What is a Marketplace?
The term online “marketplace” refers to an online shop in which, in contrast to the classic online shop of a single retailer, customers can purchase products online from different retailers who sell on their own account via the marketplace. Similar to the fair or weekly market, merchants come together at a central location and offer their products to visitors.
What are the advantages of Marketplaces?
Anyone travelling on a marketplace like Amazon has a better chance of success than anyone else – both from the customer’s and the retailer’s perspective. The customers benefit from a large product selection, while the retailers appreciate the increased reach of Marketplaces. The chances are therefore very good for both sides to achieve their own goals. For the customer, this is the purchase of a product to satisfy wishes and needs. For the retailer, it is the sale of his products to increase sales and achieve profit. An additional advantage of the marketplaces in the online sector is the numerous services that are usually offered there in addition.
From order processing through various payment options, support, fulfillment, shipping and complaints processing, a large marketplace usually has very extensive and useful structures. Depending on the placement, however, the services of the marketplaces can vary drastically in some cases. Some platforms, such as Amazon, act as generalists and offer virtually all conceivable products from A to Z, while others specialize in certain product groups, such as the provider Zalando, which focuses on fashion.
What are the most important marketplaces?
In determining the largest marketplaces in the world, there is no way around Amazon. The world’s largest marketplace is worlds ahead of other well-known players like Alibaba and eBay, at least in terms of sales. According to the business figures for 2016, Amazon achieved an annual turnover of € 115.51 billion, which is more than five times the combined turnover of Alibaba (€ 12.99 billion) and eBay (€ 7.62 billion). On the other hand, if one considers the absolute profit (EBIT) from the same year, eBay with € 6.26 billion ranks first ahead of Alibaba with € 4.76 billion on rank 2 and Amazon with only € 2.04 billion on rank 3. But if you take a look at the number of visitors to the marketplaces, Amazon is in the lead again. 4.15 billion users surf amazon.de every month – on eBay it’s only 2.56 billion per month, Alibaba attracts only 1.52 billion users on average in a month to its website.
Differences between Amazon, eBay and Alibaba
Amazon not only acts as a pure marketplace, but also sells products to consumers on its own marketplace for its own account. The goods are stored in the company’s own department stores, where they are picked and shipped. But of course Amazon is not the only actor who acts as a seller on the platform. The majority of sellers are external traders who offer their goods on the marketplace. A further distinction is made here between FBA dealers who use Amazon’s fulfillment program and FBM dealers who send orders to customers from their own warehouse. Dealers pay a sales commission and other service fees for using the platform.
ebay has become known above all as an auction platform for the auctioning of used and new goods. Gradually, however, the portal has developed more and more into a classic sales platform with the option of buying new goods immediately. eBay also charges its merchants a sales commission, although this is lower than at Amazon. For private individuals who want to sell their used goods online, the online flea market “eBay-kleinanzeigen” has been available for some years now. eBay has come under increasing pressure since its peak phase until the beginning of the 00s and has lost some market share to Amazon.
The online marketplace Alibaba very rarely acts as a seller itself in China. The focus is clearly on enabling other merchants to sell goods, e.g. on Alibaba sites such as Taobao or Tmall. As with the other online marketplaces mentioned, Alibaba also charges a commission for this. In addition, it is possible to use Alibaba to conduct personalized advertising aimed at potential sellers. As Alibaba does not itself act as a seller, the provider is more similar to eBay than Amazon, as only external merchants take over the sale of the goods.
Which marketplace is the best?
Both from the dealer’s and (and above all) the customer’s point of view, there is a lot to be said for Amazon. The strategic orientation of the marketplace as well as the extremely aggressive and almost all-embracing development policy with the aim of generating maximum customer satisfaction puts the consumer in a comfortable position. Anyone looking for a product, whatever it may be, will usually find it at Amazon. With regard to assortment size, prices, service, delivery conditions, revocation periods, return conditions and much more, there is currently no real competition to Amazon (at least on the German market).
It will be interesting to see to what extent eBay could succeed in maintaining its current positive position and remain a satisfactory sales platform for customers compared to Amazon. The development of Alibaba in the western markets over the next few years should be just as exciting. Alibaba is little established in Germany so far. However, this could change in the next few years. It remains to be seen whether and, if so, when Alibaba can become a serious adversary in Europe. It is also clear that Amazon is both a curse and a blessing for retailers. The reach and sales potential that Amazon provides retailers with is largely incomparable. However, the expectations and fees that Amazon places on its dealers are not exactly easy to meet. Amazon’s uncompromising customer orientation and its own claim to profits mean that dealers sometimes come under massive pressure and it becomes increasingly difficult to make profits. Nevertheless, marketplaces the size of Amazon (but also eBay and Alibaba) are highly interesting for most traders from a sales point of view.
On our own behalf: As an Amazon agency, we at intomarkets have specialized in professional dealer support. Whether Amazon Vendor or “normal” Seller: with targeted product optimizations and PPC measures, a powerful switch can be applied to Amazon, especially in combination, to increase visibility and sales enormously, which in turn has a considerable influence on the organic ranking. We also rely on well thought-out and strategically planned campaigns with Amazon Marketing Services to strengthen brand building and increase sales.