The online marketplace is basically a place (in our case a website) where you can find products coming from multiple vendors, would they be brands, shops or persons, in the same platform. The marketplace owner is responsible for attracting customer and keeping track of money transactions, whereas the third party vendor is dealing with manufacturing and shipping. This way, the marketplace avoids holding stocks, and the manufacturer sells directly his own products. This kind of supply chain management is usually called drop shipping.
Famous online marketplaces: Flipkart, Amazon, eBay, Snapdeal etc.
In terms of revenue, the marketplace takes a percentage of sales on any product sold on its platform. There are various types of online marketplaces:
- C-to-C (Customer to Customer) marketplaces are focused on building communities on buyers and sellers.
- B-to-B-to-C (Business to Business to Customer) offer a common selling platform for smaller business to sell their goods.
Is it a replacement for e-commerce as we know it?
It does not replace E-commerce but it does augment the offering. Online marketplaces target a different audience, selling different products, hence setting up a market place is very different than setting up a regular e-commerce website. For instance the inventory changes constantly, you may never see the same product twice on a marketplace.