At some point we stopped talking about classifieds and replaced it with marketplaces. Although a simple differentiation between the two, blurry lines do exist. The choice which path to take has implications on growth strategy, execution and available monetization pools.
Online connectivity and mobile explosion has given marketplaces the opportunity of scale not seen before by making buying and selling online easier than ever. So what’s the difference?
Simplified; classifieds (horizontal or vertical) are platforms that connect buyers and sellers online and leaves it there. A marketplace facilitates some form of transaction via technology enablement by moving down the value chain i.e payment gateway, service fulfilment, etc.
The current shift towards marketplaces is an interesting one in unlocking double-sided value for both user and business. Curating a more end-to-end service offering is of a higher experience to the user, and conversely gives the marketplace more control and influence over the journey for additional revenue pools. The push towards creating a more frictionless experience for consumers is at the epicentre of this evolution.
Simple classifieds have been replaced by two-sided and mobile-curated marketplaces that bridge the gap between offline and online, with marketplaces reaching a significant stage in their development. Importantly, there needs to be clarity in strategy, marketing and solution-oriented thinking as these all have a profound impact on everything from the user experience to payments and partnerships.
The incumbents such as OLX group have now ventured into more transactional players such as FCG’s Cars45 who purchase cars on demand from consumers to then resell, are aiming to catch a slice of the transactional pie. The move away from standardised ad-generating revenue to success-based facilitation is rapidly evolving and possesses the most exciting stage in the digital commerce industry.
Identifying vertical-specific niche’s are key. Current trajectory indicates online marketplaces will be more verticalized and hyper-focused than they are today. And in most likelihood encompass a hybrid approach of service offering. While it’s a safe bet to say marketplaces will continue to grow, sustaining that growth will require them to focus on providing truly customer-centric experiences and delivering value on each and every journey of the transaction.
Security and trust are paramount in aiming to grow these new ancillary-type services amongst consumers. Curating a community-style approach as done by Carousell does speed up the adoption. Capturing the attention of the market and fostering an active customer base willing to engage in such activities assists in driving transaction volumes as users grow more confident transacting online. Education of the benefits, and more importantly customer ROI with a ‘guaranteed-approach’ is what appeals to consumers as we move towards the frictionless era.
Online marketplaces will function as the starting point for nearly every interaction businesses and consumers have with goods and services. Consumers have proven they will buy and purchase just about anything online, and marketplaces are rushing to bring them even more choices and flexibility. Traditional businesses will adapt and leverage online marketplaces to bring their goods and services to market. More and more will come to see marketplaces as a quicker avenue to new revenue streams or as an expansion of their existing distribution model.
If not clear by now, this next evolution of marketplaces is certainly based on transforming the transaction. Marketplaces that are able to create an ecosystem within their offering, are even more poised to capture the piece of transactional pie.
