In just 15 years, a whopping 52 per cent of the Fortune 500 companies have disappeared.
This includes household names such as Borders, Blockbuster, Blackberry and Kodak. Commerce has changed substantially, and with the resulting tectonic shift in the retail landscape, companies are constantly seeking new strategies to remain relevant to their customers and competitive within their industries.
One result of this shift is the evolution of the marketplace. They’ve been around for a long time –ever since there has been something to sell. But throughout their progression from a village market square to an online destination, their purpose has remained the same; to provide an easy and convenient location where multiple sellers can gather and offer customers a curated range of products or services.
If you’re in the job of selling products and services today, it’s vital to understand these developments to identify the best commerce strategy for you.
In the beginning, marketplaces were based on satisfying customers’ basic needs. Why did people go to the local produce market? Because they could find everything they wanted in one place. Customers could compare varieties of fruit and veg from different sellers. It was an experience that satisfied the need for hunger.
But in commercial terms, it also satisfied the three main principles that customers are guided by in their shopping needs: ease, relevance and convenience. That is, the ease of having everything in one place, a relevant selection of offerings, and a convenient shopping experience that includes comparisons, buying and delivery.
Read more: How to start an online store in 2021
Shopping centre marketplaces
The shopping centres of today are still guided by these three basic principles – from your local shopping strip to the enormous Westfield, they’ve built an economy around ease, convenience and relevance for their customers.
Chadstone today is known as Melbourne’s “fashion capital”. It draws customers because it offers everything fashion, and it provides facilities that make it convenient: parking, access to public transport, etc. So, the shopping centre has now evolved from being a traditional marketplace into an experience centre. Rather than purely a shopping destination, Chadstone boasts play areas, restaurants, convenience food and entertainment for everyone. For young families, Chadstone can become a day out.
And so other retailers are now asking themselves how they can become more than just a shop, improve customer experiences and keep people in their stores for longer. For instance, Lululemon stores hold yoga sessions to build added value, a sense of community and extend the time spent in the store. The marketing director of Westfield might now consider themselves in the entertainment business, under the shopping category.
The future of shopping centres will likely extend beyond merely bricks and mortar. In this case, a marketplace strategy that facilitates third-party selling will be the way forward.
Classified ads once existed only in print. If you wanted to buy or sell anything, you went through the major newspapers, which all had substantial classified sections. Those ‘rivers of gold’ underpinned the success of the newspaper.
The classifieds formed one of the two main revenue streams from newspapers, along with advertising. Craigslist began as an email distribution list to friends of the founder Craig Newmark, advertising local events in San Francisco Bay area. Similarly, what is now a marketplace for virtually everything, Gumtree, began as a classified site for property in London.
Publishers then leveraged major sections of the classifieds to create their own marketplaces for those categories, such as houses, cars and jobs. Hence the emergence of Realestate.com.au and carsales.com.au. BikeExchange, the leading global marketplace for the cycling industry, also began as a classified marketplace and has gradually transitioned to a niche marketplace. These classified marketplaces have become the one-stop destination for customers in their category.
From a listings-based classified marketplace, a few power players have built themselves into mega marketplaces.
Mega marketplaces are a prime example of e-commerce that provides everything for everyone and have largely been responsible for major innovation in the online marketplace industry. Back in its early days, eBay started as an auction house but has slowly pivoted to more of a marketplace. Out of eBay, Gumtree, Craigslist and Amazon emerged.
Amazon is now the clear leader in this field because it has become “the everything store”, able to satisfy the needs of any customer. You can buy virtually anything you want from anywhere you want with ease, convenience and choice.
A major reason for Amazon’s success is the “membership experience” they created with the introduction of Amazon Prime, granting access to Amazon TV, the equivalent of Netflix, free and faster postage and discounts on Amazon products. The appeal of its added value means it can charge $100 a year to its 98 million members. This now underpins their business, and Amazon has created true value for their customers beyond the transactional experience offered by eBay.
Unlike mega marketplaces that aim to serve everyone’s needs, businesses can build a niche marketplace that allows them to own a particular category and be the first port of call for customers – a one-stop-shop providing content targeted to the customer and a selection of curated products.
Airbnb has reinvented the accommodation category as a niche marketplace, evolving the notion of a short-term spare bed into worldwide coverage of the budget or luxury markets, both short term and long term. It competes with hotel-aggregating sites and brings together customers with private sellers and has enabled a whole new income stream for those sellers.
Marketplaces may now be virtual, but they are evolving rapidly and remain the most popular way for buyers to find what they need. Knowing their differences can help you improve your e-commerce strategy by leveraging the type of marketplace that’s right for your business.