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2022-10-19 5:00 pm

Online Marketplace Definition


An online marketplace is a type of online store, where vendors can sell their products to buyers. It’s a platform designed to fit the needs of both customers and sellers. What are the benefits of online marketplaces? How does selling via a marketplace differ from having your own online store?

While thinking about online marketplaces, a few names come to our minds – mosty of the e-commerce giants that are present in the web for a long time, like Amazon (almost 30 years on the market!), eBay or Etsy. But there is also plenty of space for little marketplaces gathering people interested in a certain niché (handmade clothes, film gadgets, woodworking, etc.) on the Internet. The popularity of online marketplaces leads to the question: how do they work? Let’s try to see it from two perspectives.

Benefits of online marketplaces for vendors

Online marketplaces are a great way to start selling products online, especially if a vendor doesn’t have the experience nor resources to build their own online store. Marketplaces usually provide not only space for selling products, but also technical support, simple marketing opportunities, and a set of tools to reach a broader audience quickly.

Plus, the online marketplace has its full infrastructure, which means a seller doesn’t have to worry about it – they just need to upload their products and start selling.

Benefits of online marketplaces for buyers

Customers choose marketplaces for a variety of reasons. One of them is not having to look for the best offer all over the Internet – plenty of vendors selling similar products inside one marketplace make it easy to find the cheapest one. But money isn’t the sole issue when it comes to buying.

Lots of marketplaces offer a handy review system that distinguishes vendors offering great customer service and selling high-quality products from those who are not quite reliable. One look at the vendor’s rating is usually enough to know if it’s a good idea to continue looking around their shop. But if the seller turns out to be a fraud anyway, online marketplaces usually come with some kind of buyer’s protection, aiding people who have problems getting their money back or having an order sent out in time.

Types of online marketplaces

There are at least three common types of online marketplaces – horizontal, vertical, and global. Knowing how they differ from each other is crucial especially when you’re a vendor looking for a perfect platform to sell your goods.

  • Horizontal marketplaces – all the products in such marketplaces belong to one type, but they can be split into dozens of categories. For example – aforementioned Etsy gathers sellers and buyers around handmade products. Though you can buy or sell plenty of different products, they are all required to be handmade to appear on an Etsy store.
  • Vertical marketplaces – platforms for buying and selling products in one category. Carvago is a great example, as it provides space for buying and selling new and used cars. Similarly, Airbnb is a platform for renting apartments and houses for short periods of time.
  • Global marketplaces – it won’t be a euphemism to say that global marketplaces sell everything: millions of products from thousands of categories. The most recognizable example is Amazon.

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