Learn the Basics of Online Marketplaces

Buying goods at a marketplace used to mean walking up and down aisles and in and out of stalls. Shopping in this way could take a large portion of your day. Technology has since made the experience of shopping simpler and much more effective. Online marketplaces have been developed to create a more accessible shopping experience for all kinds of different niches.

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What is an online marketplace?

The idea of an online marketplace has been around since as early as 1969, but the use of the internet with these marketplaces didn’t start until the mid-1990s. Online marketplaces bring buyers and sellers together to facilitate transactions. These marketplaces are positioned on websites and applications where users can set up accounts and either buy or sell.

A key distinction of online marketplaces is that they do not just sell their own products. Third-party businesses and sellers also sell their products using the layout that the online marketplace has set up.

Online marketplaces are often referred to as ecommerce or “electronic commerce.” Ecommerce has been steadily gaining traction over the years as more and more people see it as a viable way to shop. 2020 saw a considerable increase in traffic to online marketplaces, and it has dramatically changed the way people shop today. Customers often prefer to shop online rather than go out to get the goods they are looking for.

Not all ecommerce stores are the same, however. In this blog, we will only be discussing online stores that bring buyers and sellers together rather than ones through which a single company sells directly to consumers.

How do online marketplaces work?

There are a couple of ways that online marketplaces sell. There may be a few exceptions, but the majority are B2C or C2C. Amazon is primarily a marketplace where businesses sell their products to consumers. eBay, on the other hand, sees a lot of ordinary people selling to other people.

In order to sell, businesses or individuals must set up an account and list their products. Depending on the website you are listing on, you may incur costs when listing or selling products. This is how online marketplaces make their money. They charge fees or take a percentage of each sale.

So how do online marketplaces process transactions? I’m sure that you have typed in credit card information online at some point. The information that you submit is sent through a secure payment gateway. PayPal is an excellent example of an online payment method and is used widely across the internet. Most ecommerce sites provide ways several ways that customers can feel confident when making purchases.

Not only is there secure payment, but most marketplaces also offer returns. When purchasing in a store, you can try things on and get a feel for how the product works. You get this same experience for online orders but only after you receive the shipment. Products don’t always meet expectations and returns are a great way to ensure that customers are getting what they want.

What are the top online marketplaces?

Many of the online marketplaces that we use today have been around for quite a while. They have evolved from their more simple purpose and are now what we see today. Top marketplaces include the likes of Amazon, Walmart Marketplace, eBay, Alibaba and Etsy. These few marketplaces capture so much of the market that they dwarf most of the other online markets.

Amazon is probably the most well-known and serves as a marketplace for pretty much everything that you could ever want. While eBay used to be the number one place to sell online, it has since been surpassed by Amazon. eBay developed from its roots in selling secondhand goods. Alibaba is as successful as Amazon is but in China. Etsy is an online marketplace that was born out of the desire to sell handcrafted goods.

The success that has come out of online marketplaces stems from the number of goods they can provide and how they can provide them to customers. People no longer have to go out in search of what they want. With a push of a button, anything they are looking for can get to their doorstep in a week.

Success is not only seen at the top. There are many niche online marketplaces for things like vintage clothes and records. These do pretty well amidst the industry’s well-known giants as they focus on specific items rather than trying to be a general marketplace.

There are a lot of moving parts that go into online marketplaces, and it can be confusing. They have changed so much over the years, and they continue to evolve as new technologies are integrated into the website to improve the customer experience.

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