What Is a Marketplace? Advantages and Disadvantages

Marketplaces represent one of the main places on the Internet to carry out buying and selling transactions . If you want to know more about what a marketplace is and what advantages and disadvantages it has, keep reading and we will tell you about it.

What is a marketplace ?

To understand what a marketplace is, it is necessary to start from the basis that it is a third-party actor that connects buyers and sellers on the Internet . In other words, although the company promoting the marketplace may also sell its own products in said space, what characterizes the marketplace is that it is a website or platform open to various sellers. 

In other words, it is a virtual e-commerce space where sellers can advertise their products, and buyers can see them and compare the different offers available. It is, after all, a showcase , but in an e-commerce version . For example, some of the best known marketplaces are Amazon , AliExpress or Linio , among others. 

How a marketplace works ?

The operation of a marketplace is simple and, although it may vary from one to another, most marketplaces work in a very similar way. 

In general terms, the operation of a marketplace is based on the sellers having a profile that allows them to upload the products within the platform . Below is a brief description of the product and photographs, as well as the category to which it belongs and all the information that may be of use to the buyer.

Once the ads are published, potential buyers can access them through the categories and the marketplace search bar, which allows them to search for the specific product they need thanks to the keywords associated with each ad. 

Finally, to complete the purchase, the buyer enters the data related to the payment and the seller proceeds to send the product 

Advantages of a marketplace

Marketplaces have many important advantages, especially compared to traditional physical commerce. Some of the most important are the following:

  • They constitute a sales channel that reaches all audiences , since it can be accessed anywhere in the world. You just need to have access to the Internet. 
  • They adapt to both online businesses and mixed businesses (online sale and physical sale). Selling on a marketplace does not mean that you cannot also have a physical store, so it can actually be a complement to traditional sales. 
  • It can also be sold exclusively online . This allows some businesses to dispense with having physical stores, which considerably reduces the fixed costs associated with their economic activity. 
  • You do not need to have your own online store , but you use the marketplace platform. 
  • By using the marketplace platform, this provides greater security and confidence in the transactions that are carried out. What usually has an important influence on customer satisfaction .
  • Greater security against possible pathogens : Another advantage that a marketplace offers is that it reduces direct contact between seller and buyer, which, in certain circumstances (for example, in the face of the covid-19 pandemic) provides greater security to when making transactions. 

Disadvantages of a marketplace

Although selling through a marketplace offers many advantages, it is also true that it has some drawbacks or limitations that should be taken into account. Some of the most important are the following:

  • The purchase is not immediate. When buying online, the product takes time to reach the consumer . It may only be a few hours or a few days, but it will always be necessary to transport the product in question from the distribution center to the address indicated by the customer. 
  • They require logistical processes for deliveries . Because the product must be taken from the warehouse to the customer, it is necessary to have a logistics team or outsource the service to take care of this activity. 
  • Payments are not immediate , as they are managed through the marketplace itself. This means that, in many cases, the seller receives the accumulated money from the sales on specific days of the month, and not as the sales are made. 
  • Greater competition, since other sellers offer their products in the same space . 
  • Difficulty in advertising or branding , since the seller usually only has the ability to edit their own profile and their own ads.

Conclusion

The most important thing when it comes to understanding what a marketplace is is to understand that it is not an online store, but an online space where many sellers offer their products to potential buyers. In addition, it is also important to understand that, although there are many advantages they offer, they also present a series of specific limitations that should be known before starting the sale through these channels.

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