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.


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.

In general, because marketplaces aggregate products from a wide array of providers, selection is usually more wide, and availability is higher than in vendor-specific online retail stores. [1] Since 2014 online marketplaces have become abundant. [2] Some online market places 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

B2B online marketplaces

Some of the earliest online marketplaces were for business-to-business (B2B) trading. Early examples of online platforms that enabled e-commerce between businesses include VerticalNet, Commerce One and Covisint. Contemporary B2B online marketplaces focus on a limited range of commodities or service, such as EC21, Elance and eBay Business, and have not achieved the dominance online marketplaces have obtained in B2C retail. B2B purchasing requires that online marketplaces facilitate complex transactions, [3] such as a request for quotation (RFQ), a request for information (RFI) or request for proposal (RFP).[ citation needed ]

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. 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. [4] 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. [5]

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. [6]

For services and outsourcing

There are marketplaces for the online outsourcing of professional services like IT services, [7] search engine optimization, marketing, and skilled crafts & trades work. [8] Microlabor online marketplaces such as Upwork and Amazon Mechanical Turk allow freelancers to perform tasks which only require a computer and internet access. [9] 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. [10]

Microlabor online marketplaces allow workers globally, without a formal employment status, to perform digital piece work, such as for example rate an image according to content moderation guidelines. Gig workers are paid for each task, for example U.S.$0.01 for each moderated image, and accumulate payment on the microlabor platform. [11]

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. [12] As the sharing economy inspires itself largely from the open source philosophy, [13] open source projects dedicated to launching a peer to peer marketplace include Cocorico [14] and Sharetribe. [15] 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 [16] In 2015 Alex Stephany, the founder of online marketplace JustPark, defined the sharing economy as the economic value arising from making underutilized assets available online. [17]


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. [18]

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. [19]

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. [20] 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. [21] In 2016 and 2018 respectively, Frank Pasquale and Shoshana Zuboff cautioned, that the data collection of online marketplace operators result in surveillance capitalism. [22]

See also

Related Research Articles

E-commerce is the activity of electronically buying or selling of 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 in turn driven by the technological advances of the semiconductor industry, and is the largest sector of the electronics industry.

Consumerism Socio-economic order that encourages the purchase of goods/services in ever-greater amounts

Consumerism is a social and economic order that encourages the acquisition of goods and services in ever-increasing amounts. With the industrial revolution, but particularly in the 20th century, mass production led to overproduction—the supply of goods would grow beyond consumer demand, and so manufacturers turned to planned obsolescence and advertising to manipulate consumer spending. In 1899, a book on consumerism published by Thorstein Veblen, called The Theory of the Leisure Class, examined the widespread values and economic institutions emerging along with the widespread "leisure time" in the beginning of the 20th century. In it, Veblen "views the activities and spending habits of this leisure class in terms of conspicuous and vicarious consumption and waste. Both are related to the display of status and not to functionality or usefulness."


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.

Amazon China, formerly known as, is an online shopping website. was founded in early 2000 by the Chinese entrepreneur Lei Jun in Beijing, China. The company primarily sold books and other media goods, shipping to customers nationwide. was renamed to “Amazon China” when sold to Amazon Inc in 2004 for US$75 Million. Amazon China closed its domestic business in China in June 2019, offering only products from sellers located overseas

Post-capitalism is a state in which the economic systems of the world can no longer be described as forms of capitalism. Various individuals and political ideologies have speculated on what would define such a world. According to some classical Marxist and some social evolutionary theories, post-capitalist societies may come about as a result of spontaneous evolution as capitalism becomes obsolete. Others propose models to intentionally replace capitalism. The most notable among them are socialism, anarchism, and degrowth.

Market (economics) Mechanisms whereby supply and demand confront each other and deals are made, involving places, processes and institutions in which exchanges occur.

A market is a composition of systems, institutions, procedures, social relations or infrastructures whereby parties engage in exchange. While parties may exchange goods and services by barter, most markets rely on sellers offering their goods or services to buyers in exchange for money. It can be said that a market is the process by which the prices of goods and services are established. Markets facilitate trade and enable the distribution and resource allocation in a society. Markets allow any trade-able item to be evaluated and priced. A market emerges more or less spontaneously or may be constructed deliberately by human interaction in order to enable the exchange of rights of services and goods. Markets generally supplant gift economies and are often held in place through rules and customs, such as a booth fee, competitive pricing, and source of goods for sale.

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 catalogs, marketplaces such as Amazon and Google Shopping, social media platforms like Instagram and electronic data feeds to trading partners.

A two-sided market, also called a two-sided network, is an intermediary economic platform having two distinct user groups that provide each other with network benefits. The organization that creates value primarily by enabling direct interactions between two distinct types of affiliated customers is called a multi-sided platform. This concept of two-sided markets has been mainly theorised by the French economists Jean Tirole and Jean-Charles Rochet and Americans Geoffrey G Parker and Marshall Van Alstyne.

Digital economy refers to an economy that is based on digital computing technologies, although we increasingly perceive this as conducting business through markets based on the internet and the World Wide Web. The digital economy is also referred to as the Internet Economy, New Economy, or Web Economy. Increasingly, the digital economy is intertwined with the traditional economy, making a clear delineation harder. It results from billions of everyday online connections among people, businesses, devices, data, and processes. It is based on the interconnectedness of people, organizations, and machines that results from the Internet, mobile technology and the internet of things (IoT).

Taobao Chinese website for online shopping

Taobao is a Chinese online shopping platform. It is headquartered in Hangzhou and owned by Alibaba. It is ranked as the eighth most-visited website. was registered on April 21, 2003 by Alibaba Cloud Computing (Beijing) Co., Ltd.

Consumer to consumer (C2C) markets provide an innovative 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).

Collaborative consumption encompasses the sharing economy. Collaborative consumption can be defined as the set of resource circulation systems, which enable consumers to both "obtain" and "provide", temporarily or permanently, valuable resources or services through direct interaction with other consumers or through a mediator. Collaborative consumption is not new; it has always existed., formerly Taobao Mall, is a Chinese-language website for business-to-consumer (B2C) online retail, spun off from Taobao, operated in China by Alibaba Group. It is a platform for local Chinese and international businesses to sell brand name goods to consumers in Greater China. It has over 500 million monthly active users, as of February 2018. In the last few years it has opened its features to brands, not only for online sales but also for developing brand awareness.

In capitalism, the sharing economy is a socio-economic system built around the sharing of resources. It often involves a way of purchasing goods and services that differs from the traditional business model of companies hiring employees to produce products to sell to consumers. It includes the shared creation, production, distribution, trade and consumption of goods and services by different people and organisations. These systems take a variety of forms, often leveraging information technology to empower individuals, corporations, non-profits and government with information that enables distribution, sharing and reuse of excess capacity in goods and services.

There are several 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 (C2A).


Cokodeal is a marketplace e-commerce service that connects traders in Africa to the world. It is headquartered in Nigeria with reg no: 1165256. The service helps connect African traders and customers. With Cokodeal, individual users, organizations and businesses can create online stores to market African manufactured goods and services. Its founders partnered with Neoteric, a UK enterprise, to handle its development and support. Presently, its major trading is in Ghana, Nigeria, Tanzania, South Africa, and Kenya. Cokodeal is an avenue for African traders to meet global customers and make deals.

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 (ATM) and other electronic appliances with or without using inter-net. Online banking, e-ticketing for air travelling, 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 on-line 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.

Zilzar is a privately held, online marketing platform headquartered in Malaysia, specifically catering to Muslim consumers seeking halal products and services. The company positions itself as a global Muslim lifestyle marketplace where consumers can access information, content, community and trade. This e-commerce platform was launched in 2014 by Malaysian Prime Minister, Dato Sri Muhamad Najib Tun Razak in the 10th World Islamic Economic Forum in Dubai. The site was described as a way of empowering the consumer and creating employment for Muslims in emerging markets by the country's prime minister. The business describes its aim as connecting Muslim consumers and making it easier for halal traders around the world to conduct business online. The platform handles content regarding Islamic societies and products that deals with the compliance of the Islamic Sharia law.

A platform cooperative, or platform co-op, is a cooperatively owned, democratically governed business that establishes a computing platform, and uses a website, mobile app or a protocol to facilitate the sale of goods and services. Platform cooperatives are an alternative to venture capital-funded platforms insofar as they are owned and governed by those who depend on them most—workers, users, and other relevant stakeholders.

Platform economy Economic and social activity facilitated by technological platforms

The platform economy is economic and social activity facilitated by platforms. Such platforms are typically online sales or technology frameworks. By far the most common type are "transaction platforms", also known as "digital matchmakers". Examples of transaction platforms include Amazon, Airbnb, Uber, and Baidu. A second type is the "innovation platform", which provides a common technology framework upon which others can build, such as the many independent developers who work on Microsoft's platform.


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