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.
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.
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 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
A platform or an online marketplace for the purchase or sale of goods and services through wireless handheld devices or mobile phone
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.
If you’re a government agency or department and looking to do digital transformation, the first thing to know is that this isn’t like any other kind of change. It’s not just about using technology in your day-to-day work; it’s also an opportunity for innovation on how we deliver public services and engage with citizens.”
“Digital governments have more potential than ever before because they can innovate faster, adapt better to changing needs over time, generate higher levels of service satisfaction among users (in part by offering personalized services), reduce transaction costs through automation as well as lower operating costs due away from high rents paid for office space which has been centralized”.
Digital transformation is a recent and popular topic in the Caribbean. What does it mean? How can you be digital? Let’s explore these topics together as we talk about what digital transformation means, how to implement it, and some of the benefits that come with this new way of thinking.
A lot has been said about technology in the past few years. It has impacted every industry sector including yours! You need to keep up or risk being left behind. The world is changing at an exponential rate thanks to technology so don’t get left out!
In order for organizations to stay competitive they are going through a process called Digital Transformation (DT). DT is all about ensuring your company becomes more efficient, agile and customer-centric by leveraging current
What is digital marketing?
At a high level, digital marketing refers to advertising delivered through digital channels such as search engines, websites, social media, email, and mobile apps. Using these online media channels, digital marketing is the method by which companies endorse goods, services, and brands. Consumers heavily rely on digital means to research products. For example, Think with Google marketing insights found that 48% of consumers start their inquiries on search engines, while 33% look to brand websites and 26% search within mobile applications.
While modern day digital marketing is an enormous system of channels to which marketers simply must onboard their brands, advertising online is much more complex than the channels alone. In order to achieve the true potential of digital marketing, marketers have to dig deep into today’s vast and intricate cross-channel world to discover strategies that make an impact through engagement marketing. Engagement marketing is the method of forming meaningful interactions with potential and returning customers based on the data you collect over time. By engaging customers in a digital landscape, you build brand awareness, set yourself as an industry thought leader, and place your business at the forefront when the customer is ready to buy.
What is SEO?
SEO stands for “search engine optimization.” In simple terms, it means the process of improving your site to increase its visibility for relevant searches. The better visibility your pages have in search results, the more likely you are to garner attention and attract prospective and existing customers to your business.
It’s a rainy Thursday afternoon in December and I’ve just finished a client meeting in Port of Spain. As I step out of the elevator, my watch vibrates faintly to let me know my car is out front. I jump into the warm car as the driver greets me by name and verbally confirms my location, telling me we’ll be there in about 12 mins. He drops me off at my hotel, and as I hop out of the car, he thanks me and wishes me “Happy holidays!” No fumbling for my wallet, no figuring out how much to tip him, and no waiting for the credit card machine to process my card while impatient passengers are waiting outside.DIGITAL TRANSFORMATION – IT’S REALLY ALL ABOUT PEOPLE
The Passenger Perspective
What everyone knows is that I’ve just endured the results of digital disruption. Where companies are creating new types of services by leveraging digital tools; in this case, mobile, GPS, Digital Payments and other real-time data processing systems to enable experiences and business models that were previously not possible.
The transaction happens completely in the background, so all you have is The Experience.
It’s true there were many powerful digital technologies that enabled this no-hassle car service, however from a “passenger” perspective, digital was not a big part of this encounter. For me, the encounter was about the convenience; the warm car, the friendly driver, and the simplicity of leaving the car at my destination. The transaction happened behind the scenes and so seamlessly hidden that all I was left with was the experience. If anyone has ever tried to get a taxi on a rainy day in Trinidad, especially during the holidays, knows what an extremely pleasant occurrence it was to have a warm dry car waiting for me.
Tailoring the Engagement
As humans, we process everything. We’re often irrational and very quick to opt-out, quit, or abandon anything that is a poor experience. Yet, when companies take the time to understand us, our motivations, our likes, and dislikes, and then tailor the engagement around these elements, consequently we’re likely to participate, spend more time in the event, and willingly spend more money.
THE REAL POWER BEHIND DIGITAL IS THE ABILITY TO KEEP THE TRANSACTION BEHIND THE SCENES. EXPERIENCES SHOULD BE DESIGNED FOR PEOPLE, NOT MACHINES.
Disney’s MagicBands and MyMagicPlus are examples of how a company leverages digital technology to remove friction. Keeping transactions in the background, Disney allows humans to experience the pure joy and enchantment of Magic Kingdom Park. As Nick Franklin, former Executive Vice President of Disney, states, “The guest doesn’t need to know how it happened. It’s about the magic…”
People First, Technology Second – DIGITAL TRANSFORMATION – IT’S REALLY ALL ABOUT PEOPLE
Companies going through digital transformation the Caribbean initiatives are often quick to start throwing technology at the solution. It’s &ld quo; digital transformation in the Caribbean” after all so there should be some cutting innovative technology involved. While this is accurate, the technology’s primary role in the process should be to enable the interface. Unfortunately, we focus too much on technology and not enough on the people to enable the desired emotion.
VALUABLE EXPERIENCES ALLOW HUMANS TO FEEL AN EMOTION. THE TECHNOLOGY IS NOT AN EXPERIENCE; ITS SOLE PURPOSE IS TO FACILITATE A SEAMLESS ENGAGEMENT.
What’s the takeaway? When designing an app, service, or new technology offering, be sure to invest the time to understand the human aspect first. Understand your target users as people and not just consumers. Take the time to understand their motivations, their goals, their context, and their comfort with technology.
Perhaps the industry term “digital transformation” is a misnomer. Perhaps we should be calling these initiatives something along the lines of “experience transformation”? This might reinforce the point that our work as innovators is about people first and technology second. To paraphrase the futurist and influential author, Gerd Leonhard, this is not really about technology─ it’s really about transcending technology.
To find out more about the way forward for your company click HERE
DIGITAL RESOLUTIONS FOR A DISRUPTIVE NEW YEAR. Many of us use the New Year as a time to set resolutions and become better versions of ourselves. Traditionally, we start with a list of things that will impact our personal lives: get in shape, stop procrastinating, spend more time with family.
This year, Ocey challenges you to start your digital resolutions for a disruptive new year with resolutions for your business – and more specifically resolutions that will leave your organization better prepared for the ongoing digital revolution. Why? According to Harvard Business School, leading digital companies generate better gross margins, earnings, and net income than organizations in the bottom quarter of digital adopters.
LEADING DIGITAL COMPANIES GENERATE BETTER GROSS MARGINS, EARNINGS, AND NET INCOME THAN ORGANIZATIONS IN THE BOTTOM QUARTER OF DIGITAL ADOPTERS.
Consider adding the four following suggestions to your resolutions list and make sure to continue following through on them throughout the year:
Secure Your Organization
Every year the number of security attacks grows, with enterprise organizations finding it increasingly difficult to mitigate the consequences of data breaches. Resolve to be proactive about security in 2021.
Tom Puthiyamadam, global digital services leader, PwC, says: “Businesses that integrate cybersecurity with digital strategies will be better poised to build trust into everything they do and transform faster. Leading companies are integrating cybersecurity, privacy, and digital ethics from the outset. And that enables them to better engage with existing customers and attract new ones. Many also see efficiencies in operations, business processes, and IT investments.”
Digital resolutions for a disruptive new year – INVEST IN A SECURE DIGITAL INFRASTRUCTURE TO PROTECT YOUR ORGANIZATION’S SENSITIVE DATA.
In 2020, we witnessed how hackers become more ingenious in their attacks:
A California hospital had faced a ransom demand to regain control of its computer system
Multiple reports about hacked baby monitors and strangers talking to children
Millions of users had trouble accessing Twitter, Amazon, Netflix, Spotify, and other popular websites due to unprecedented massive DDoS caused by home devices – from home routers to internet-connected toasters
MarketsandMarkets estimates the security market will grow from $122 billion today to $202 billion by 2021. According to IDC, the key domains for growth are security analytics, threat intelligence, mobile security, and Cloud security.
Prioritize the Customer Experience
Companies must learn from their customers to develop the tools, processes, and platforms necessary to build an exceptional customer experience (СX). According to leading design experts, CX will become the main differentiator among brands, overtaking price, and products.
When we discuss creating innovative experiences or transforming operations, IoT often plays a key role in developing solutions that address those strategies. Though consumer applications are most well-known, IoT also stands to revolutionize environmental monitoring, infrastructure management, manufacturing, energy management, healthcare monitoring, transportation, construction, and more. Tomorrow’s market leaders are investing in IoT solutions today.
With the right technology strategies in place, leading enterprise organizations can take a broader, deeper, and more thorough approach to digital transformation that will result in competitive advantages in the marketplace.
For help with your digital resolutions contact Ocey Phillips