A deep dive into online marketplace : how does it works, pros and cons
A marketplace is generally a location where people purchase or sell goods and services. It is the place where the seller meets the buyer, whether it is a B2B or B2C type of market. A market can be a wholesale market, retail market, high end or a street market according to the brands available, and the target customers of the locality. There are concepts like Supermarkets and Hypermarkets where one can find everything, from Safety pin to High-End cars under one roof.
Online Marketplace is an e-Commerce marketplace where products/goods/services are provided on an online interface. Here the transactions are facilitated by the operators of such online marketplace. e.g Amazon, Flipkart etc. the online marketplace is a dais from where the sellers display their products with the help of online marketplace operators, who in turn facilitate the financial transactions on a commission basis, while the final delivery of the goods, the after sales services responsibilities lie with the sellers. Hence and online marketplace provides a vast array of goods /services as compared to retail stores, where the prices are also competitive due to huge inventories of goods.
Sellers/Wholesalers have started selling their products through the online marketplace with the help of marketplace operators. Sometimes, these sellers also concern business mentor who guide them to select the best suited platform for business. Sellers can sell their products to the customers through multiple online marketplace operators, simultaneously. The inventories/ stock, never lie with these online marketplace operators. These online marketplace operators enable buyers meet sellers online and facilitate financial transactions thereof. The sellers usually make a list of products they intend to sell and thus upload them with the online marketplace operators. In few cases the sellers give the responsibilities of advertising, financial transactions, delivery of the goods, and after sales services of their product entirely wit the online marketplace operators, while in some cases the responsibility of delivery and after sales services lie with the sellers, while the responsibility of advertising the product lies with the online marketplace operators. The online marketplace operators generally pay the sellers for the goods sold in 7 days. On an average, the online marketplace operators charge around 15% commission for the products on their portal.
Worldwide Statistical Analysis :
Customers prefer online marketplace because,
- 73% find it time-saving.
- 67% think there are more varieties.
- 58% feel relaxed because it is less crowded.
- 59% think it’s easy to compare prices.
From a sales perspective, in 2016 global B2C e-commerce sales is expected to reach 1.92 trillion US dollars which will increase to 2.14 trillion, 2.36 trillion and 3.42 trillion US dollars in 2017, 2018 and 2019 respectively. In 2020, it is expected to grow almost double the figure of 2016 to 4.06 trillion US dollars.
In India, the sales figure of e-commerce marketplace in 2016 will be around 23.39 billion US dollars which will zoom to 37.5 billion US dollars in 2017, 52.54 billion US dollars in 2018, 65.09 billion US dollars in 2019 and 79.41 billion US dollars in 2020.
In 2016, Worldwide number of digital buyers is expected to reach 1.61 billion which will increase to 1.77 billion, 1.91 billion, 2.07 billion in 2017, 2018 and 2019 respectively. The forecast for a number of digital buyers in 2020 is 2.59 billion.
A number of digital buyers in India is expected to touch 112.7 million from there it will go on increasing to 153.2 million in 2017, 192.6 million in 2018 and 239.7 million in 2019. Further, it will go on and reach 288.9 million in 2020.
Let’s look at some benefits of online marketplace:
- The online shopping trends are increasing day by day and the sellers have also started catering to the demands of the consumers.
- The online marketplace is having its own numerous profits and positive points involved, both for the consumers as well as the sellers.
- All the products are just a couple of clicks away, as one can shop right from his home, flexible payment options, the customers can easily return the products if no satisfied with the products, can review his shopping etc. the buyers can compare thousands of products and prices to purchase accordingly.
- A consumer can shop anytime as the online marketplaces are open throughout the entire day and night.
- A local seller gets an opportunity to sell his products to the customers of the entire world with the help of online market.
There are some drawbacks as well:
- The consumers cannot check the product quality before the delivery of the products.
- The consumers in few cases, incur losses due to the faulty products and faulty handling during delivery.
- The sellers incur losses due to the return of the products, logistics involved in it and in some cases return of used products (used by the customers for 5–7 days).
- The online marketplace operators take around 7–30 days for the payment of goods to the sellers.
- Sellers have to offer coupons and discounts to stay ahead in the competition which will affect their profitably.
- Apart from product cost, a buyer has to pay shipping cost as well.
Originally published at veloztechform.com on September 21, 2016.