7 Reasons To Launch An Online Marketplace App
- By Aakash Mangi
Over the years, E-commerce has become an integral part of the retail framework worldwide. Like most other industries, the retail sector also has revolutionized from the advent of the internet. Due to the continuous digitization of society consumers from almost every country are enjoying the perks of online transactions.
Due to the regular increase in internet access and adoption rate worldwide, the number of digital buyers is increasing every day.
As per Statista, in 2020, more than 2 Billion people purchased goods and services online, and in the same year e-commerce sales crossed $4.2 Trillion worldwide!
At this time entering the retail space with a Multivendor Marketplace App could be one of the most profitable businesses today if done correctly!
What Is An Online Marketplace App?
An online marketplace app basically serves as a medium between consumers and individuals/businesses that offer products and services in the business-to-consumer and the business-business sectors.
The founder or owner of an online marketplace generally does not offer any products or services of their own. Their task is to only give a platform for participants of the marketplace to interact with each other.
There are primarily 4 types of marketplaces:
Vertical Marketplace: This type of marketplace act as a platform for vendors that sell the same type of products.
Horizontal Marketplace: This type of marketplace act as a platform for selling different types of products that have similar characteristics.
Global Marketplace: Global marketplaces have no restrictions at all and sell all kinds of products and services from various suppliers
Hybrid Marketplace: These types of marketplaces sell their own product as well as provide a platform for other sellers to sell their products and complete transactions.
7 Reasons To Launch Your Own Online Marketplace App
Taking into account the growth of online marketplaces and areas that are yet to be tapped by this technology, businesses can make use of the marketplace business model and develop their own unique solutions.
Here are the 7 main reasons why you should launch your own online marketplace app in 2022!
1. High Efficiency
An online marketplace app offers a high degree of efficiency when compared to an eCommerce website at an almost similar cost. Even though the logic behind an online marketplace is rather complex, the functionality of an online marketplace can satisfy the specific needs of multiple vendors.
2. Highly Scalable Business Model
An online marketplace app carries lesser financial risk as compared to an eCommerce store because there is no investment in inventory. Marketplaces expand very quickly most of the time.
However, if traffic increases quickly, you may need to add more vendors to cater to the demand. Therefore, the greatest challenge for a marketplace owner is to balance the supply and demand of products and services.
Top-quality vendors attract more and more customers and at the same time, a huge and growing customer base attracts more top-quality vendors.
3. Easier Data Analysis
Having a marketplace app makes it easier for owners to track their sales with precise metrics. For example, using metrics an owner can find out which products or services are in high demand and can find out which vendors are gaining more popularity.
Through this data, owners can figure out the products and services that are actually gaining traction and promote them accordingly.
4. Complete Automation Of Processes
The main source of revenue for marketplaces is the commission it receives from sales generated from their platform.
To keep track of commission successfully requires a high level of automation and this is catered to by an online marketplace app. The requirement for paperwork is negligible as everything is done automatically through the app.
5. Low Risk
It is easily understandable that anything that you invest a lesser amount of money is a less risky venture when compared to the one where you have invested more money. This logic is applicable to an online marketplace business when compared to an offline store as well.
Since an online marketplace business has a lower cost to set up, it comes with a lower risk. Even in the case of the business model, the business model of an online marketplace business is much more scalable than an offline store if the inventory is properly maintained.
The only risk that comes with an online business is satisfying your customer’s demand if your customer base expands rapidly and that is not really a bad thing for any business as long as you are ready to onboard more quality vendors and satisfy the consumer demand.
6. Boosted Marketing
When it comes to any form of online business, marketing plays a very important role in its success as offline stores even though offline stores have lower visibility, they still may get customers that happen to cross the store or are referred to by acquaintances.
I cannot say the same for an online marketplace. Due to their popularity in today’s time, getting your online store to be distinguished from the rest needs full-blown marketing efforts. With the move to the digital landscape, there are several opportunities for promoting your online marketplace.
You can use banner ads on websites relevant to your niche and also employ SEO practices to make your prospective customers aware of your products. There are several other ways too like social media marketing, display advertising, email marketing, and many more.
What you need to do is come up with a smart marketing campaign that attracts customers to your online marketplace and makes them aware of your products and services.
7. Higher Profit Margins
Having an online marketplace business is all about growing your reach. With a greater reach, more consumers will buy your products and services and that will help you gain higher profit margins.
The higher profits in online business are not just due to the high reach and sales but also due to the lower cost of setting up the business plays an important role.
For example, if you start an offline store, you have overheads like the monthly rent but if you run an online marketplace business there is no need to worry about any such unnecessary overheads.
Convenience and reliability to buy and sell things are needed by businesses as well as customers and your online marketplace business can deliver just that.
If you build an online marketplace app, you can cater to almost any niche and address. Online marketplaces have a lot of potential and gain a lot of interest from vendors who are always finding new ways to promote and sell their products and services through as many channels as possible.