Gone are the days when users needed to go to a nearby market to purchase grocery items, medicines, consumer durables, electronics goods or anything in that case. Everything is available online.
It’s not only products which can be purchased online, services can also be ordered online may it be a car cleaning, housekeeping, insurance, horoscope, relationship consulting or a nanny for your kids.
Digital Marketplaces have changed the way consumer used to buy and they’ve literally brought everything online. Marketplaces have brought a convenience, affordability and accessibility through innovative web and mobile solutions.
If you check top 10 startups from any country, you’ll find minimum 3-4 startups which are marketplaces. Just to name a few, Airbnb, eBay, Uber, Tinder, Naukri, Gettyimages, Shadi, Themeforest, Amazon and list is never ending. We’ve been fortunate enough to build bespoke marketplaces for clients from various domains like Travel & Tourism, Services, Accessories, Music, electronics and
We’ve been fortunate enough to build bespoke marketplaces for clients from various domains like Travel & Tourism, Services, Accessories, Music, electronics and much more.
Fundamentally what digital marketplace does is to facilitate connection, communication and transaction among two or more entities which are on opposite side of demand and supply metrics. So a person providing services or selling product becomes a vendor and the other party who’s either consuming these services or purchasing products becomes a buyer.
The role of Digital Marketplace is to facilitate information access, let both parties communicate and decide terms of the transaction and finally let them do fair business transactions. And revenue model varies depending upon the business domain they’re operating in. So core revenue streams are subscription fees, listing fees or % on basis of transaction value. Obviously, as the platform matures they can evaluate which streams are performing well and accordingly adjust or introduce additional revenue streams.
Technically, it will require a robust platform which can handle such a massive amount of data and users, intuitive and easy search functions, proper communication options and a secure way of doing a transaction. Unlike your conventional offline buying, digital marketplaces give options to rate their experience of doing business with each other and that shows a track record for anyone else planning to do business transactions with them. So a digital marketplace is not just a traditional buy and sale platform but it’s also a community driven platform wherein both parties can make informed decisions before any transactions.
To run the marketplaces operations is not an easy task. Before you launch, you should be prepared with a proper road map of how you’ll bring users to your platform, how will you act neutral and be fair to all parties (not only to those who’re paying – mostly vendors), how will you maintain secure way of communication and transaction among both parties and above all how will you always be ready to help them out to do a business. Many founders make a mistake of simply focusing on bringing in users without proper support processes and such platform fails miserably.
Also, almost all new entrants have a misunderstanding about escrow accounts. For digital marketplaces, you really don’t need a real escrow account but you need a wallet or a gateway which can let you authorise the transaction or holds the money until another party confirms receipt of product or services. And this has to be figured out at very early stage of business model because every country has different laws about it. In India or some part of GCC, you can’t block the money while in the US, it’s easy and most of the gateways offer these options.
We at Yield has been building marketplaces for almost 8-9 years so we understand this business model so well no matter you want to build a product or service marketplace. And within next 5 years, every service or product available in the market will be part of either generic digital marketplace or niche digital marketplace.