E-commerce has exponentially evolved, since 2004, with the rise of eBay and Craigslist. It has changed the way sellers and buyers come into contact and make a deal.
Most people now rely on going online rather than on a physical store to shop. And even more in this Covid times.
Digital marketplaces are not restricted to a specific entity. And, that’s the best part about it. Anyone can enter the industry and make profits if done right. It is the one-stop solution for both buyers and sellers to consume and provide goods and services.
Building up a successful digital marketplace is not as easy as it sounds. There isn’t a specific modus operandi that would lead to success. However, you can find some ways on how to win over it in the below guide.
How does it work?
The digital marketplace has quite a simple working model. The sellers over the online marketplaces are provided with dedicated spaces to manage their inventories, images, logistics, product details, and more.
On the other hand, the online buyers can have access to the seller’s inventory and product description electronically. This way, they can decide on a product and make a purchase accordingly.
While these marketplaces benefit both the sellers and the buyers, they also enjoy great revenue streams. They have an array of sources to extract revenue such as sign-up charges, through commissions, mixed models, subscription models, and product listings.
Amazon is one of the finest examples of a mixed model system and is pretty successful in its domain as well.
How to win over a successful digital marketplace?
Building up a marketplace that brings in the benefits and profits you desire may be considerably hectic. However, here is the compiled list that may raise your chances of thriving in the industry:
1) Trading liquidity
The first and foremost marketplace’s value proposition is to deliver high-quality demands to providers and excellent supplies to buyers. Basically, a marketplace is considered as good as its trading liquidity.
The suppliers have to maintain patience in the initial days of their marketplace set-up since the buyers won’t come straight away. This means the conversion rate would be low. But once the marketplace acquires the momentum, buyers’ demand will increase and so does the conversion rate.
2) Aim at providing trust and security
Trust and safety is another critical area to focus on in a marketplace. There must be transparency among buyers and sellers and a clear set of guidelines for a better experience.
For example, for online marketers, convenience messaging is one of the important aspects while purchasing. According to reports, in the USA, more than fifty percent of adult users are likely to abandon a purchase if they do not get quick answers to their queries.
That simply depicts how fragile the communication part is when it comes to sales.
Similarly, having an in-built messenger can also help buyers to directly communicate to sellers regarding negotiations or queries. This way, it builds trust and credibility among both.
3) Recurring usage of the marketplace
Retaining the buyers and sellers to your marketplace plays an important role in the overall success of your marketplace. Having a well-defined, trustworthy, and secure marketplace keeps your participants hooked.
For example, Udemy, a course provider company, hooks its users by engaging with consumers’ educational videos. Similarly, think about how well other prominent companies like Uber and Airbnb would be performing the same with their consumer base.
4) Provide value
Marketplaces must focus on providing value, establishing trust, and improving liquidity to win a better market. Initially, the buyers and sellers might come up with objections. But as long as a marketplace is providing value more than they are capturing, they can increase their profits.
5) Keep a track of performance
Keeping a track of how far you have come is the key to winning. All the key performance metrics (KPIs) such as traffic, revenue, engagement, conversion, margin, etc. are crucial parts of a successful marketplace.
Once a marketplace is winning the game, it is difficult to take over its place until some other disruptive technology enters the market. Hence, measuring KPIs can have an overall positive impact on the business.
Why implement blockchain in your marketplace?
With the huge rise in the marketplaces, it is most likely to see an upsurge with the emergence of blockchain technology. Blockchain has the potential of changing the way payments were made online.
The way online transactions are conducted is not considered to be significantly reliable. There are issues like cross-border transactions, card data security, technical integration, just to name a few, that can not be disregarded.
Blockchain when integrated with marketplaces can remove all the security complications and hence, can revamp the entire transaction system.
It incorporates a decentralized ledger that verifies, records, and tracks cryptocurrency transactions and agreements between different parties.
The decentralized marketplaces are peer-to-peer (P2P) networks that remove the intermediaries and connect consumers and sellers directly. It connects three groups of users; Producers, sellers, and consumers.
Like traditional marketplaces, blockchain marketplaces work the same. Upgraded transaction processes, no intermediates, high-level security, and transparency are what it offers.
This lets the buyers, producers, and sellers interact independently without having to be bound by any unnecessary imposed rules.
In conclusion, the internet is dominating the marketplace by providing space for buyers and sellers. And regardless to say, the online marketplaces in the last few years have seen immense overall growth. And this growth is predicted to be just expanding over the coming years. That said stepping into this business would be a smart move only if done right. Moreover blockchain might change how transactions are processed online and give serious competition to traditional marketplaces which will need some more time before it could come up with an effective solution like that of Blockchain technology. The above guide can help you reduce chances of failure when it comes to digital marketspace so take your first step now!