Term

What is Marketplace?

3 MIN READ

Marketplace

Marketplace refers to the point of connection between sellers and customers. This is a place where sellers can exchange goods or sell products and services to consumers. Typically, marketplaces are represented by physical locations (markets, retail stores) and online marketplaces (eBay, Craigslist). 

Online marketplaces offer various types of not only goods and services. For example, Airbnb, which is an online vacation rental marketplace, offers to rent apartments for holidays or long-term.

The difference between traditional marketplaces and online marketplaces is that latter are not limited to only one place and can operate worldwide. Also, online marketplaces function 24/7, which allows customers to look for desired goods whenever they want.

Types of marketplaces

Ecommerce marketplaces, just like physical marketplaces, unite vendors, manufacturers, and buyers under one roof, allowing them to interact with each other however they want. For example, buyers can become sellers themselves, or vice versa sellers can buy something from manufacturers using marketplaces.

In general, there are 3 marketplace models:

  • B2B (or business-to-business) marketplaces. This marketplace targets other businesses, like suppliers or wholesalers. The B2B marketplace allows enterprises to buy and sell goods from each other. Examples of these marketplaces are Mercateo, IndiaMart, Alibaba.
  • B2C (or business-to-customer) marketplaces. This model represents marketplaces that have businesses as sellers and customers as buyers. In this model, customers are direct consumers and purchase products for personal use. Unlike B2B marketplaces, B2C marketplaces offer to only purchase goods or services and not to exchange them for something else.
  • C2C (or customer-to-customer) marketplaces. This type of marketplace has individuals as buyers and sellers. Usually, such marketplaces offer goods that have already been in use for a reduced price. Such marketplaces also practice the model of the auction when a customer can place a bid and if it wins, he will purchase this product for the price offered. Examples for this model of marketplaces include eBay, Craigslist, Wish etc.

Types of management 

Different types of marketplaces follow different management approaches. Typically, marketplaces can be fully managed, unmanaged, and lightly managed.

  • Fully managed marketplaces have strict regulations to ensure the quality of services. Fully managed marketplaces are suitable for the B2C model. 
  • Lightly managed marketplaces follow the practice when the marketplace interferes only to provide quality assurance. For example, Booking.com allows users to communicate freely with property owners on the website and can also ask for more detailed information regarding the property if it wasn’t specified.
  • Unmanaged marketplaces let users manage operations themselves. The problem with this type of management is that the relationships between customers and sellers are based on mutual trust without any additional guarantees.

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