The Platform Economy: Types of Marketplaces

In recent years, and specifically the last few months, we have seen a rising demand for what is called ‘platform economy’.

When we talk about the Platform economy in ecommerce, we typically refer to ‘marketplaces’. Amazon is worldwide the best known marketplace. Besides goods and products, marketplaces can also sell (or facilitate) services. One of the biggest examples here are Uber and AirBNB, who offer services for travel, delivery and accommodation. 

The platform economy centers around transaction platforms, with well-known players such as Amazon, Airbnb, Uber but also Vinted, Bol.com, Marktplaats and even ‘the good old’ eBay is an example of a marketplace.

These marketplaces build on the reputation of their brand, on their traffic, their community and their loyal fanbase. They offer services or goods that are of value to their audience, and when done well, these become very significant revenue streams.

There are different types of marketplaces: from horizontal B2C offerings goods, to very niche B2B marketplace. In this blog we will describe the most common marketplaces.

Catalog Depth:

Horizontal Marketplaces

These offer a wide variety of products across multiple categories. They focus mainly on building a broad audience, offer nice sales, special things such as free and fast delivery and are focussed on being ‘the go-to marketplace for everything you need’. 

Example: Bol.com, Amazon, eBay

Vertical Marketplaces

Focus on a specific niche or industry. They are strong on building a very specific audience, and typically use their brand, their reputation and tools like social media. They generate traffic by making niche content, working with influencers and offering goods or services that are really catered to the specific audience.

Example: Douglas (beauty products), Etsy (handmade and vintage items), Chewy (pet supplies), Zalando (fashion)

Audience:

B2C (Business-to-Consumer) Marketplaces

Businesses sell products directly to end consumers. They can be either vertical or horizontal focussed. 

Example: Bol.com, Blokker, Zalando, Booking.com

B2B (Business-to-Business) Marketplaces

They facilitate transactions between businesses. There are currently not many players in this field, and therefore there might be a great business opportunity if you have a good business plan. These marketplaces can also be either vertical or horizontal.

Example: Alibaba, Faire, Amazon Business

C2C (Consumer-to-Consumer) Marketplaces

Allow consumers to sell to other consumers. Typically these are second-hand products, or home-made goods. With a more global awareness and popularity on sustainability and eco-friendly offerings, this market is currently growing fast and gaining a lot of traction.

Example: Vinted, eBay, Facebook Marketplace, Catawiki, Etsy

Managed:

Managed Marketplaces

The platform takes on more responsibility in the transaction process. They offer options like shipping, payments, returns etc. They act more like a ‘normal webshop’. Additionally, they regulate seller processes such as onboarding procedures, payouts etc. To be able to sell on these platforms, you have to conform to their rules and regulations, and work according to their flows.

Example: Bol.com, Douglas

Unmanaged Marketplaces

Minimal involvement from the platform in transactions. They bring ‘ask and demand’ together, but typically do not get (or very minimally) involved in the actual transaction, the shipment and/ or return process. You find them typically more often in the C2C market. The procedure for onboarding or to start to sell is also way less complicated and regulated. Sometimes the only thing you need is an email address, (paypal) account and the description of the product you want to sell.

Example: Marktplaats, Craigslist, Facebook Marketplace, Catawiki

‘Product’ Type Offering:

Service Marketplaces

These marketplaces connect service providers with customers or businesses. They typically focus on one type of service, and make it as easy and frictionless as possible to use the service.

There are some very big, very successful and well known players in this area, known as “disruptors of the service industry”.

Example: Uber, AirBnB, Upwork, Fiverr

Product Marketplaces

The most well-known variant of marketplaces: selling goods. This can be B2C, B2B, in a horizontal or vertical focus, with drop shipments or own warehouses, and any variant in between. You name it!

Example: Amazon, Steam (for digital ‘products’)

Hybrid Marketplaces

Combine elements of different marketplace types. They can be very broad, or very niche. They really focus on offering whatever type or product, service or goods their audience wants.

Example: Amazon (sells own products,  third-party products and offers digital goods)

Localisation:

Local Marketplaces

Focus on a specific geographic area. They typically offer services and goods that are very geographically bound. The focus often is on ‘fast delivery, and products which are expandable. 

Example: JustEat, TakeAway, Fleurop (selling flowers), Jimmy Brings (selling alcohol in 30 min)

Global Marketplaces

Focus on a worldwide audience. They typically offer services and goods that are in high demand, cheap, ‘must have’ and people don’t mind waiting a bit longer to receive it. You often find them in Asia, shipping to Europe and the US.

Example: Temu, AliExpress

Last but not least:

Social Marketplaces

Recent years we have seen nearly every social media platform expanding with commerce integration. Not only for consumers to sell to other consumers, but also businesses offering their goods and services directly through ads, popular posts, videos etc. New innovations are popping up constantly. Like recently we have seen live ads and live shopping videos.

Example: Instagram Shopping, Facebook Marketplace, Pinterest, ​​TikTok Shop

Although some of these type of ‘product’ marketplaces might have been around for a while, new ones are coming up fast. A few years ago we never heard of online C2C marketplaces, and now for example Vinted has become a very well known marketplace. Same goes for Uber and Airbnb: they have become household names that we can’t imagine ever being without.

As innovation and opportunity grows: many entrepreneurs out there are thinking about what would be the ‘next big thing’. Who is building the new “Uber for… X”? With the power of social media, the opportunity to build audiences, to connect with niche markets, to find your specific target group ánd all the technical tools and partners out there to help you build the marketplace: why not go for it?

We at Deity specifically cater to the visionaries, the niche players, the ones with dreams who don’t find the standard tech offering. We are not just a tech platform, but we are your partner in the journey. Please reach out and share your dream with us, so we can help to bring your vision to life.