You’ve arrived at the start of your adventure as a marketplace entrepreneur!
This guide’s goal is to assist you in getting started on your trip and moving forward one step at a time. The iterative method will help you maximize learning, save costs, and ensure that your idea is set up for success from the start.
The marketplace building process is a lot more comprehensive than one might think, so let’s dive into the #1 guide to building an online marketplace in the Caribbean.
What is an online marketplace?
An e-commerce site that connects merchants and customers is known as an online marketplace. It’s also known as an electronic marketplace, and the website owner is in charge of all transactions. Companies utilize internet marketplaces to connect with clients interested in buying their goods and services.
A website or app that supports shopping from a variety of sources is known as an online marketplace. The marketplace’s operator does not own any inventory; instead, their job is to show other people’s goods to users and enable transactions.
Guide to creating an online marketplace one step at a time.
People often look at amazon & run and say “hey I want to build the next amazon in the Caribbean”. It’s not that easy, given the size of our markets and the ability to do cross boarder commerce in a way that makes sense to the end customer. That means that building a successful marketplace in the Caribbean is a lot more difficult in the region than it will be in other parts of the world.
It takes time to set up an online marketplace. In a nutshell, here are the steps:
- Find a strong marketplace idea & flesh it out (ensure you are solving a problem & that problem is a pain point for enough people).
- Do market research to find out market needs & Product demands (you may be trying to solve a problem for you alone)
- Select a marketplace business model, Operational model, Pricing models, Revenue models & Digital strategy (That all works together)
- Solve the disintermediation problem for all your models (This will break your marketplace before it even starts)
- Value, finding the right balance of value for mercahants, customers & the marketplace
- Create your Minimum Viable Platform (MVP) (your marketplace MVP that will get useful feedback that you can use to iterate).
- Build your demand & supply models (Finding the right balance between the chicken & egg problem)
- Begin selling to your first consumers on your marketplace.
- Keep track of your essential metrics & analytics to help you expand your business.
You’ll learn about business strategy as well as a deep dive into how successful marketplace websites work from the inside out if you keep following my blogs as I am to bring local context to how marketplaces can work.
How do online marketplaces work?
Online marketplaces do not have to keep track of inventories, logistics, photos, or product descriptions, but they can delegate this responsibility to sellers. Sellers, on the other hand, receive their own location where they can manage orders and offer their wares. Buyers have electronic access to suppliers’ inventory, and real-time information on the products being presented to customers is updated on a regular basis. So, how do these online marketplaces generate revenue? Continue reading to learn more:
- Options for Earnings
- Subscription-based model: One of the most common business models is the subscription-based approach. A regular price is charged for the supplier’s access to the platform in this monetization model. Suppliers can use this revenue model to find new clients or obtain access to potential clients or partners. However, you must guarantee that your vendors receive sufficient value to keep their subscriptions active.
- Sign-up fees: In this arrangement, sellers pay a one-time cost when they apply to sell on your marketplace platform, often known as sign-up or registration fees. No complicated payment methods are required because the sellers pay you upfront. You can motivate vendors by stressing the benefits and offering early bird rewards.
- Commission model: When a vendor makes a sale, you charge them a fixed fee or a percentage of the sale as commission. Each conversion may be charged by the platform to both the vendor and the buyer. Unlike subscription-based models, the charge appears to be acceptable in this case because the parties operate for free and only pay when they receive some benefit from using the platform.
- Product listing fees: Product listing fees are a typical marketplace business concept among two-sided marketplace platforms. When your vendors put their products for sale, you charge them a fixed or variable sum in this approach. While there are several methods for calculating product listing fees, you must make it as simple as possible for the seller to pay the fees. This would inspire them to add additional products to their catalog.
- Mixed models: You can choose the revenue model that best matches your market, depending on your industry. You shouldn’t, however, take a “one size fits all” strategy. You can use multiple models at the same time. You can generate many revenue streams by merging numerous models. Some of the largest online marketplace participants, such as Amazon, have successfully integrated numerous models.
Types of ecommerce online marketplaces
Online marketplaces are classified according to their industry, focus, and target audience. We’ll go through each one individually and explain how the Multi Vendor Marketplace Module can assist you in creating your own marketplace.
Online Marketplace based on Core-Focus:
Based on emphasis segments, there are two types of online marketplaces: those that provide only one type of service or sell only one category of products, and those that serve as a hub for many services in a number of niches.
Vertical Marketplace
A marketplace that focuses on a specific sort of service rather than diving into a pond full of fish. Consider Etsy, which began as a small marketplace for people to sell goods and has grown into a giant.
Horizontal Marketplace
A marketplace is an internet platform where you may locate a variety of services or items. Consider a shopping mall where you can locate all of your favorite brands and items under one roof. A horizontal marketplace is an online eCommerce marketplace such as Caribshopper.
Global Marketplace
Global markets are locations where you may buy and sell anything. You’ll have a larger inventory, and buyers will have more selections, regardless of the distance between buyers and sellers. Purchasing from a worldwide marketplace is similar to shopping at a mall; you’ll find everything you need all in one spot. The most well-known example in this area is eBay.
A major feasible classification for the online marketplace occurs on the verticals they are offering:
Product-based online marketplace
This type of online marketplace focuses on product sales. Product-based marketplaces, such as Amazon and Flipkart, exist. Product-based marketplaces make money through commissions and subscriptions. They have the authority to levy delivery costs as well.
Service-based online marketplace
A website where service providers can post and deliver services such as personal care, cleaning, plumbing, appliance repair, pest control, graphic design, and so on.
The Urban Company, Fiverr, and Upwork are popular service-based online marketplaces that offer a wide range of services across hundreds of categories.
Booking or rental online marketplace
There’s a good chance you’ve heard of a booking or rental business that offers an online marketplace. The most common websites for booking or renting Marketplace are Ola, Uber, booking.com, and MakeMyTrip.
Marketplace based on the platform
Mobile Commerce
A platform or an online marketplace for the purchase or sale of goods and services through wireless handheld devices or mobile phone
eCommerce
A two-party site, e.g. seller – shopper, company owner – investor, etc.
Marketplaces on the basis of Customer Type:
B2B – an online marketplace for the exchange of goods or services between companies or two business merchants
B2C – an online marketplace for the transaction from the merchant to customer for goods or services
C2C– an online platform for the transaction between customers for goods or services
Examining several sorts of markets and deciding which one is best for your company is a crucial decision. You’ll be dedicating a portion of your revenues to growing a new audience, which is something you’ll be doing on a regular basis.
When you’ve located a market that interests you, learn more about the items and businesses that thrive there. It doesn’t imply it won’t work out if your products don’t match, but it’s something to think about.
Benefits of online marketplaces
You are not obligated to do anything just because everyone else is. Every business will not benefit from selling on an online marketplace for various reasons. It does, however, have some advantages that make it a viable alternative for some organizations.
- Improved visibility: Placing your products in a virtual high-traffic marketplace increases their visibility. Customers will be directed to your website or physical store as a result of this.
- Better management: As a seller, you won’t have to waste time and money building and managing your own e-commerce website or app. The market will take care of it for you. You can concentrate on controlling your inventory rather than getting distracted by non-essential issues.
- Low startup expenses: Using online marketplaces to promote and sell products can help small firms keep their expenditures under control.
- Ease of use: As the worldwide internet penetration rate rises, customers will find online markets to be more convenient than their offline equivalents.
The near future
Online marketplaces dominate the internet, providing a perfect meeting place for consumers and sellers. You can create the optimal conditions for customers to shop and businesses to promote by using the proper revenue model.
Amazon and Walmart, for example, are hybrid markets that sell both their own products and those from other companies. They also operate as a marketplace for buyers and sellers, allowing a wider range of products to be sold. Because of their experience, technological capabilities, and nearly limitless resources, these behemoths give other competitors a run for their money. Marketplaces must eliminate friction in both buying and selling to encourage participation, show trust in all transactions to encourage involvement, and provide efficiency and distinctive value to consumers in order to exist. Those who are unable to do so will see their market share dwindle.
