What Is a Marketplace? Should You Sell on One?

Marketing strategies keep changing to fit market demand and customer tastes. Over the history of marketing, it has been carried out in many forms to suit each period. Today the internet is highly developed, and with it marketplaces have grown. So what is a marketplace? Should you sell on a marketplace? Let's Mona Media find out in the article below.

What is a marketplace?

A marketplace is a market that connects buyers and sellers through a system of trading platforms. Think of traditional trade, which took place in markets where buyers and sellers met in person to trade goods.

A marketplace plays a similar role to a market, in a different form. On these e-commerce platforms, sellers and customers still buy and sell as usual. But they don't have to travel or meet in person. They only need to exchange information online, so everything happens faster.

On a marketplace you also pay to rent a selling spot, and a wide variety of goods is on display. Buyers find products more easily without spending much effort or shopping time. You can simply sit at home, open any trading platform and shop.

Today you can see many marketplace models that you probably already use regularly. These business models are growing fast and are used by many people, such as Shopee, Lazada, Sen Đỏ, Tiki and others.

The marketplace model has also done well on social media such as Facebook and Instagram, and on a few apps like Zalo. Marketplaces are growing very strongly and delivering positive results.

This model benefits both sellers and buyers by creating favorable conditions. Sellers don't have to worry about finding premises or paying high rent. Buyers shop more easily because they don't have to travel much and can see many more products.

Types of marketplaces

There are several kinds of marketplaces. Based on their characteristics, they can be divided into the types below.

By type of business partner

Based on who does business with whom, marketplaces fall into two types:

C2C marketplace model

This model connects individual or household suppliers with customers through a trading platform. With C2C, as long as you have a product to sell, you can open a shop on the marketplace easily.

C2C supports people who are new to business or sell on a small scale and don't have enough capital to open their own store or build their own website. You can set up online shopping channels on Facebook, Instagram, or a stall on e-commerce platforms such as Shopee.

These e-commerce platforms give you a stall with full functions for selling products, such as shop management, order checking, product management and revenue tracking, so you can reach many types of customers.

B2C marketplace model

The B2C model is larger than C2C, connecting many big businesses and well-known brands with customers through an e-commerce platform. You can tell the two types apart by the traits of the shops, such as brand recognition, scale and products.

Most B2C partners on a marketplace open stores in the platform's Mall section, which marks them as official, quality stores. For example, Shopee has Shopee Mall and Lazada has Lazada Mall. All stores in a Mall are tightly controlled and face higher requirements than C2C.

By products sold

• Vertical marketplace: the same type of product or service, offered by many different suppliers. An example is the Grabbike marketplace model: you book a motorbike through the app, with many partners all able to provide motorbike transport.
• Horizontal marketplace: offers many different products that share the same type, features and function. For example, ShopeeFood specializes in food and drink, with a wide range of items such as fast food, noodles, pho, rice dishes and drinks.
• Hybrid marketplace: this type sells many kinds of products and services to meet market demand. Tiki is an example: it sells its own products and also hosts distributors selling other goods such as clothing and cosmetics.

Should you sell on a marketplace?

Given how popular and fast-growing marketplaces are, the question is whether you should go this way. To answer it, you need to look closely at your business conditions and what a marketplace can offer.

Benefits of selling on a marketplace

Selling on a marketplace saves sellers a lot of cost. You don't need much capital to rent premises, or to spend heavily on advertising your store. Setting up a stall on a marketplace is quick and costs only a small amount.

You also don't need to worry much about advertising, because marketplaces reach a very large number of customers. Customers search for products in the results the platform provides. The higher your products and services are rated, the better your visibility.

Selling on a marketplace also saves store management costs. Sellers can handle closing orders, customer care themselves without hiring staff. As your store becomes better known, you can hire extra help.

Marketplaces will suggest shipping partners and support with packing. These tasks run as a professional, fast chain. That is why selling on a marketplace brings sellers many benefits.

Businesses become better known and earn more customer trust when they sell on a reputable marketplace. The platform's policies weed out sellers who are careless about their products and services, which protects quality.

As a result, consumers tend to shop on trusted sites that are well rated and have customer support policies. On the large e-commerce platforms today, you can see commitments on product quality and refunds for poor-quality products or bad service.

Limitations of marketplaces

The first thing to note is that competition on a marketplace is extremely high. Because marketplaces are so popular, many people choose this way of selling. Search for any product and you will be surprised to find hundreds of thousands of results. Your product has to stand out and be rated highly by customers.

For every product sold, you pay the marketplace a fee called commission. Fees differ by product type and where you sell, so weigh them up before you start, and find a supply source with a price that fits your situation.

As you can see, selling on a marketplace is the choice of many people today. However, you shouldn't depend on it too much. Build your own website or store and combine it with other marketing strategies to get better results and more room to grow.