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Glossary – Marketplace

Marketplace

Nikiforov Alexander
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What is a marketplace?

A marketplace is an online platform where the buying and selling of goods and services from various sellers takes place. In Russia, the most popular marketplaces include services like OZON, Wildberries, and AliExpress, according to the service "Anketolog."

Interest in marketplaces increased sharply in 2020 due to the COVID-19 pandemic and continues to grow. In 2021, the e-commerce market in the country grew by 12% against the backdrop of declining traffic to traditional shopping centers. Users began to actively order not only clothing but also food products, which also contributed to the development of online trading.

According to a study by Data Insight, 97% of online shoppers prefer to make purchases on marketplaces, confirming their popularity and convenience.

How a marketplace works

In most cases, marketplaces do not engage in direct trading. They act as intermediaries between businesses and customers, facilitating transactions. A seller, whether a company, individual entrepreneur, or self-employed, creates an account on the platform and signs an electronic contract.

On the website, the seller posts information about their products by filling out product cards, adding photos, descriptions, and setting prices. Products can be stored either in the seller's own warehouse or in the marketplace's warehouse.

Customers visit the site, select the products they need, place an order, and pay for it. After that, the marketplace forwards the order to the customer and transfers the funds to the seller, deducting its commission. If the product is unsuitable or of poor quality, the buyer can return it, and in this case, the money is not transferred to the seller.

Types of marketplaces

Marketplaces can be classified according to several criteria:

By theme

  • Product marketplaces: Websites where goods are sold, such as Wildberries and Lamoda.
  • Service marketplaces: Platforms for customers and service providers, like "Yandex.Services" and freelance exchanges.
  • Informational marketplaces: Platforms that publish job vacancies or informational content, such as hh.ru.
  • Investment marketplaces: Resources for trading financial assets, such as the "Moscow Exchange."

By type of products

  • Vertical marketplaces: Specialize in one type of goods, such as "Yandex.Taxi."
  • Horizontal marketplaces: Platforms for selling various products in one niche, such as "Hobby Express."
  • Global marketplaces: Marketplaces where you can find goods for any occasion, such as OZON and AliExpress.

By participants

  • C2C: Platforms for transactions between private individuals, such as "Avito."
  • B2C: Marketplaces where businesses offer their products to end consumers, like "SberMegaMarket" and Wildberries.
  • B2B: Platforms for interaction between businesses, such as Alibaba.

Advantages and disadvantages of marketplaces

Working on marketplaces has its pros and cons. Among the advantages are:

  • Quick start: Marketplaces offer a ready-made platform, allowing businesses to quickly start selling without the need to develop their own website.
  • Expansion of customer base: Millions of users visit large marketplaces, providing an opportunity to attract new customers.
  • Simplification of logistics: Marketplaces can offer storage and delivery services for goods.
  • Cost savings on acquiring: Platforms handle payment processing, allowing sellers not to deal with setting up online cash registers.
  • Marketing tools: The ability to conduct promotions and advertising campaigns on the platforms.
  • User trust: Marketplaces are considered safe platforms, which increases customer trust levels.

However, there are also disadvantages, such as:

  • High competition: Sellers have to compete for customers' attention with many similar products.
  • Commissions: A portion of sales revenue goes to pay platform commissions and services.
  • Strict rules: Sellers must comply with platform requirements, which may limit their actions.
  • Reputational risks: Negative reviews can relate not only to product quality but also to the platform's operation itself.

It is also important to note that marketplaces may not be suitable for businesses dealing with premium goods, have low margins, or sell perishable items.

How to start working on a marketplace

To launch sales on a marketplace, several steps should be taken:

  • Choosing a product: Identify a demanded product with high margins. Study the demand for similar products on the platform.
  • Preparing for sales: Register as an individual entrepreneur or self-employed, create an account, and fill out product cards considering SEO requirements.
  • Working with reviews: Pay attention to customer feedback, respond to comments, and improve service quality.
  • Using professional services: Consider hiring managers for product promotion and customer communication.

By following these recommendations, you can successfully launch and develop your business on marketplaces, attracting new customers and increasing sales.