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The main types of marketplaces. Which one should you choose?

Arateg
Arateg is a custom software development company based in Minsk, Belarus. We take care of tech, so you can focus on core business.
Updated on ・3 min read

Today many businesses are looking for convenient channels to distribute goods and services, reach a large audience, as well as cut down marketing and operating costs. Online marketplace platforms were designed to address these issues.

Connecting vendors and customers, a marketplace allows them to make payments and orders in one place. An organization or individual doesn’t have to build and promote a website or application to deliver services but just create a profile and add relevant information.

Thanks to these advantages, marketplaces gained high popularity over the past years. McKinsey & Company revealed that nearly 80% of B2B decision-makers prefer remote human interactions or digital self-service due to reduced travel expenses, ease of scheduling, and safety.

In this context, online marketplace development is a great investment opportunity. This article describes the main types of marketplaces to help you choose the best option. Let’s get started.

Explore the key benefits of a marketplace for vendors, customers, investors, and the owner.

The main types of marketplace platforms

Online marketplace platforms are generally classified by the target audience, focus, and management approach. Although many people believe that a marketplace refers to online retailing only, it comprises plenty of sectors from education and manufacturing to healthcare and insurance.

  1. Types of marketplaces by the target audience Business-to-business marketplaces A B2B marketplace connects organizations (consumers) with other businesses (vendors), for instance, retailers, wholesalers, or manufacturers to purchase from them. By generating orders and carrying out transactions via an online marketplace platform, companies facilitate processes such as sales and procurement, as well as improve the transparency of financial deals.

Employing this type of website, providers can start delivering services much faster in comparison with other ways such as e-commerce website development or physical store opening. With a B2B marketplace, they can also expand their sales channels and attract a new audience.

Considering special aspects, organizations generally tend to buy in bulk or use services from a team of experts. As a consequence, the size of orders accumulated in the system often varies between thousands and millions of dollars. Therefore, it is crucial for customers to protect themselves from fraud and ensure high quality of service.

To increase credibility, a marketplace should take the following measures:

implement a review and rating system, so that customers can estimate the quality of services and make more informed purchasing decisions
require vendors to submit legal documents and the necessary licenses, check them
verify new users who want to register in an online marketplace platform
ask suppliers to provide consumers with a money-back guarantee, return policies, delivery details, and service terms.
Amazon Business, eWorldTrade, and Thomas are examples of popular B2B marketplaces. Aiming to increase revenues, some business-to-consumer (B2C) marketplaces like eBay have already begun offering various goods to organizations, too.

Business-to-consumer marketplaces
A B2C marketplace is an app or website that matches vendors with individual customers. A large e-commerce marketplace can be compared with a retail store where consumers can find a variety of products offered by numerous providers. For instance, Booking.com is a B2C platform that connects thousands of hoteliers and property owners with travelers across the globe.

Considering our practical experience in building B2C marketplaces, we have recently created a marketplace that enables users to book tables in cafes and restaurants. Thanks to this solution, food service providers managed to continue generating profit during the COVID-19 crisis. Another project lately delivered by our team is an online pharmacy marketplace that matches around 1,500 suppliers of medical goods with consumers.

As of today, a B2C marketplace is the most popular model that comprises giants such as Amazon, eBay, AliExpress, and Booking.com that are likely to stay monopolists for many years. Therefore, it may be difficult to attract millions of users due to high competition.

To succeed in the market, it is reasonable to build a niche marketplace. A niche targets a group of consumers characterized by similar needs and preferences. So, before online marketplace development, you should conduct research on the audience’s pain points and expectations. This will help you work out an effective marketing strategy, choose a proper monetization model, and gain a competitive advantage.

Peer-to-peer marketplaces
Peer-to-peer (P2P) or customer-to-customer (C2C) marketplaces bring together individuals enabling them to share products and services via a single platform. This type of app/website unites people with similar tastes and issues.

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