Future considerations of Online Marketplaces — Understanding Tendencies and Technologies. Part 1.
Recent technological developments have drastically changed most of our day-to-day activities, and going shopping is no exception. The ability to shop 24/7, compare prices, save money and time, and receive exclusive goods are the main reasons for an increased amount of consumers accessing marketplaces online. What’s more, such an access is mostly provided by users’ mobile devices.
Statista says that over the last 5 years, the share of mobile web traffic has grown from 16.2% to 53.2% (to compare: in 2009 this amount equaled only 0.7%!). It is obvious that such dizzying growth rates will soon surprise us even more. What does it mean for us? For us as consumers, it means we have ever-expanding opportunities of buying things with yet unknown degree of convenience. For us as businesspersons, this information should be the guidelines for strategic and marketing actions.
We at Globalluxsoft decided to look deeper into this topic and investigate the recent trends in e-commerce industry that are likely to linger within the next 3–5 years. For this purpose, we observed the available solutions and interviewed market players to obtain the insider information from the first-person perspective. We are happy to share it with you.
Although having undeniable advantages over offline stores, online marketplaces may have their pitfalls. Amazon, eBay, Alibaba, and others operate based on the centralized platform, where buyers and sellers are connected via mediators solely. Such a centralization evokes the lack of transparency and causes uncertainty when a user cannot fully trace one’s transactions.
Blockchain has already provoked a paradigm shift in the application of various technologies, and online marketplaces are among them. The key distinctive feature of blockchain technology is the absence of intermediaries in the process of data transmission.
Blockchain-based marketplaces represent peer-to-peer networks with the aggregate of nodes that autonomously control, verify and record all the transactions and contracts concluded between the parties involved. Besides, blockchain allows concluding smart contracts, which are digitally signed and secured agreements. All the data is stored publically, and it can’t be deleted or changed. The system cannot be hacked. In addition, users don’t provide their personal sensitive information. All this eliminates the possibility of any fraud. In addition to the above, with the help of blockchain, you can issue your own crypto token.
“I think that in markets where a particular business model dominates and has proven successful, it provides opportunities for other marketplaces to emerge, providing they have either a different business model and/or a different solution to the same problem. As marketplaces are data rich environments, with GDPR coming in I think this will bring into focus what is best for the consumer and this causes challenges to the established marketplaces and opportunities for new entrants.”
Having been created at a Bitcoin Hackathon in 2014, the project soon came into the spotlight of developers and later — of marketplace users. The platform integrates the best features of traditional marketplaces with the newest technologies that allow producers and sellers setting their own terms, while the consumers receive the best customer experience. The platform’s shtick is its escrow accounts, with which all users have their personal key pairs for signing the transactions, making it an anonymous and safe marketplace.
The users of this online marketplace enjoy truly low fees and prices thanks to blockchain and Bitcoin integration. Using digital currency, manufacturers and vendors avoid unnecessary intermediaries, which leads to lower fees and, consequently, lower prices offered to consumers.
“First, blockchain is an advance in goods’ delivery. I dream of a marketplace where your deliveries are fully autonomous without any delay. With the increasing development of new drones and driverless cars, you are likely to see it coming in the next years. Second, a transparency. A blockchain technology could be used to decentralize the information and transactions so that any new and used product could be tracked with a perfect history of their issues. Sadly, today some companies resell their reshaped, fixed, repackaged products under the name “new product”. Finally, I believe that one day, marketplaces will accept cryptocurrency just as the current currency is accepted. Imagine, no more VATs and exchange rates…”
At the same time, other entrepreneurs point out at some alternative priorities.
“I believe we will make some attempts to do marketplaces with blockchain, but I am not sure whether decentralized e-shops are something that have an added value right now. We will see more and more B2B marketplaces as there are still a ton of spaces for those ones. I also think that SaaS-enabled marketplaces will grow as the added value of having tools to deal with the before and after transactions are going to be much needed. Scaling a marketplace will still be very hard!”
Virtual Reality and Augmented Reality
Virtual Reality (VR) and Augmented Reality (AR) have revolutionized the fields of entertainment, education, healthcare, and, of course, marketing as well.
Virtual reality is known to be a computer-generated environment that allows users to immerse into it by simulating their physical presence. The majority of world’s top brands have already integrated VR into their marketing strategies, and this is not surprising considering the powerful opportunities brought by this marvelous tool. It allows customers familiarizing themselves with a certain product or service in a personal way, accelerating purchasing process, and offering more personalized choices to consumers.
Luxury Estates International marketplace was among the world’s first luxury real estate brokerages to implement VR in the marketing of their listings. Before, their clients had been able to look through 3D still images and have video tours of the premises. The representatives of the company say that when clients first tried VR-enabled tours, they were completely amazed by the realism and immersion. They could virtually and remotely experience the atmosphere of the luxury property, and it was an absolutely different sort of things.
As distinct from VR, AR doesn’t imply an isolation from the real world; by means of overlaying an interactive layer, it brings new components into a real world. The effects may include graphics, digital images or perception changes.
According to some opinion polls, more than 71% of shoppers would shop at a retailer more often if the latter offered AR. Indeed, it provides an impressive and exciting customer experience combined with a touch-and-feel factor. It was proven long ago that we are most influenced by things that are connected with our emotions and perceptions.
British online clothing shop Banana Flame uses the technology to transform the users’ web cameras into interactive “mirrors”. Shoppers can try on apparels in a real-time mode, adjust the position of a garment, change its color and size, and even make a photo of their image and share it with friends in social media. The innovation brought a profit markup of 182% to the company. Many other clothing stores, such as Ray-Ban and Zovi, offer the same service at their virtual dressing rooms.
“The world of work is changing with an increasingly decentralized workforce. More and more workplaces of today are likely to be working in autonomous groups or virtual teams, rather than working nine to five in the same office building. Responding to these trends is critical if businesses are to keep up with the competition. This impacts how work needs to be managed; communication and collaboration are key, information needs to be real-time and available anywhere. The future of job management within marketplaces looks like an integration and combination of market networks, the internet of things, Blockchain and AI — and this has extraordinary potential.”
The concept implies that real and virtual worlds are merged, in the result of which new environments and visualizations are created. In MR, physical and virtual objects co-exist and interact on a real-time basis.
As for now, you will hardly find the online marketplaces that extensively use this technology, but considering that the related trends are developing at a breakneck pace, it is quite possible that soon we will be able to try MR-fueled marketplaces.
It is possible to imagine that in the near future, some companies will build their MR engines and environments, which could substitute the currently used mobile apps. There would be an “Environment Store” (liken it to App Store or Google Play), where users would be able to find, let’s say, an “eBay Environment”, download it and use it in their mixed reality headsets for choosing and buying eBay goods online.
Of course, such developments would require great advancements in AI systems, development of more advanced and light-weighted MR headsets (since the ones available now are not appropriate for a comfort usage during several hours), and the readiness of the brands to involve into such experience.
“Marketplaces have exploded over the recent past in the retail B2C or C2C space, where you have a higher degree of user fragmentation and a lower barrier to entry for each user in engaging in the marketplace. Businesses have been slow to adopt, in particular in their B2B interactions, which are operationally still in a place where retail e-commerce was in the early 90s. There is already a shift in this adoption happening, but the operational business-to-business model is so deep and so unpenetrated, that in 3–5 years we are going to see a saturation of marketplaces within operational businesses. If you are looking for tectonic shifts in the “marketplace market”, IMO, this is it, as all these technologies are just tools which are mostly being applied to particular niches, leveraging data pools, which marketplaces churn out.”
To be continued…
Soon we will post the Part 2 of this article, where we will speak about some more relevant trends in today’s marketplace business. Stay tuned — we have more interesting things to tell you!