Online Marketplace Definition: What Is an Online Marketplace

Bradley Johnson
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    Whether you’re researching different eCommerce business ideas or learning how to make wholesale sales, you’ve probably come across the term marketplace. Though the term itself seems straightforward, there are subtleties between marketplaces that are important to understand.

    Listing products in a relevant marketplace is the difference between a few sales and dozens or hundreds. If your goods aren’t available where relevant buyers are looking, you’ll spend too much time and energy trying to win attention for your business. 

    Let’s look at the definition of marketplace in general, different types of marketplaces, and what they are used for. 

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    What Does Marketplace Mean?

    A marketplace is any location, whether in person or online, that facilitates the exchange of goods between buyers and sellers. A marketplace business model differs from that of a retail store, because transactions happen in both directions, not just one. Marketplaces may offer just about any kind of product for sale, from car parts and athletic equipment to party supplies and children’s toys. There are several types of marketplaces which we’ll break down in detail later in this post. 

    Online marketplaces are becoming increasingly popular, as starting an eCommerce business is more affordable than it’s ever been. eCommerce website examples like Amazon, Etsy, Walmart, eBay, Wayfair, and Chewy have become some of the leading online marketplaces for retailers. 

    Some marketplaces impose seller requirements to ensure only brands of a particular quality can sell. If a marketplace does enact this type of requirement, it’s usually limited to specific kinds of products or industries. 

    Marketplaces extend beyond retail environments, as well. They help bring high demand products to the customers who are driving purchasing trends. 

    BlueCart’s online marketplace offers you powerful eCommerce solutions under one roof. Get access to 95,000+ qualified buyers and our industry-lowest payment processing fees. Request a demo now to see what BlueCart can do for you. 

    What Is An Online Marketplace

    An online marketplace is any website, marketplace app, wholesale directory, or other eCommerce website where buyers and sellers exchange goods through the Internet. Marketplaces attract various kinds of customers and sellers depending on what type of marketplace it is. 

    Some marketplaces operate solely on a direct to consumer basis, as the businesses listed on the site sell retail goods. In many cases, an eCommerce store user interface (UI) is built into the marketplace. In other cases, business owners may use an eCommerce website builder to connect the marketplace to their products. 

    Wholesale directories are another form of online marketplace. A directory is where wholesale suppliers list their goods for sale. Retailers, distributors, and small business owners research products they need in wholesale directories and buy in bulk for resale.

    Wholesale items to sell span dozens of categories, including clothing and shoes, electronics, recreational goods, and food and drink. There’s almost no retail product that doesn’t first come in wholesale form, as it’s one of the primary ways mass-manufactured products reach the public. People sell items online because it's one of the best side hustles to get into.

    Since it’s expensive to buy wholesale products due to an industry standard called minimum order quantity (MOQ), distributors and retailers must know how to calculate markup. Without markup, retailers aren’t profitable. Margin is a central part of wholesale price vs. retail price and should be included in any B2B business model.

    A wholesale marketplace is yet another type of online marketplace. But you may be wondering, “What’s the difference between a wholesale directory and a wholesale marketplace?”

    Where wholesale directories are designed for professional purchasers to have an easy time finding sellers, wholesale marketplaces are more open-ended. A business owner who has products that fit the marketplace can list their products with a seller account. 

    Wholesale marketplaces offer different competitive advantages, too. Examples include a particular type of buyer, number of buyers, and bulk order discounts. Transaction, listing, and setup fees also differ based on the marketplace in question. 

    Another type of online marketplace is resale websites. These are sites like eBay and Craigslist, where anyone with an account can list products for sale. Resale sites are much less formal than wholesale directories and products can be purchased in smaller quantities. 

    Benefits of Online Marketplace

    With everyone looking at online marketplaces these days, it’s fair to wonder why people are so interested. Online marketplaces offer advantages over strictly brick and mortar shop and make it easier to reach customers with strategic effort. 

    Here are some top benefits of listing your products in an online marketplace: 

    • Easier to gain traffic. When you list products online, it’s much easier to take advantage of search traffic. Three in four consumers shop online at least once a month and that number is growing quickly. If your products are placed in a relevant eCommerce store with a strong eCommerce marketing plan behind them, you can capture website traffic quickly. eCommerce SEO, eCommerce content marketing, and eCommerce PPC are excellent ways to accomplish this. 
    • Built-in audience. Many online marketplaces have a built-in audience--the people who already shop there. This means if your product has attention-grabbing images and solves a real consumer need, a percentage of people will be interested in it from day one. Thousands of people visit popular sites each day looking for useful and enjoyable products. BlueCart’s marketplace offers access to 92,000+ buyers that are interested in wholesale goods. Create a new listing now and get your product in front of them.
    • Faster and simpler customizability. Years ago, customers only knew if you had new products--or discontinued ones--if you updated your product catalog. These days, not only can you make a digital catalog, you can update product information on the fly. Using an online marketplace saves hours of time in your weekly business operations. Just make sure you choose one with good eCommerce product catalog design like BlueCart.
    • Better for retaining customers long-term. Shopping at an in-person marketplace is great when you can, but it has major marketing downsides. Unless you get someone’s contact info, as soon as they leave a physical location they likely won’t return. On the flip side, running your business online gives you several ways of retaining customers. eCommerce email marketing is just one method of keeping online shoppers coming back for more.

    Types of Offline Marketplaces

    In addition to online marketplaces, the definition of marketplace is incomplete without discussing offline marketplaces. Brick and mortar shop shopping experiences are still popular with customers, and they can be a boon for your business when used right.

    • Retail stores. The biggest and simplest example of offline marketplaces is retail stores. Many companies offer exclusive in-store discounts, limited edition products, and other perks that can’t be found online. Though retail environments don’t open their doors to any seller, it’s still a powerful way of reaching customers. If you're a wholesaler, build relationships with retailers as soon as you acquire a wholesale license so they can see why they should carry your goods. 
    • Street vendors and flea markets. Love finding a rare deal in person? You can still do so at the thousands of flea markets and street vendor events that happen yearly. If you’re normally selling food online but don’t have a physical presence, you can get an influx of new customers with a food truck at seasonal events. This is a form of online to offline marketing. The inverse holds true for businesses that haven’t built their digital presence yet. 
    • Farmers’ markets. Shopping farmers’ markets is an age-old way to pick up fresh produce and discover new producers. It’s also a great way to get your goods in front of new customers, if it’s the right audience. Part of the appeal of these markets is their seasonality. If you take advantage of this window of opportunity, it can strengthen your online business and vice versa. 
    • Industry trade shows. Despite the comparatively little attention they receive, trade shows are still a great way to discover products. Depending on what they sell, some vendors bring samples or a limited quantity of products for buyers to examine. If the trade show you’re attending allows products to be bought and sold, take advantage of this opportunity. 
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    Finding the Right Market for Your Products

    Understanding the right market fit for your goods and selling them efficiently takes time. Choosing the best online marketplace to sell in is a crucial choice in your business journey. In addition to a strong brand presence in your market, it’s important to build relationships early so customers can become familiar with your work. 

    Develop the highest quality products you can and sell them with a strong eCommerce marketing strategy. The more buyers see how much your goods rock, the easier it will be to learn how to sell on marketplace and increase eCommerce sales

    Frequently Asked Questions about Marketplaces

    Marketplaces have become a major part of online trade. Their role in the future is expected to be even bigger. There are constantly new innovations in eCommerce. The answers below might help you stay on track with online trading. 

    What Is the Difference Between Marketplace and E-commerce?

    The main difference between marketplaces and eCommerce websites is that the former gives multiple sellers the opportunity to offer their products. Ecommerce websites are usually run by a single company that offers their products through this online channel. Some eCommerce stores also offer products from other sellers. This can be done either via dropshipping or consignment. Some websites start as eCommerce projects and turn into marketplaces. Amazon is a good example of this model. 

    Are Marketplaces Profitable?

    Yes, it can be a profitable business model to run a marketplace. Some marketplaces charge their customers subscription fees to sell products via their platform. Other marketplaces charge sellers a commission for every deal. Ads are another revenue stream for marketplaces. Since these platforms generate a lot of traffic, they can sell advertising space via Google AdSense or other platforms.

    Can Businesses Sell on Multiple Marketplaces?

    Yes, they can. In fact, it’s recommended that businesses sell their products on as many marketplaces as possible. That includes platforms that are niche-specific and platforms that sell all product categories. Keep in mind that some of the most popular platforms charge high commissions for every sale. That might significantly reduce your profitability.

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