Evolution of online Marketplaces

evolution of online Marketplaces

Marketplace is a multi-seller e-commerce site and not a single seller. If in the beginning, the only marketplace type was aimed at B2B by allowing essentially to answer calls for tender, the generalization of sales between professionals and individuals or even between individuals gave another dimension to the marketplace. From then on, the use of the term marketplace has developed widely and now designates a relatively different concept. In this article we will see the evolution of online Marketplaces and many more tips about this business.

The story of marketplaces

Before tackling about the evolution of online Marketplaces, let’s first take a closer look at the definitions. A marketplace is a platform that puts 2 parties in contact: the seller and the buyer. These platforms can be C2C (from private individual to private individual), B2C (business to business) or B2B (business to business). There are several types of marketplaces:  product, service or content. A marketplace can also be “hybrid”. We use this term to say that the activity covers both the B2B and B2C market, but also to talk about companies that sell both their products, and those of their third party sellers like Amazon. 

The seeds of online marketplaces were sown long before the internet revolution. Physical marketplaces, bustling with vendors and shoppers, have existed for centuries. These traditional marketplaces provided a central location for exchanging goods and fostering a sense of community. The rise of classifieds in newspapers offered a glimpse into the future of online marketplaces. These printed listings allowed buyers and sellers to connect beyond their immediate geographic location, albeit in a static format.

The arrival of the internet in the late 20th century truly ignited the online marketplace phenomenon. Early online marketplaces, like the 1982 Boston Computer Exchange, focused on facilitating transactions for niche communities. These pioneering platforms laid the groundwork for the dynamic online marketplaces we know today. With the widespread adoption of the internet and advancements in secure payment processing, online marketplaces exploded in popularity. They offered a convenient and accessible way for buyers across the globe to discover a vast array of products and services, while sellers gained access to a wider customer base than ever before.

Today, there are countless marketplaces. This growth is directly correlated to the evolution of technology (internet, the emergence of e-commerce, payment by card, smartphones …) and the digitalization of the world.

The evolution of online Marketplaces

The evolution of online Marketplaces has developed some platform types at three major stages: 

1- Ebay and Amazon, founding fathers of B2C 

The first generation of marketplace appeared at the end of the 90’s and beginning of 2000’s with a simple but innovative objective for the time: trust and richness of the offer on the customer side, traffic on the partner side. If at the beginning the marketplaces were rather generalists, stemming from a historical e-commerce activity, constituting their main asset, they very quickly diversified to the point where there are today C2C marketplaces in many fields:

  • Generalist: Trade me (1999), Taobao (2003), Priceminister (2010), Fril (2012), Wallapop (2013), Welp (2015), Facebook Marketplace (2016).
  • Crafts: Etsy (2005)
  • Fashion: Vinted (2008) 
  • Childcare : Yojo (2012), Yoopies(2012)
  • DIY : Ebid (1999).
  • Web : Fiverr (2010), 5euro.com (2013)

2- The advent of specialized marketplaces 

The second generation of Marketplace type is the services one. Its market targets customers with specific needs. In 2006, Blablacar was the first to launch a services marketplace. In 2007, it was AirBnb‘s turn to make its appearance by offering individuals and professionals to rent out their property for vacations. Today, this company is present all over the world and is estimated to be worth 35 billion dollars or about 29 million euros. 

Since 2010, more and more marketplace services have appeared in various fields: 

In the field of private transportation we can mention : 

  • Uber launched in 2009, is now present in 253 cities: Paris, New York, London, Johannesburg, Beijing, Sydney…
  • Drivy launched in 2010

In the field of rental we have : 

  • Getaround (ex-Drivy), which was launched in 2010 and allows individuals to rent a car.
  • Click&boat which allows to rent a boat.
  • Wingly, which allows the person to do co-pooling.
  • Doctolib in Europe which allows to manage appointments and health services 
  • Foodora  home meal delivery service
  • Malt online marketplace that connects businesses and freelancers in the digital world owned by Malt Community
  • Allô Voisin in France, a network for renting objects and providing mutual aid services between individuals
  • ID Garage, allows motorists to compare quotes from thousands of garages
  • Planity is a platform for making beauty appointments… 

3- Alibaba, the forerunner of B2B

The third generation that we see emerging focuses on B2B needs and uses. Indeed, the marketplace is starting a mini revolution and is no longer limited to the B2C sector. Founder of this new vision of the marketplace, Jack Ma created the Chinese website Alibaba and uses the same codes as B2C marketplaces. Thanks to Alibaba, Chinese factories can be put in touch with Western companies who wish to buy Chinese products at low prices and resell them. Alibaba becomes the intermediary of a transaction between a buyer and a seller who do not have the same commercial and cultural reflexes. Jack Ma proposes to secure the purchase, a system of “gold supplier” label to certify suppliers and reassure the companies that buy.

4- What is the next generation?

The evolution of online Marketplaces seem to identify the content platforms as the 4th generation. This kind of Marketplace are online services gathering providers (often independent) who offer to write content for a fee. It can be to create a logo, to write a text, to edit a video.

We’ve witnessed a progression from bustling physical marketplaces to classifieds in newspapers, and finally to the explosion of digital platforms facilitating transactions across the globe. But the story doesn’t end there. Enter the 4th generation of online marketplaces: the content marketplaces. These platforms move beyond simple product and service exchange, placing emphasis on valuable content that informs, educates, and empowers users.

Content marketplaces are characterized by a symbiotic relationship between creators and consumers. Creators, like educators, musicians, or fitness instructors, share their expertise and content on the platform. Consumers, in turn, can access this content through subscriptions, pay-per-view models, or even free tiers with limited access. This exchange fosters a deeper connection between creator and user, building trust and loyalty. Additionally, these platforms often leverage community features, allowing users to interact, share experiences, and learn from each other, further enriching the overall experience.

The rise of content marketplaces reflects a fundamental shift in consumer behavior. Today’s users crave not just products, but knowledge, experiences, and a sense of belonging. Content marketplaces cater to this need by providing a curated space for valuable content, fostering a thriving community around shared interests, and empowering creators to monetize their expertise. This innovative approach to online commerce is transforming the way we learn, interact, and access valuable information.

Marketplace type: which one pick when we want to create a marketplace

Carving your niche in the exciting world of online marketplaces requires careful consideration. Here are some key points to ponder when selecting the type of marketplace you’ll create:

Understanding Your Target Audience: Who are you building this marketplace for? Are you connecting buyers and sellers of physical goods, digital products, or services? Delving deep into your target audience’s needs and preferences is crucial. Do they prioritize convenience, curation, or competitive pricing? Identifying these factors will guide you towards a marketplace model that best serves their specific interests.

Transaction Complexity: Consider the level of complexity involved in transactions on your marketplace. Are you facilitating simple exchanges like product purchases, or will your platform handle more intricate transactions like service bookings or rentals? The complexity of transactions will influence the features and functionalities you need to integrate into your marketplace. For instance, a marketplace for booking freelance services may require robust scheduling and communication tools, while a platform for selling digital downloads might prioritize secure payment processing and file delivery mechanisms.

Marketplace Dynamics: Will your marketplace be a two-sided platform connecting buyers and sellers directly, or will you introduce a third element, like a curated marketplace with vetted vendors? The chosen dynamic will impact user acquisition strategies and the level of control you exert over product or service quality. Two-sided marketplaces require a critical mass of users on both sides to flourish, while curated marketplaces offer a more controlled environment but require upfront effort in vendor selection and quality assurance.

By carefully considering these factors, you’ll be well-equipped to choose the type of marketplace that aligns perfectly with your vision and caters effectively to your target audience’s needs.

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