional who’s right for you.
Specific to Italian market, local services are able to resist the competition of global gigants. Among numerous reasons it is worth to mention customers habits, language barrier and better, local support.
Reshopper is a Danish marketplace for families with children – a sharing economy platform where users can buy and sell used children’s clothes and items from the Reshopper app. Using Reshopper helps families save money and support the environment, since reshopping is a greener alternative to buying new products. Founded in 2012, it has more than 270.000 downloads on mobile platforms, and has expanded to Sweden and the Netherlands.
Rakuten France, formerly PriceMinister, is a French company created in August 2000, operating the online shopping and buying website. PriceMinister’s positioning has changed: the French marketplace returns to its first love and focuses on its B2C business.
TicketSwap offers a safe, simple and honest place for consumers to sell their tickets for concerts, festivals, sports events, theater and other outings. The platform protects buyers from extortionate prices, by limiting the maximum sales price to 120% of the original price. This way, buyers know that they always pay fair price for a ticket. By checking users and working with event organizers, the platform combats fraud. Safety is a key factor of its success. Ticketswap was launched in 2012 and draws more than 120.000 visitors per month, from all over the world.
Founded in 1999, in the early dot com era, Tradera has really stood the test of time, and still holds the position as Sweden’s number one auction platform in all categories. Since it has beenacquired by Ebay in 2006, Tradera now has both the muscles and the international network for an international scaling up.
UrbanWineBox is a Danish niche and up-and-coming online marketplace for storing and managing wine collections, founded in 2017 and located in Copenhagen, Denmark. The concept is a combination of a storage facility and a peer-to-peer trading platform, where wine lovers or investors can connect and trade wine. This unique, innovative service does not have any competition (yet!).
This clothes marketplace superstar does not need special introduction. They have completely changed the game offering free delivery and free return, in case you are not happy with your purchase. This way Zalando answers the biggest concern of online clothes shoppers – the risk of buying something which doesn’t really fit. Founded in 2008, today it is present in 17 European markets, selling shoes, clothes and accessories by almost 2000 brands.