How can building digital marketplaces help startups and services industries thrive? Marketplace developers must view providers’ activities holistically and give capabilities built with management in mind if they are to successfully bring service organizations online.
Marketplaces have fueled trade since the beginning of time. Digital markets are expanding at an astronomical rate as the globe quickly transitions to becoming digital.
According to a McKinsey & Company analysis, marketplaces accounted for half of all worldwide online sales, which for the top 100 sites amounted to $2 trillion, even before the epidemic drove up online purchasing.
You probably have a good idea of how big and practical e-commerce has become if you have recently received a package from Amazon, eBay, Jumia, or another online retailer.
Global retail e-commerce sales are predicted to increase by 50% to $ 7.4 trillion by 2025 upwards. Digital marketplaces, which make it easy for buyers and sellers to conduct transactions, are the foundation of this sector.
About Digital Marketplaces
The development of the digital economy, which has experienced an even more noticeable growth since the onset of the epidemic, has been greatly aided by online platforms.
Greater use of these platforms can have a huge impact on smaller companies, who are frequently represented by local service providers and who frequently lack the funds and expertise to build their digital infrastructure.
We need to start focusing on how using online markets and platforms may assist smaller firms to benefit from the digital transformation as their e-commerce forefathers did.
Read- 6 eCommerce business strategies to learn from leading eCommerce tycoons.
How Building Digital Marketplaces help Startups and Services Industries Thrive
Marketplaces on the internet offer three key essential services:
- Consumers can more easily find and swiftly acquire what they are looking for.
- They provide convenience for startups. Thanks to two of these: Discovery and Convenience.
- The third function is Trust. Marketplaces codify the actions of both buyers and sellers and establish norms for conducting business.
Read- How does Shopify Solve all the problems of a startup e-commerce business.
Factors Influencing the Building of the Digital Markets to help Startups and Services Industries Thrive
The continuous expansion of digital markets is being driven by four trends. These tendencies don’t seem to be slowing down and they are:
- Alteration in the market dynamics
- Consolidation of the market
- Additional value added options
- Supporting the Tech enablement ecosystem
- Alterations in market dynamics.
More specialized, consumer-specific websites are emerging as a result of rising customer expectations for personalization, such as renting and consumer-to-consumer (C2C) services that appeal to Generation Z and Millennials.
35 percent of consumers, according to Digital Commerce 360 (2019), shop in specialty marketplaces, particularly for clothing, shoes and other footwear, and home goods.
Read- How to start a dropshipping business with no capital in Nigeria.
- Consolidation of the market.
The market appears likely to consolidate as more firms target comparable customer groups. Larger players are buying up or making investments in markets near their core industries.
We anticipate a situation in which businesses with comparable marketplace value propositions continue to collaborate or associate to cater to comparable clientele.
- Additional value-added service options (and potential revenue streams).
The competition to draw both buyers and sellers has increased due to the proliferation of online marketplaces and the growing reliance on sellers to achieve scale.
Therefore, marketplaces must put in just as much effort to provide a unique value proposition for both merchants and customers.
- Supporting the tech enablement ecosystem.
By helping marketplace operators alter their service offerings to stay relevant, tech companies like Shopify assist both brands and retailers increase sales and market potential.
Social commerce and transactions on hybrid marketplace/community forums like Facebook Marketplace demand additional features and enablers, such as payments and security, thorough product tagging, and increased “shoppability,” for companies to be successful.
Value-added services will increasingly make the difference between marketplaces that succeed and those that struggle in luring vendors.
When sellers see the value of these services, the more profitable ones will figure out how to charge for them, creating additional revenue streams with margins higher than those obtained merely from enabling the sale of clothing.
Note:
As part of a wider channel strategy, brands should create sustainable marketplace strategies to meet consumers where and how they shop.
How Startups And Services Industries Fall in Digital Marketplaces and Solutions
If adopting a digital lifestyle is advantageous, why have startups service providers lagged for the previous two decades?
- The way people communicate is one of the causes.
- Startups Service providers struggle to accurately reproduce the human element of engagement, which taints the whole experience.
- Additionally, the complexity and subjective nature of services make it difficult to establish any form of standard. The level of trust that customers and sellers expect will certainly rise as services get more complex.
- Although these problems call for creative solutions, money and time are the main causes of the delay. Big e-commerce sites like Amazon have the resources and capacity to support essential retailing operations like distribution.
Solutions
- Service providers must perform important duties like marketing to attract and retain clients. However, not many online markets are set up to manage everything service providers need to.
- Marketplace developers must view providers’ activities holistically and give capabilities built with management in mind if they are to successfully bring service organizations online.
How Digital Marketplaces Can Help the Self-care Industry Transition
The massive industry that is perfect for transition is the Self-care industry. The self-care industry, which includes establishments like spas, hairdressers, and gyms, is one service sector that effectively shows the aforementioned problem while also offering tremendous room for growth.
The majority of businesses in this sector are tiny businesses with occasionally just one or two employees. These workers could even be independent partners, which would mean that they might have different services, accounts, and tools.
For example, a salon might have both a hairdresser and a nail technician who are paid separately, along with product sales that are billed to the house.
However, users of these services typically want to schedule appointments right away, and they do it rather frequently regardless of where they are, which goes back to the three primary purposes of a digital marketplace.
To assist self-care businesses to succeed, digital marketplaces based on basic business management software can detangle and manage various components.
Even before the market has enough awareness to draw in new clients, they can still add initial value to suppliers by offering managerial help. The platform can continue to be used for free while charging developers a fair membership price for this assistance.
However, when the market expands, the earnings that result from the greater visibility make the offer more enticing. Through the marketplace, providers can begin to establish enough new connections with customers that they can easily recoup any costs associated with the managerial support subscription.
Conclusion
Although operating a small self-care business can be challenging, marketplaces can be effective for both service and retail businesses.
Individual customers must still decide whether using this kind of marketplace is the best option for them, of course.
The client will need to weigh the cost of the membership fee against the amount of business they are presently doing or have a fair possibility of gaining while making this choice.
