Start Your Own Marketplace

Marketplaces are still hot. In the B2C sector, they have existed for two decades with major players like Amazon, Bol, as well as various retailers such as Wehkamp.nl  , Blokker, H&M, and Fonq. C2C marketplaces have also been around for quite some time, including platforms like Marktplaats/eBay, Etsy, Uber, and Airbnb. In B2B markets, however, numerous initiatives have emerged in recent years with their own marketplaces in various forms, such as Bidfood, Alibaba, ThomasNet, and Amazon Business.

What makes setting up a marketplace attractive, often alongside an existing business? What are the different forms? And what should you consider when contemplating launching a marketplace? We spoke with Erik Jansen, Partner at Squadra, and Marco de Vries, Squadra Associate, both from the Digital Commerce practice. In this first part, we focus on the benefits of having your own marketplace and strategic considerations. Part 2 will cover the different forms and setup choices. Part 3 will address common pitfalls.

When Do We Talk About an Online Marketplace?  

Erik: “An online marketplace is simply an online space where buyers and sellers come together to conduct transactions. The marketplace acts as an intermediary and facilitates the exchange of goods, services, or information between these parties.” Marco adds: “The main advantage of a marketplace is that it provides a centralized environment where a seller can reach a large number of buyers, and buyers, in turn, have access to a wide range of products or services from different sellers.”

What Are the Benefits of Having Your Own Online Marketplace?  

“Erik begins, “Setting up your own marketplace benefits your business, your customers, and your partners in three main areas.” “First, a broader and deeper assortment, second, more customer data, and third, the opportunity for additional services.”

Marco: “First and foremost, a marketplace offers opportunities for a broader and deeper assortment, thereby enhancing your value proposition for customers. After all, they get more choices and it enables ‘one-stop shopping’. For your organization, this leads to higher conversion and/or larger orders.” Erik continues, “And a broader assortment can make you attractive to new customer segments. Partners then have access to new customer segments, expand their networks, and reduce their Customer Acquisition Costs (CAC). Moreover, you don’t have inventory/price risk or procurement costs and capital commitment.”

“As a second benefit, we mentioned more customer data,” Erik continues. “More customer visits lead to a more comprehensive understanding of their buying and search behavior. For your own organization, this enables better personalization and improvements to the customer journey. For customers, this means better offers, more relevant search results, lister pages, and alternatives.” Marco: “And also for partners, there is more insight into customers, and it provides a benchmark with their own website and other channels.”

“Third, we often see an opportunity for additional services and thus additional revenue,” Marco continues. “Think of product data services, storage, additional customer data, or paid positions on the website for partners. But also additional logistics services for customers, such as faster delivery or smaller delivery windows.” Erik adds, “For your organization, extra services mean extra income, better utilization of your own fulfillment system, and lower delivery costs per shipment. For customers, extra services mean fewer invoices and deliveries. Also, purchase data is only shared with one party, which combats spam and ensures privacy. For partners, additional services can lead to lower fulfillment costs and better service for customers.”

What Are the Strategic Considerations Behind Having Your Own Online Marketplace?  

“Erik begins, “Indeed, setting up your own marketplace is primarily a strategic consideration.” “The implementation requires a significant amount of time, money, and ongoing management attention, so there needs to be a strong justification for that investment. There are two strategic considerations driving the decision to embark on the adventure of having your own marketplace: 1. gaining more control over your customer base and the chain, and 2. strengthening your brand and image.”

Marco adds, “With your own marketplace, you create a better customer experience, more control over customer segments, and thus greater control. More customer data provides deeper insights and offers an opportunity to enhance the customer experience throughout the entire customer journey. A stronger proposition results in more repeat customers and simultaneously makes it harder for competitors to enter the same customer group. Once you initiate this positive cycle, your role in the chain becomes increasingly significant.”

Erik: “The second strategic consideration is branding and innovation. Successfully establishing a robust online marketplace for customers and partners is a significant challenge that demonstrates leadership. When done well, it builds trust in your brand and positions your brand as a market leader. Additionally, having your own marketplace opens up opportunities for innovation. There are more possibilities to experiment with new products and services, which strengthens your competitive position and increases customer satisfaction. For instance, the marketplace assortment provides customers with easy access to niche and distinctive products, including unique long-tail items.”

Conclusion: Your Own Marketplace  

In this blog, together with Erik and Marco from Squadra E-commerce, we’ve explored the world of online marketplaces, from B2C to B2B. We discussed the benefits of having your own online marketplace, such as offering a broader assortment, more customer data, and creating opportunities for additional services. We also delved into strategic considerations, such as increasing control over your customer base and chain, and strengthening your brand and image.

In part 2 of this series, we will delve deeper into the different types of marketplaces and the choices involved in setting them up. Part 3 will discuss common pitfalls and provide tips for successful marketplace implementation. Whether you have an existing business or are starting a new venture, owning a marketplace can open doors to new opportunities and growth. It’s important to carefully consider how a marketplace fits into your business strategy and the value it can add to both your organization and your customers and partners. Stay tuned for more insights and tips in the upcoming parts of this series, ‘Start your own Marketplace!’