The History of Marketplaces
The democratization of the internet in the 1990s opened the doors to a new type of commerce: e-commerce.
Initially, digital platforms selling retail goods took the e-commerce turn, but marketplaces offering services began to establish themselves about a decade later. This is the case of the giant Airbnb, which, in just over 10 years of existence, reported 4.7 billion in revenue in 2019. Other unknowns have become big names thanks to the unparalleled growth opportunities offered by the marketplace model.
A marketplace is the digital counterpart: a tripartite platform that connects sellers/providers and buyers/seekers, managed by an operator/administrator, who ensures the proper functioning and security of transactions. For sellers, marketplaces offer visibility at a lower cost; for customers, it’s an opportunity to find specific products or services with confidence.
The community aspect, even digital, should not be underestimated. Wefarmup, for example, is much more than a marketplace for renting agricultural equipment; it is a gathering place for the farming community. The establishment of collaborative economy marketplaces is also on the rise.
Digital marketplaces have improved an existing model: by removing spatial and temporal barriers, they have given a new dimension to these websites while offering a certain proximity. The presence of other features such as, for example, a search engine that combines geolocation, availability, and seller behavior enhances the performance of the marketplace.
Why Differentiate Service Marketplaces from Product Marketplaces?
Marketplaces can be divided into three types:
- B2B marketplaces, which connect professionals with each other. These marketplaces are experiencing exceptional growth. By 2022, Gartner predicts that 75% of professional purchases will take place on marketplaces.
- B2C marketplaces, which connect individuals and professionals. This is the most common type of marketplace.
- C2C platforms, which connect individuals with each other.
Two families should be distinguished within marketplaces: products/goods and services. Based on opposite user experience logics and facing different challenges, it is important to distinguish these two major families.
What is a product marketplace?
A product marketplace connects providers and sellers for the sale of products online. One of the main challenges of this type of marketplace is managing product stocks, while the user experience revolves around the shopping cart, as is the case with Amazon.
What is a service marketplace?
It connects providers and sellers for the sale of online services. For this type of platform, onboarding is one of the main challenges: we do not import sellers as we would import references on a product marketplace. The user experience, on the other hand, is centered around the availability calendar.
The term “service marketplace” suggests that this type of platform only allows for the sale of services. However, this is not the case. Three major families within this type of marketplace should be distinguished: rental marketplaces, such as Airbnb; network marketplaces, which connect multiple players and facilitate data sharing; and finally, marketplaces that sell services.
What Economic Model to Choose for My Service Platform?
At Medialem, we offer a plethora of business models depending on your platform type and market. Each model has specific advantages:
- Commission model, which can be applied to both buyers and sellers. This model facilitates the onboarding of new users.
- Subscription model, which can also apply to sellers and buyers. This model ensures regular income for the operator.
- Media purchase model: To earn revenue, the operator sets up a space purchase system for sellers to promote their services.
- Non-transactional models: Transactions are made outside the platform.
These models can be combined to create the best-suited model for your platform.
Two Project Management Approaches
The development process for creating a marketplace depends on the project management methodology you choose. There are two primary approaches to consider:
Waterfall Method: This is a sequential approach where each phase must be completed and approved before moving on to the next. It requires having a clear and fixed vision of the final platform from the outset.
Agile Method: This approach provides greater flexibility. Development is divided into sprints, typically lasting 2 to 4 weeks, during which the client selects the features to be developed. This method enables quicker progress and easier adaptation to changes in the marketplace.
To illustrate the difference, consider a bike trip from New York to Philadelphia. With the Waterfall method, you would meticulously plan each step before starting the journey. In contrast, with the Agile method, you would decide on the next day’s accommodations on the go, allowing for spontaneity and unforeseen changes.
Key Deployment Steps
- Pre-scoping: Establish the main lines of your platform and its functional scope.
- Design: Accompanied by a UX team, you will establish the wireframe or layout of your marketplace. With the UI team, the wireframes will take shape with a design in your brand colors.
- Development: The established design is coded while the features to be deployed are developed.
- Launch
- Maintenance: Application Maintenance allows your platform to evolve over time based on customer feedback.
Marketplaces embody a constantly changing universe, and marketplace trends vary continuously. The relatively recent emergence of service marketplaces makes it a particularly interesting study subject and less explored in-depth than product marketplaces.
