Online marketplace

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An online marketplace (or online e-commerce marketplace) is a type of e-commerce website where product or service information is provided by multiple third parties. Online marketplaces are the primary type of multichannel ecommerce and can be a way to streamline the production process.

Contents

In an online marketplace, consumer transactions are processed by the marketplace operator and then delivered and fulfilled by the participating retailers or wholesalers. These type of websites allow users to register and sell single items to many items for a "post-selling" fee.

Because marketplaces aggregate products from a wide array of providers, the selection is wider, and availability is higher than in vendor-specific online retail stores. Some online marketplaces have a wide variety of general interest products that cater to almost all the needs of the consumers, others are consumer specific and cater to a particular segment. Online marketplaces became abundant in 2014.

B2B online marketplaces

Business-to-business (B2B) online marketplaces are platforms that allow companies to buy and sell products or services to other businesses. These marketplaces typically focus on a specific product or service category and are used by businesses to find suppliers, negotiate prices, and manage logistics.

Some examples of B2B online marketplaces include VerticalNet, Commerce One, and Covisint, which were some of the earliest B2B marketplaces to emerge in the early days of e-commerce. More contemporary B2B marketplaces include EC21, Elance, and eBay Business, which focus on specific product or service categories and facilitate complex transactions such as requests for quotations (RFQs), requests for information (RFIs), and requests for proposals (RFPs). [1]

Online retailing

A Lazada warehouse in Cabuyao, Laguna, Philippines in 2018. Third-parties can ship inventory to customers from Lazada's warehouses and sell their products through Lazada's online marketplace. Lazada Laguna warehouse.jpg
A Lazada warehouse in Cabuyao, Laguna, Philippines in 2018. Third-parties can ship inventory to customers from Lazada's warehouses and sell their products through Lazada's online marketplace.

Online marketplaces are information technology companies that act as intermediaries by connecting buyers and sellers. Examples of prevalent online marketplaces for retailing consumer goods and services are Amazon, Taobao and eBay. On the website of the online marketplace sellers can publish their product offering with a price and information about the product's features and qualities. Marketplace sellers often utilize a marketplace integrator or channel integration software [2] to efficiently list and sell products across multiple online marketplaces. Potential customers can search and browse goods, compare price and quality, and then purchase the goods directly from the seller. The inventory is held by the sellers, not the company running the online marketplace. Online marketplaces are characterized by a low setup cost for sellers, because they do not have to run a retail store. [3] While in the past Amazon Marketplace has served as a role model for online marketplaces, the expansion of the Alibaba Group into related business such as logistics, e-commerce payment systems and mobile commerce is now trailed by other marketplace operators such as Flipkart. [4]

For consumers, online marketplaces reduce the search cost, but insufficient information on the quality of goods and an overloaded goods offering can make it more difficult for consumers to make purchasing decisions. Consumers' ability to make a purchasing decision is also hampered by the fact that an online marketplace only allows them to examine the quality of a product based on its description, a picture and customer reviews. [5] Another characteristic of online marketplaces is that the same product can be offered by several merchants. In this case, consumers can often make the selection of a merchant with the support of reviews of that merchant, for example. Despite many conceivable factors influencing merchant selection, such as convenience, seller ratings, delivery options and a wider selection of goods, [6] [7] customers choose primarily on the basis of the lowest price for a particular product. [8]

For services and outsourcing

There are marketplaces for the online outsourcing of professional services like IT services, [9] search engine optimization, marketing, and skilled crafts & trades work. [10] Microlabor online marketplaces such as Upwork and Amazon Mechanical Turk allow freelancers to perform tasks which only require a computer and internet access. [11] According to Amazon, its Mechanical Turk marketplace focuses on "human intelligence tasks" that are difficult to automate computationally. This includes content labelling and content moderation. [12]

Microlabor online marketplaces allow workers globally, without a formal employment status, to perform digital piece work, such as classifying an image according to content moderation guidelines. Gig workers are paid for each task performed, for example US$0.01 for each moderated image. Gig workers accumulate payment on the microlabor platform. [13]

The sharing economy

An Uber driver in Bogota, Colombia with the Uber app on a dashboard-mounted smartphone Uber ride Bogota (10277864666).jpg
An Uber driver in Bogotá, Colombia with the Uber app on a dashboard-mounted smartphone

In 2004 Yochai Benkler noted that online platforms, alongside free software and wireless networks, allowed households to share idle or underused resources. [14] As the sharing economy inspires itself largely from the open source philosophy, [15] open source projects dedicated to launching a peer to peer marketplace include Cocorico [16] and Sharetribe. [17] In 2010 CouchSurfing was constituted as for-profit corporation and by 2014 online marketplaces that consider themselves part of the sharing economy, such as Uber and Airbnb, organized in the trade association Peers.org. [18] In 2015 Alex Stephany, the former CEO of online marketplace JustPark, defined the sharing economy as the economic value arising from making underutilized assets available online. [19]

Criticism

A 2014 study of oDesk, an early global online marketplace for freelance contractors, found that the service outsourcing of microwork increased opportunities for freelancers regardless of their geographic location, but the financial gains for most contractors were limited as experience and skills did not translate into higher payment. [20]

A general criticism is that the laws and regulations surrounding online marketplaces are quite underdeveloped. As of consequence, there is a discrepancy between the responsibility, accountability and liability of the marketplace and third parties. In recent years online marketplaces and platforms have faced much criticism for their lack of consumer protections. [21]

Market economy

In 1997 Yannis Bakos studied online marketplaces and came to regard them as a special type of electronic marketplaces. He argued that they reduce economic inefficiencies, by lowering the cost of acquiring information about the sellers' products. [22]

The operators of online marketplaces are able to adapt their business model because of the data they hold on the platform users. Online marketplace operators have a unique ability to obtain and use in their economic decision making personal data and transaction data, but also social data and location data. Therefore academics have described online marketplaces as new economic actor, or even as a new type of market economy. In 2010 Christian Fuchs argued that online marketplaces operated informational capitalism. The inherent feedback loop allows the operators of online marketplaces to grow their effectiveness as economic intermediaries. In 2016 Nick Srnicek argued that online marketplaces give rise to platform capitalism. [23]

In 2016 and 2018 respectively, Frank Pasquale and Shoshana Zuboff cautioned, that the data collection of online marketplace operators result in surveillance capitalism. [24]

See also

Related Research Articles

E-commerce is the activity of electronically buying or selling products on online services or over the Internet. E-commerce draws on technologies such as mobile commerce, electronic funds transfer, supply chain management, Internet marketing, online transaction processing, electronic data interchange (EDI), inventory management systems, and automated data collection systems. E-commerce is the largest sector of the electronics industry and is in turn driven by the technological advances of the semiconductor industry.

Commerce is the large-scale organized system of activities, functions, procedures and institutions that directly or indirectly contribute to the smooth, unhindered distribution and transfer of goods and services on a substantial scale and at the right time, place, quantity, quality and price through various channels from the original producers to the final consumers within local, regional, national or international economies. The diversity in the distribution of natural resources, differences of human needs and wants, and division of labour along with comparative advantage are the principal factors that give rise to commercial exchanges.

<span class="mw-page-title-main">Marketing</span> Study and process of exploring, creating, and delivering value to customers

Marketing is the act of satisfying and retaining customers. It is one of the primary components of business management and commerce.

<span class="mw-page-title-main">Sales</span> Activities related to the exchange of goods

Sales are activities related to selling or the number of goods sold in a given targeted time period. The delivery of a service for a cost is also considered a sale. A period during which goods are sold for a reduced price may also be referred to as a "sale".

<span class="mw-page-title-main">Disintermediation</span> Eliminating middlemen from a supply chain

Disintermediation is the removal of intermediaries in economics from a supply chain, or "cutting out the middlemen" in connection with a transaction or a series of transactions. Instead of going through traditional distribution channels, which had some type of intermediary, companies may now deal with customers directly, for example via the Internet.

<span class="mw-page-title-main">Online shopping</span> Form of electronic commerce

Online shopping is a form of electronic commerce which allows consumers to directly buy goods or services from a seller over the Internet using a web browser or a mobile app. Consumers find a product of interest by visiting the website of the retailer directly or by searching among alternative vendors using a shopping search engine, which displays the same product's availability and pricing at different e-retailers. As of 2020, customers can shop online using a range of different computers and devices, including desktop computers, laptops, tablet computers and smartphones.

Drop shipping is a form of retail business in which the seller accepts customer orders without keeping stock on hand. Instead, in a form of supply chain management, the seller transfers the orders and their shipment details either to the manufacturer, a wholesaler, another retailer, or a fulfillment house, which then ships the goods directly to the customer.

<span class="mw-page-title-main">Business-to-business</span> Commercial transaction between businesses

Business-to-business is a situation where one business makes a commercial transaction with another. This typically occurs when:

Product information management (PIM) is the process of managing all the information required to market and sell products through distribution channels. This product data is created by an internal organization to support a multichannel marketing strategy. A central hub of product data can be used to distribute information to sales channels such as e-commerce websites, print catalogues, marketplaces such as Amazon and Google Shopping, social media platforms like Instagram and electronic data feeds to trading partners. Moreover, the significant role that PIM plays is reducing the abandonment rate by giving better product information.

B2B e-commerce, short for business-to-business electronic commerce, is the sale of goods or services between businesses via an online sales portal. In general, it is used to improve the efficiency and effectiveness of a company's sales efforts. Instead of receiving orders using human assets manually – by telephone or e-mail – orders are received digitally, reducing overhead costs.

<span class="mw-page-title-main">Taobao</span> Chinese website for online shopping

Taobao is a Chinese online shopping platform. It is headquartered in Hangzhou and is owned by Alibaba. According to Alexa rank, it was the eighth most-visited website globally in 2021. Taobao.com was registered on April 21, 2003 by Alibaba Cloud Computing (Beijing) Co., Ltd.

Business-to-employee (B2E) electronic commerce uses an intrabusiness network which allows companies to provide products and/or services to their employees. Typically, companies use B2E networks to automate employee-related corporate processes. B2E portals have to be compelling to the people who use them. Companies are competing for eyeballs of their employees with eBay, yahoo and thousands of other web sites. There is a huge percentage of traffic to consumer web sites comes from people who are connecting to the net at the office.

Social commerce is a subset of electronic commerce that involves social media and online media that supports social interaction, and user contributions to assist online buying and selling of products and services.

Customer to customer markets provide a way to allow customers to interact with each other. Traditional markets require business to customer relationships, in which a customer goes to the business in order to purchase a product or service. In customer to customer markets, the business facilitates an environment where customers can sell goods or services to each other. Other types of markets include business to business (B2B) and business to customer (B2C).

<span class="mw-page-title-main">E-commerce credit card payment system</span>

Electronic commerce, commonly known as e-commerce or eCommerce, or e-business consists of the buying and selling of products or services over electronic systems such as the Internet and other computer networks. The amount of trade conducted electronically has grown extraordinarily with widespread Internet usage. The use of commerce is conducted in this way, spurring and drawing on innovations in electronic funds transfer, supply chain management, Internet marketing, online transaction processing, electronic data interchange (EDI), inventory management systems, and automated data collection systems. Modern electronic commerce typically uses the World Wide Web at least at some point in the transaction's lifecycle, although it can encompass a wider range of technologies such as e-mail as well.

DHgate.com is a Chinese business-to-business (B2B) and Business-to-consumer cross-border e-commerce marketplace that facilitates the sale of manufactured products from suppliers to small and medium retailers. It is one of the largest B2B-cross-border e-commerce trade platforms in China. The company is based in Beijing and has offices worldwide, including in the US and UK.

The sharing economy is a socio-economic system whereby consumers share in the creation, production, distribution, trade and consumption of goods, and services. These systems take a variety of forms, often leveraging information technology and the Internet, particularly digital platforms, to facilitate the distribution, sharing and reuse of excess capacity in goods and services.

There are many types of e-commerce models, based on market segmentation, that can be used to conducted business online. The 6 types of business models that can be used in e-commerce include: Business-to-Consumer (B2C), Consumer-to-Business (C2B), Business-to-Business (B2B), Consumer-to-Consumer (C2C), Business-to-Administration (B2A), and Consumer-to-Administration

Pakistan's e-trading mainly involves buying and selling goods, and services using internet or telephone, through the use of electronic means such as computer, fax machine, cellular phone, automated teller machines (ATMs), and other electronic appliances with or without using the internet. Online banking, e-tickets, share trading in stock exchange are few examples of e-commerce of modern advancement. With its potential, e-trading can reduce the cost per transaction, increase efficiency, support contest, lower prices and boost international demand. It can open new areas for business in the service sector like online education, medical services, consultancy, and data exchange. It can also provide expansion in trade through domestic and international market research, advertising and marketing. In the financial services area, it can make easy and speedy transactions and transfer of money at a minimum risk. The interesting feature of online trading is that an investor simply sitting in his office or home can buy or sell through the Internet via mobile/tablet or PC and before being an experienced trader he may learn a lot by watching market screens or web portals at his convenience.

A digital platform is a software-based online infrastructure that facilitates user interactions and transactions.

References

  1. ↑ Dave Chaffey; Fiona Ellis-Chadwick; Richard Mayer; Kevin Johnston (2009). Internet Marketing: Strategy, Implementation and Practice. Pearson Education. p. 111. ISBN   978-0-273-71740-9.
  2. ↑ "Channel Integration Software Reviews 2023 Gartner Peer Insights". Gartner. Retrieved 2023-02-15.[ permanent dead link ]
  3. ↑ Matthew L. Nelson; Michael J. Shaw; Troy J. Strader, eds. (2009). Value Creation in E-Business Management: 15th Americas Conference on Information Systems, AMCIS 2009, SIGeBIZ track, San Francisco, CA, USA, August 6-9, 2009, Selected Papers. Springer Science & Business Media. pp. 156–157. ISBN   978-3-642-03132-8.
  4. ↑ Oswald Mascarenhas (2018). Corporate Ethics for Turbulent Markets: The Market Context of Executive Decisions. Emerald Group Publishing. p. 123. ISBN   978-1-78756-189-2.
  5. ↑ Matthew L. Nelson; Michael J. Shaw; Troy J. Strader, eds. (2009). Value Creation in E-Business Management: 15th Americas Conference on Information Systems, AMCIS 2009, SIGeBIZ track, San Francisco, CA, USA, August 6-9, 2009, Selected Papers. Springer Science & Business Media. pp. 156–157. ISBN   978-3-642-03132-8.
  6. ↑ Adler, Manuel; Wohllebe, Atilla (December 2020). "Consumers Choosing Retailers On Online Marketplaces: How Can Retailers Differentiate Apart From The Price? An Exploratory Investigation". International Journal of Applied Research in Business and Management. 1 (1): 27–36. ISSN   2700-8983. Archived from the original on 2023-01-26. Retrieved 2023-02-15.
  7. ↑ Conley, Paul (2022-01-13). "Frequent online shoppers make half their web purchases on marketplaces". Digital Commerce 360. Archived from the original on 2023-03-08. Retrieved 2023-02-15.
  8. ↑ Manuel Rolf Adler; Atilla Wohllebe (2020). "Consumers Choosing Retailers On Online Marketplaces: How Can Retailers Differentiate Apart From The Price? An Exploratory Investigation". International Journal of Applied Research in Business and Management. 1 (1): 27–36. doi: 10.51137/ijarbm.2020.1.1.3 .
  9. ↑ "Leveraging offshore IT outsourcing by SMEs through online marketplaces Archived 2023-06-29 at the Wayback Machine ". U.L. Radkevitch, E. Van Heck, O. Koppius, University Rotterdam, Journal of Information Technology Case and Application, Vol. 8, No. 3, Date posted: August 23, 2006; Last revised: November 24, 2013
  10. ↑ Head and Hands in the Cloud: Cooperative Models for Global Trade to be Murray, Kevin, RMIT University, Melbourne, Australia, 2013
  11. ↑ Sarah T. Roberts (2019). Behind the Screen: Content Moderation in the Shadows of Social Media. Yale University Press. p. 46. ISBN   978-0-300-23588-3.
  12. ↑ Sarah T. Roberts (2019). Behind the Screen: Content Moderation in the Shadows of Social Media. Yale University Press. p. 47. ISBN   978-0-300-23588-3.
  13. ↑ Sarah T. Roberts (2019). Behind the Screen: Content Moderation in the Shadows of Social Media. Yale University Press. p. 47. ISBN   978-0-300-23588-3.
  14. ↑ Arun Sundararajan (2016). The Sharing Economy: The End of Employment and the Rise of Crowd-Based Capitalism. MIT Press. p. 31. ISBN   978-0-262-03457-9.
  15. ↑ "The Sharing Economy: Why People Participate in Collaborative Consumption". ResearchGate. Retrieved 2019-05-31.
  16. ↑ ☑ Cocorico is an open source marketplace solution for peer-to-peer marketplaces.: Cocolabs-SAS/cocorico, Cocolabs SAS, 2019-05-31, archived from the original on 2021-11-25, retrieved 2019-05-31
  17. ↑ Sharetribe Go is an open source marketplace platform, also available with SaaS model, Sharetribe, 2019-05-31, archived from the original on 2021-11-25, retrieved 2019-05-31
  18. ↑ Cristiano Codagnone; Athina Karatzogianni; Jacob Matthews (2018). Platform Economics: Rhetoric and Reality in the "Sharing Economy". Emerald Group Publishing. pp. 51–52. ISBN   978-1-78743-810-1.
  19. ↑ Arun Sundararajan (2016). The Sharing Economy: The End of Employment and the Rise of Crowd-Based Capitalism. MIT Press. pp. 29–30. ISBN   978-0-262-03457-9.
  20. ↑ Beerepoot, Niels; Lambrefts, Bart (31 March 2014). "Competition in online job marketplaces: towards a global labour market for outsourcing services?". Global Networks. 15 (2): 236–255. doi:10.1111/glob.12051.
  21. ↑ Nicholls, Rob. "Who bears the cost when your Uber or Airbnb turns bad?". Archived from the original on 2021-11-25. Retrieved 2016-08-02.
  22. ↑ Bakos, Yannis J. (12 December 1997). "Reducing Buyer Search Costs: Implications for Electronic Marketplaces" (PDF). NYU.edu. Archived (PDF) from the original on 27 November 2022. Retrieved 27 February 2023.
  23. ↑ Nick, Srnicek (2016). Platform Capitalism.
  24. ↑ Sarah Barns (2019). Platform Urbanism: Negotiating Platform Ecosystems in Connected Cities. Springer Nature. p. 115. ISBN   978-981-329-725-8.
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