Marketplaces: The Power of Commerce in the Digital World

What are marketplaces?

Marketplace (or online trading platform) is a platform that provides a convenient mechanism for buying and selling goods and services. It can be a website or a mobile application that allows sellers to list their products on the platform and buyers to search for and buy the products they need. Marketplaces can be general, offering a wide range of goods and services, or specialized, aimed at a specific market segment. Marketplaces usually provide security and convenience for payment, delivery and return of goods, which makes them popular among consumers and sellers.

Marketplaces are online platforms that connect buyers and sellers to make transactions. They are one of the most popular forms of e-commerce today, and their popularity is growing every day.

Marketplaces: history, development, modernity

Marketplaces originated in ancient times. For example, ancient forums were a kind of marketplace where merchants could sell their goods. In the Middle Ages, fairs also functioned as marketplaces.

Marketplaces began as local markets where consumers could go to compare and buy goods such as fresh fruits and vegetables. But these marketplaces also catered to three basic shopping needs – ease, relevance and convenience. Everything could be found in one place, and there was a wide range of products and comparisons. With the advent of the Internet, marketplaces have turned into electronic platforms that provide the convenience of online shopping.

Ad marketplaces

Ad Marketplaces are next on the evolution timeline of marketplaces. Before the world went digital, bulletin boards were small sections in newspapers used to buy and sell things. Publishers will use large sections of these ads to create specific submarketplaces for specific product categories. For example, fashion, cars and real estate. This is where companies such as Craigslist and Pets4Homes appeared.

Mega-marketplaces

Although ad marketplaces were useful, there was an ever-increasing need for technology, artificial intelligence, and automation, which is how mega-marketplaces emerged. These marketplaces started out as classified marketplaces and then evolved into mega-marketplaces. Examples of mega-marketplaces include platforms such as eBay and Amazon. eBay began as a personal auction where consumers could sell unwanted items, but has now evolved into a more mixed marketplace.

The first electronic marketplaces appeared in the 1990s. One of the first marketplaces was AuctionWeb, which later became known as eBay. eBay became very popular and its success inspired other companies to create marketplaces. The eBay marketplace was founded in 1995 in the United States. He managed to create a platform where users can sell and buy goods from each other.

The further development of marketplaces was the appearance of Amazon in 1994, which started as an online bookstore and later turned into the world's largest marketplace with a fairly wide range of products. Amazon was developed after eBay, but is now a significant market leader where consumers have three shopping needs: ease, convenience and choice.

In the 2000s, marketplaces became even more popular. This was due to the widespread development of the Internet, as well as the emergence of new technologies such as electronic payments and mobile communications.

Niche marketplaces

Niche marketplaces have evolved from mega-marketplaces in the sense that they allow companies to establish themselves in a specific category. A great example of a successful niche marketplace is Airbnb. Airbnb dominates its niche market of consumers looking for accommodation. Airbnb caters to all types of consumers – from budget to luxury – and provides long-term and short-term accommodation.

As an offshoot of niche marketplaces, large niche marketplaces have developed. They are a hybrid between mega-marketplaces and niche marketplaces and offer something in between.

Brand marketplaces are the final stage in the evolution of marketplaces. Brand marketplaces are places where consumers can only purchase products directly from the brand itself. This is done in order to maintain high product prices and maintain brand equity.

Why have marketplaces evolved?

Online marketplaces continue to grow and change as technology advances. Here's what marketplace experts say: "Online marketplaces are really just starting to really take off. They were born out of big tech companies, and they continue to grow and change."

Online marketplaces will continue to grow as increased traffic leads to higher chances of consumer conversion and buzz around the marketplace. If consumers have a good experience in the marketplace, they are more likely to return to the platform and continue to drive growth. Online marketplaces also create a competitive environment for small businesses to compete with established brands. Giant marketplaces like Amazon offer a wide variety of products, from well-known brands to startups, all on one page. This gives small businesses an opportunity to compete with well-known brands that they wouldn't get anywhere else. These products are sold online with more freedom and fewer borders.

In addition, trust between the consumer and the seller is traditionally higher in brick-and-mortar stores. However, as the digital world evolves, consumers are beginning to trust online marketplaces more. Online marketplaces are easy to browse and save time and money, not to mention a wider range of products on offer. As the level of trust in relationships and customer satisfaction increases, consumers are beginning to make more purchases online. This means that marketplaces continue to grow and change.

The future of e-commerce

E-commerce marketplaces offer great value to consumers, which is why they have become so popular and will continue to expand at such a rapid pace. One of the best parts about online marketplaces is that a seller can sell their products to consumers all over the world from the comfort of their home.

Today's marketplaces can provide a fantastic stream of additional income through subscription packages such as Amazon Prime. Membership packages such as Amazon Prime give the consumer a personalized experience and make them feel part of a community. This is not just about Amazon. Many companies are now moving towards personalizing marketing, communications and experiences to improve the overall customer experience and encourage repeat purchases.

Finally, e-commerce marketplaces offer valuable consumer insights. Marketplaces generate very high volumes of traffic, which in turn provides businesses with valuable consumer data. Analyzing this consumer data can allow companies to identify patterns and trends that can be implemented when planning future strategies.

The largest marketplaces in the world

• Amazon (USA) is one of the first sales-oriented Internet services of real consumer goods, the world's largest company that sells goods and services over the Internet. The company is expanding into e-commerce markets around the world. It is now the largest marketplace in the world, which started as an online bookstore. Amazon currently offers a wide range of products and services, including electronics, home appliances, clothing and more. Jeffrey Preston Bezos is an American entrepreneur, the founder of the online store Amazon.com and aerospace company Blue Origin. One of the richest people in the world — a fortune of about 169 billion USD (2023).
• Alibaba is the largest Chinese marketplace offering products from Chinese manufacturers and suppliers. Alibaba also provides e-commerce and cloud computing services. Alibaba Group is a group of companies engaged in business on the Internet. Alibaba Group is privately owned and based in Hangzhou, China. The main types of activity are trade transactions between companies under the B2B scheme, online retail trade.
• eBay is one of the oldest marketplaces. It is a large worldwide e-commerce website and auction house for buying and selling most types of new and used goods. eBay Inc. is an American company that operates eBay.com and facilitates consumer and business-to-consumer sales through the website.
• Walmart is an American multinational retail corporation that operates a network of hypermarkets, department stores and of grocery stores from the United States with headquarters in Bentonville, Arkansas. It is a retail store that has expanded its activities to online trading in the network. Walmart offers a wide range of products at affordable prices.
• JD.com — JD.com, Inc., also known as Jingdong , the international name of Joybuy and formerly known as 360buy, is a Chinese e-commerce company headquartered in Beijing. It is a leading marketplace in China, specializing in electronic products, fashion clothing, cosmetics and other products. JD.com also provides logistics and financial services.
• Pinduoduo — Pinduoduo Inc. is a Chinese online store specializing in the traditional agricultural industry. In 2021, the gross product of Pinduoduo will be 2.44 trillion yuan. The business is the biggest product of PDD Holdings, which also owns US online marketplace Temu. This is a popular marketplace specializing in group purchases at wholesale (discounted) prices. Pinduoduo provides a platform for selling goods from suppliers without intermediaries.
• Rakuten is a Japanese e-commerce company headquartered in Tokyo. Its B2B2C e-commerce platform Rakuten Ichiba is the largest e-commerce site in Japan and one of the largest in the world. Hiroshi Mikitani founded MDM, Inc. in 1997. In June 1999, the company changed its name to Rakuten, Inc. It is a Japanese marketplace that offers a wide range of products, including e-commerce, fashion and more. Rakuten also provides e-commerce and cloud computing services.
• Zalando is a German online retailer of shoes, clothing and cosmetics. The company was founded in 2008 by David Schneider and Robert Gentz and has 50 million active users in 25 European markets. This is a popular European marketplace that offers goods from manufacturers and brand companies.
• Etsy is a peer-to-peer e-commerce website focused on handmade products and vintage items and materials, unique goods of a limited edition. It's an American specialty marketplace for handmade crafts, unique merchandise, and artwork. Etsy provides a platform to sell unique products from artisans around the world.
• Flipkart is an e-commerce company headquartered in Bangalore, India. It was founded in October 2007 by Sachin Bansal and Binny Bansal. The company launched its own line of products in India called "DigiFlip", which included tablets, flash drives, and laptop bags. It is a large Indian marketplace offering a wide range of products including e-commerce, fashion and more. Flipkart is one of the largest marketplaces in India and competes with Amazon in this market.
• Carrefour is a French multinational retail and wholesale corporation headquartered in Massey, France.
• Tmall, formerly Taobao Mall, is a Chinese online retail website consumer-to-consumer trade, separated from Taobao, managed in China by Alibaba Group.

Marketplaces around the world

Marketplaces are quite common around the world, but there are countries where they are more common. For example, China is the leader in the average volume of the online shopping market, and Alibaba and JD.com are the two largest marketplaces in China. In the US, Amazon is the largest marketplace, and eBay is also quite popular. In the European Union, Zalando is one of the leading marketplaces for fashion.

Globally, $3.23 trillion was spent on the top 100 marketplaces alone. Marketplaces have evolved over time from physical markets to e-commerce platforms. A digital marketplace is an e-commerce platform that connects sellers with buyers, and all transactions are managed by the platform owner.

Countries with the largest number of marketplaces

Most marketplaces are located in China, USA and Europe. China is home to marketplaces such as Alibaba Group, JD.com and Tmall. In the US, the most popular marketplaces are Amazon, eBay and Walmart. In Europe, the largest marketplaces include Amazon, eBay, Carrefour and Zalando.

Turnover and profits of the largest marketplaces

The biggest marketplaces have huge turnovers and profits.

Monetary turnover of the world's largest marketplaces in 2023, according to Statista research:

Revenues of the world's largest marketplaces in 2023, according to Statista research:

As can be seen from the tables, the largest marketplace in the world by cash turnover is AliExpress, which belongs to the Chinese company Alibaba Group. It overtook Amazon, which previously held the top spot. Amazon's profit is also the largest among all marketplaces.

Gross merchandise turnover (GMV) on the world's 100 largest marketplaces will grow by 2.9% in 2022 to $3.2 trillion.

Popular Ukrainian marketplaces

Ukraine has a well-developed marketplace market. Trading platforms are popular among Ukrainian Internet users and play the role of the main driving force of Ukrainian e-commerce. Entrepreneurs can sell both on thematic marketplaces dedicated to specific niches and on general platforms.

TOP-10 marketplaces of Ukraine

• Rozetka is one of the largest players in Ukrainian e-commerce, which does not only sell goods independently, and allows others to use its platform. According to SimilarWeb, Rozetka is visited at least 30 million times a month - you can convert some of these users into your customers. Rozetka does not cooperate with dropshippers, like most other trading platforms. The marketplace allows you to freely sell various categories of goods, but in some cases additional permits are required. Such requirements apply, for example, to auto parts or food products. There is also a small list of prohibited categories.
• Prom.ua — according to various estimates, more than 100 million products are sold on this trading platform. According to SimilarWeb, the site is visited about 40 million times a month. Such statistics both attract a powerful flow of traffic and frighten with fierce competition. Sellers on Prom get a separate site, but the bulk of sales comes from the marketplace's general product catalog. After registration, the merchant has 7 days to get acquainted with the platform for free, although the features of the test period are very limited. The site allows you to sell, according to the drop-shipping scheme, and even put up used goods for sale.
• Bigl.ua is a marketplace from the Prom orbit. When registering for Prom, the merchant gets the opportunity to display his goods on Bigl. According to SimilarWeb, the site is visited up to 10 million times a month. Sellers on the marketplace must have at least 80% positive reviews and no more than 15% canceled orders. The work of online stores is checked by the quality control service and reserves the right to remove products from the catalog that customers complain about.
• F.ua is a well-known online store in Ukraine that allows merchants to display their goods on the company's website. According to SimilarWeb statistics, the site is visited more than 1 million times every month. Maidanchyk puts forward clear work criteria for sellers. For example, the merchant must contact the buyer no later than 24 hours after placing the order. If the requirements are not met, F.ua can block the seller.
• Zakupka is one of the largest Ukrainian marketplaces, a catalog of goods and services of Ukraine, which has been working since 2004. Entrepreneurs can create their own online stores on the portal. The platform has collected 17 million products from 3,900 sellers. About 200,000 buyers visit the portal every day. The company offers merchants an atypical option for cooperation, when entrepreneurs do not pay a subscription fee. Instead, sellers only pay for clicks on their catalog listings. To work on the marketplace, the seller does not have to create a site on the platform — you can simply upload products to the platform catalog.
• ALLO — uses the website of its online store as a platform for cooperation with merchants. According to information from SimilarWeb, the company's website is visited up to 7 million times a month. Merchants can use the name of a well-known retailer and place their goods in the store's general catalog, they will not differ in any way from the company's offers.
• Made With Bravery is a marketplace for Ukrainian manufacturers who want to sell their products abroad. One of the creators of the platform is the Ministry of Digital Transformation of Ukraine, which seeks to support Ukrainian business during the war and tell the world about domestic manufacturers. The platform started working recently, so the list of product categories that can be sold on it is quite limited.
• OLX is not a classic marketplace - it is a bulletin board where everyone anyone who wants to can exhibit their goods or services. But the popularity of the platform forces merchants to consider the site as a trading platform. According to statistics from SimilarWeb, OLX is visited about 60 million times every month, which makes the platform one of the most popular in Ukraine for online trading. That is why there is an opportunity to create a business store on OLX, which provides additional benefits.
• Epicentr Marketplace is a relatively new trading platform that appeared in the fall of 2020. After a year of operation, the turnover of the marketplace already amounted to 33 million hryvnias, and the number of goods from merchants reached 700,000 items. According to SimilarWeb, the Epicenter site is visited up to 20 million times a month. The combination of relatively low competition and high traffic makes Epicenter Marketplace an attractive place for sellers. The trading platform is located on the same domain as the Epicenter online store, and the merchants' goods are in the same catalog as the company's offers.
• Kasta is one of the most famous clothing sellers in Ukrainian e-commerce. According to the company, the site is visited daily by 400,000 users who make 20,000 orders per day. In total, 3,000 merchants and more than 15,000 brands cooperate with Kasta. The marketplace is gradually moving away from selling only clothes and covering new categories — accessories, electronics, cosmetics, etc. Kasta offers two cooperation models to choose from: FBK and 3PL. In the case of FBK, the marketplace provides the seller with services fulfillment, while 3PL — the merchant handles the logistics. Read more about the Kasta marketplace and its features in our articles.
• Ralex is a marketplace offering a convenient platform for buyers where they can purchase from different sellers on the same site. You can browse products, compare prices and customer reviews to make your choice. In addition, Ralex provides convenient delivery of goods to your door and also provides customer support to resolve any questions or problems related to purchases. Thanks to a wide range of products and convenient service, Ralex is created to meet the needs of customers and facilitate convenient online shopping.

Opportunities for business

Marketplaces provide opportunities for entrepreneurs to expand their business. They allow you to sell goods without the need to create your own online store and attract a large audience of buyers. Marketplaces also provide access to marketing tools, logistics and payment systems, simplifying the sales process.

Business on marketplaces has a number of advantages. First, marketplaces provide access to a large audience of buyers. Secondly, marketplaces offer a range of services, such as storage of goods, delivery, payment and warranty. Third, marketplaces can help businesses expand their sales geography.

Creating your own marketplace

Any company can create its own marketplace. To do this, you need to develop a platform for the marketplace, set up a payment and logistics system, and attract sellers.

There are several ways to create a marketplace for your business. This can include coding from scratch, using open-source marketplace software, using generic website or e-commerce builders and marketplace plugins, themes or extensions, or building it yourself using multiple tools without coding.

Meaning of marketplaces

Marketplaces have a significant impact on modern business and economy. Marketplaces have become a necessary component of the modern economy. They provide a convenient platform for buyers and sellers from all over the world, allowing trade transactions to be carried out in an online environment. Marketplaces stimulate competition, provide a wide selection of goods and services, facilitate the globalization of trade, and facilitate the development of e-commerce. They also help companies thrive in times of economic uncertainty, diversify their workforce, use innovative solutions and reduce business costs.

The largest marketplaces in the world, such as Amazon, Alibaba and eBay, have significant turnover and profits. Thanks to marketplaces, buyers are given many opportunities to acquire various goods at affordable prices. For a business, creating its own marketplace can be a promising strategy for expanding the audience and selling its products.

Conclusion

Buying and selling goods is part of everyday life, and marketplaces will continue to evolve to accommodate new monetization models and strategies. Entry thresholds to marketplaces are still relatively low, which is why they are popular among entrepreneurs. So, we can expect that even more companies and businesses will appear on the marketplaces in the future.