Notice boards
It all started with the era of bulletin boards. They are also called classifiers, or listings. In fact, these are the “yellow pages” that have been transferred to the Internet.
Their main task is to help with the search for a suitable offer and the subsequent opening of supplier contacts. Further communication between the supplier and the consumer, the meeting agreement and the transfer of money took place offline.
The marketplace catalog was disorganized and difficult to navigate. And the entire responsibility for safety and quality lay with the consumer himself.
Thematic marketplaces
Thematic marketplaces appeared after the classified ads. In fact, these are the same message boards, but in a narrower niche. And by focusing more narrowly on one of the verticals, they were able to provide a slightly better customer experience.
At this stage, reviews, user profiles, certified / verified suppliers, as well as an online request for a product / service already appear, i.e. not just a phone number was opened, but there was a request through the platform.
But using the marketplace was mostly just about finding the right supplier. All further communication with the provider took place directly, past the platform.
In fact, the service for consumers became a little better than that of message boards, but they still had many responsibilities: independent search for a supplier, choosing among different options, communication, offline transaction.
And at this point, a network effect from reviews appears: the more reviews, the more tasks the supplier receives, and the more tasks the supplier has, the more reviews grow.
UBER for X
Then came the era of “UBER for X”, or the era of on-demand marketplaces.
The proliferation of phones has led consumers to develop a culture of ordering everything “on demand.” With the “uberification” of many markets and services, the smartphone has become a remote control for ordering anything from cookies to lawyer services.
For food delivery from supermarkets, there is Zakaz.ua, for washing things – Washio, for finding a tutor – Buki.
Here, real-time user communication already appears. Everything is needed here and now. No one wants to wait more than ten minutes for an answer.
On-demand marketplaces tend to have good liquidity due to their focus on one category. Only taxis, only tutors, only cleaners.
Here, there are already more responsibilities on the part of the platform: matching, pricing, financial support for the transaction, guarantees and security.
There is a reuse of providers for related services. For example, UberPool – when a taxi turns into a mini-bus.
At this stage, the focus shifts from the supplier to the marketplace. If earlier they said “Order Salateira through Eda.ua”, now the phrase “Order a meal at Eda.ua” is increasingly heard.
But not everything turned out rosy. Many of these “Uber-like” marketplaces died because they never managed to provide sufficient liquidity on the platform.
Managed Marketplaces
Managed marketplaces take on even more additional operational responsibilities.
They take full responsibility for the quality of content. Now there are already a lot of marketplaces that do not give you the opportunity to sell a car on their platform, but they themselves buy your car, branded clothes, and even a house.
Of course, this is even more convenient for users, but keep in mind that the cost of a transaction for the marketplace itself increases significantly.
To compensate for operating costs, such marketplaces themselves set prices for purchased goods, and the commission for their services reaches 45%.
This model is relevant for niches and services that have high requirements for trust.
Examples: Beepi, Dodo Pizza, TheRealReal.
SaaS marketplaces
Now a new segment of marketplaces has also appeared, which offer their suppliers some useful and most often free software, and then involve them in participating in the marketplace. This is the so-called “come for the software, stay for the customers” approach.
The best example here is the OpenTable project, which provides restaurant reservation solutions. Connecting each new restaurant to the network helps the marketplace build liquidity.
Our local example is Carbook, which allows you to sign up for any service station or car wash. Or Yclients.com, which helps you make appointments for a hairdresser or beauty salon.
The advantage of this type of marketplace is that free software attracts and quickly activates new providers. In a fairly competitive market where customer acquisition is very expensive, free software creates a well-protected new market with competitive advantages.
But this strategy will only work if this vendor really needs such software. It is also important that the scope of use of suppliers is disposable. In OpenTable, the marketplace is growing well due to the fact that people are always looking for some new interesting restaurants. This approach will not work in areas where trust and long-term relationships are important (like ordering a doctor).
And now, when reviewing the history of the development of marketplaces, the trend is clearly visible. Marketplaces are becoming more and more complex mechanisms, acquiring additional operational obligations. At the same time, they are of increasing value to their users. And then it will be even more interesting.
Commodity marketplaces will take over the entire customer service cycle. Storage of goods, delivery, payment – all these processes will be absorbed by marketplaces. Even after-sales service will be carried out by the platform.
At the next stage, marketplaces will aim at regulated services. These are niches that were previously avoided due to the need for suppliers to have special permits and licenses. But now these niches are blue oceans.
Already, there are more and more marketplaces that cover certified and licensed services. These are medical, engineering, accounting, training, legal, cosmetic services, etc.
Licensing sets a certain standard, but at the same time sets many restrictions. For example, the complexity of obtaining a license and the associated costs.
New types of marketplaces will expand the supplier market. If the niche requires a legal entity for the supplier, the marketplace will help you open such a legal entity in a few clicks. Need a license – please!
New marketplaces will significantly expand their geography due to new technologies. Now telemedicine is developing with might and main. Doctors from Kyiv are already helping the Ukrainian diaspora in Europe and America. And some marketplaces are even starting to delegate part of the processes to artificial intelligence. For example, diagnosing skin defects using your smartphone’s video camera.
As you can see from the trend, an interesting future awaits us. Marketplaces are gradually penetrating into all sorts of niches and are slowly taking over the world.
Researchers from the E-Commerce Foundation claim that by 2020, 39% of online sales will come from global marketplaces. This indicates the growing influence of marketplaces on international e-commerce.
Managed marketplaces take on even more additional operational responsibilities.
He takes full responsibility for the quality of the content. Now there are already a lot of marketplaces that do not give you the opportunity to sell a car on their platform, but they themselves buy your car, branded clothes, and even a house.
Of course, this is even more convenient for users, but keep in mind that this significantly increases the cost of the transaction for the marketplace itself.
To compensate for operating costs, such marketplaces themselves set prices for purchased goods, and the commission for their services reaches 45%.
This model is relevant for niches and services that have high requirements for trust.
Examples: Beepi, Dodo Pizza, TheRealReal.
