Marketplace Model
“The
future lies in the hybrid marketplace-led model where the seller is also
selling his own labels as well as provides a platform for merchants and sellers
to sell their products. If a seller has to make available large merchandise to
his buyers, it has to adopt a marketplace-led model. The real use of internet
would be if the small merchandisers get a chance to sell their products to a
wider range of audience,” said Vivek Gaur, CEO, Yepme.com
Flipkart
had based its business model on Amazon when it was launched in 2007. But, now
it has completely changed its business model last year. Inspired by Alibaba, it
now claims that reason was due to the Indian market, where customers and income
levels are quite similar to that of China. What does this really mean?
It
means that the product or service is provided by multiple third parties,
whereas transactions are processed by the marketplace operator. Transparency is
ensured by applying the same set of rules to all participants, and because
buyers and sellers know who they are dealing with. Trust is provided by
features such as buyer and seller ratings, reviews, and integrity / guarantee
of payment.
What
are the advantages and disadvantages of marketplace model?
Advantages:
- · It can sell a large number of stock keeping units (SKU) without maintaining any inventory
- · Operational efficiency improve as some overheads are transferred to the seller
- · Being a marketplace provider allows you to focus on developing eCommerce technologies
Disadvantages:
- · It is much tougher to implement product quality control in a marketplace model, as the seller is primarily responsible for the products
- · With a multitude of sellers, brand salience is one of the first things to get hit in the marketplace model
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