Marketplaces – what are they and how to use them in your business strategy?

“Online marketplaces” such as Allegro or OLX are a growing part of the global e-commerce market, with new platforms of this type emerging every year. How do they work in practice? Is it possible to sell everything on them or only specific products? Each marketplace has its own characteristics, but all can be effective tools for building brand awareness.

What is a marketplace?

Put simply, a marketplace is an online marketplace. It is an e-commerce platform where different sellers can display their products or services. Both companies and private users can operate in marketplaces.

There are many types of marketplace:

• B2B (business to business, transactions between companies),
• B2C (business to client, transactions between a company and a customer),
• C2C (client to client, transactions between private individuals).

They can also be divided by the type of products offered. In this case, we are talking about vertical and horizontal marketplaces. The former focus on the sale of one specific type of product, such as second-hand clothes or white goods. The latter offer a wide selection from many different sectors.

The most popular marketplaces in Poland include:

• Allegro,
• OLX,
• Amazon,
• Aliexpress,
• Morele,
• Facebook Marketplace,
• Ebay,
• Etsy,
• Vinted.

They vary in size and scope. Allegro, OLX or Aliexpress offer access to hundreds of thousands of products from various categories. Morele, for example, focuses on electronic equipment. The various portals also differ in their operating methods and fees for use (sales).

Marketplace versus price comparison

Marketplaces and price comparison sites differ in their main purpose. A marketplace is a marketplace where commercial transactions are made. A price comparator, on the other hand, is used to compare prices for specific products between suppliers or portals. In this way, the customer can choose the best offer and save time on comparing and monitoring product prices themselves.

Price comparison engines often contain redirections to auctions on specific marketplaces.

How do marketplaces work on the internet?

The basic way a marketplace works is very simple. The website is just a space where sellers and buyers meet. Its owner does not intervene in the commercial transaction in any way. All the details are agreed by its parties. This is how Facebook Marketplace, for example, works.

The largest and most popular online marketplaces, such as Allegro, offer much more extensive possibilities. In their case, the seller must be verified and meet a number of conditions before they can list their goods. In return, the platform gives access to, among other things, integrated online payments , the possibility of choosing the form of delivery or tracking the parcel. It also allows products to be sold in bulk.

Most importantly, most marketplaces also ensure the security of the transaction, protecting the buyer from fraud. It can also store products and send them to customers itself, as is done by Amazon, for example, which is also the largest seller on its platform.

Allegro, which also has its own warehouses, works in a similar way. You can buy products from several sellers and get them in one shipment – they will be combined in a logistics centre.

The differences in how marketplaces work can also be seen in how they pay for their services. Some, such as Facebook Marketplace, are free. Others, like OLX, on the other hand, charge a small fee for each ad.

A popular solution is the subscription model, where for a certain amount of money you get access to some or all of the platform’s functionalities. Another model is commission – the marketplace takes a portion of the money from the sale.

What do you gain by using marketplaces?

Exposing yourself to an already existing and popular website is, for many companies, a cheaper solution than their own online shop. It also allows you to reach a large number of potential customers at the same time.

Marketplaces are used by a huge number of users on a daily basis. It is a space where your brand can attract new customers and build greater consumer loyalty among existing ones. The marketplace also happens to be the first stop for many people in their search for specific products. Because launching and operating a profile on this type of portal is simple, many companies use it at the same time as running their own online shop. Marketplaces can be used to develop (almost) any company selling products.

In addition to being able to sell products, many virtual marketplaces also offer extensive advertising tools. They can be used for online marketing or market and price monitoring.

In addition, sales in marketplaces, especially the most extensive ones, can be easily automated. This can be done with taking orders, sending confirmations or responding to basic enquiries. This speeds up the sales process considerably, as the customer does not have to wait for a response from a consultant.

What to sell in the marketplace?

The short answer is – everything.

However, a lot depends on the type of marketplace and the products your brand offers. This does not change the fact that online marketplaces are great for selling last pieces or damaged items. They can be listed in a regular auction, so you don’t have to create another subpage in your online shop. Marketplaces are also often the first choice for people looking for these types of products.

Marketplaces are also very good platforms for selling original, distinctive and artisanal products. We are not only talking about handicrafts or paintings, but also clothing or artistic jewellery sewn in small numbers.

Marketplace versus own online shop

The marketplace and your own online shop will be most effective as complementary sales channels. However, it is important to remember that the effectiveness of sales in the marketplace depends on the visibility of the offer. In your own online shop, you can decide which products will be visible initially. With a virtual marketplace, this often involves paying for the positioning of the offer, which adds to the costs.

This does not change the fact that virtual marketplaces offer ‘out of the box’ opportunities that you would have to work for years to achieve with your own shop. Above all, they are well-established, which can result in orders coming in faster than with an online shop. For example, if the online shop is not properly positioned, orders may not appear at all. In the case of a marketplace, the website owner is responsible for the positioning.

Both sales channels allow the customer experience to be designed and measured. However, there are more possibilities in this respect with an online shop of your own. It can be created from scratch, allowing you to design your sales funnel and customer experience. With marketplaces, your brand relies on the solutions offered by the platform. In return, you get access to a large number of users whose feedback can help you better plan your product development and sales.

Advertising in the marketplace

Advertising on a virtual marketplace most often involves positioning your brand’s offer so that it appears on the first page of a search. Often, the location where you want to promote yourself and your target audience are also selected. Once the ad has been paid for and verified, it will be displayed to the selected audience.

Ads within a particular marketplace can be a very good marketing tool. Although in most cases they will lead to a specific offer, in combination they can be used to build brand awareness.

They can also help to connect with new customers. Some marketplaces prohibit or are reluctant to ‘look at’ direct linking to online shops. However, you can urge contact by email, phone or simply signal your brand.

How do you succeed in a marketplace?

Marketplaces give companies a very wide range of opportunities to operate, but to be successful in them in terms of sales and image, there are a few things to keep in mind.

At the outset, it’s worth being clear which portals will benefit your brand the most. The largest give you access to thousands of customers, but are characterised by high competition and the need to meet many requirements. This means that the effort and costs may not bring the expected return on investment. Sometimes a better option may be to use marketplaces that are local or specialised in one type of product.

The next step will be to create a sales persona. Identifying a model customer allows you to better select a specific type of marketplace. Someone who wants to buy discounted clothes will use different portals than a DIY enthusiast. When defining your sales persona, you need to keep in mind factors such as age, location, education, etc.

Next, identify the markets where your brand wants to grow. The largest marketplaces (e.g. Amazon) often have local branches, which can work to your advantage. Opening up to another country means securing another sales channel. In this case, do not forget to check the local laws and translate the content.

Care should also be taken with the sales listings themselves. The names of specific auctions should correspond to their subject matter – if you are selling a Samsung phone, you must write “Samsung phone” (not: “non-apple”) in the title. The product description should be written concisely and using benefit language. It can be interesting to use storytelling. Photographs play a big role in advertisements. Although individual portals have their own guidelines regarding their format and quality, it will always be good if they are clear and in high resolution.

It is also important to set a budget for activities and advertising. Listing, especially in large numbers, takes time, so it may be necessary to employ an extra person for this purpose. It’s also important to remember that some marketplaces charge for use, so factor this into your costs.

The final step is to start selling. It is worth researching the consumer’s path all the time. This will allow you to better tailor your offer in the future. Measuring the customer experience is also suitable for this purpose. Marketplaces provide the opportunity to rate and comment on individual offers or exhibitors. This should be used as a source of knowledge.

Marketplaces – the future of e-commerce?

The popularity of marketplaces is growing year on year. They offer customers access to many products in one place, which makes the purchasing process easier. For exhibitors, in turn, they are another sales channel and a place to build brand awareness. Although there are fees involved in using them, the effects can far outweigh them.