A variety of development strategies stand behind the success of marketplace startups. One requires the marketplace to expand rapidly and enter new markets as fast as possible. Another is to eliminate the obstacles from registration to successful transactions. The third strategy is to ensure that the marketplace quickly adds new products and establishes competitive prices. Ensuring sustainable demand is a key objective for the fourth strategy. To get more information on the business models applied by the most successful marketplace startups, visit this blog.
All those strategies have worked for the most successful marketplace startups that now have networks of consumers and sellers all over the world. Let’s move on to see what they are.
Amazon is one of the largest online trading platforms in the world, with millions of sellers and buyers and almost 2 billion visitors. The marketplace is constantly expanding its boundaries, offering the possibility of registration for individuals and legal entities. Using the platform, you can run a business in the USA with a long term perspective. For this, a special paid program Fulfillment by Amazon (FBA) has been developed. By registering in it, sellers select and order goods from the supplier, send them to a warehouse in the USA, and fill out product pages on the website. The company takes care of communication with customers, packaging and delivery of products to end consumers. Profit from sales minus commission is transferred to the seller’s account.
Alibaba is a global B2B-focused Chinese platform. The number of visits to the marketplace per month reaches 185 million. In 2019, Alibaba Group's sales amounted to almost $900 billion. The system supports the exchange of information between entrepreneurs and suppliers from all over the world.
Besides, Alibaba Group includes the famous Chinese platform AliExpress, which helps online retailers sell their products around the world. About 200 million visitors from different countries and regions visit the site every month. Marketplace works primarily in B2C format.
Any legal entity can register as a seller. The registration procedure is quite complicated and lengthy. Each seller on the site is given a certain status, which determines the level of customer trust and the limit on the placement of goods. Beginners are allowed to place up to 50 units of goods.
Ebay is a popular American marketplace operating in the format of an online auction. This site has its own target audience, including for non-standard products. About 180 million active buyers are concentrated here. Ebay works mainly on B2B and C2C models.
The sale and purchase of a variety of goods and services on the site can be carried out by private and legal entities with any status. To become a member of this online market, you must register by entering contact information and data for crediting funds. It is also possible to register individual and business accounts in the system.
Uber started as a ridesharing company. As some experts noted, the company was significantly overestimated during one of the investment rounds. The investors were convinced that its price should not exceed $6 billion. But in three years, Uber market value was already 10 times bigger. The reason for that might be that Uber is no longer just a ridesharing service. It significantly expands its segment, providing users with access to various additional categories of transportation, including very popular UberEats.
How These Marketplace Startups Became Successful
If you look at the most successful marketplaces of recent years, including Uber, you will see that they are very local. And although it may be an issue at the start, the positive thing for marketplaces is that working in a certain market they can check and find all the features that will positively manifest themselves when used in the other markets.
Another important factor on the path to the success of the marketplace is the expansion of the product line. But buyers want to get not only an extensive range of products. It is also crucial for them to know that these products are offered at affordable prices. That is why young companies have to look for ready-made franchises for online stores and new options for promoting a product in a market that has not yet been occupied by competitors. There are many examples of such a strategy, including Craigslist.
Whether you want to start your own marketplace or to work with one, we hope this piece has helped to dig a little deeper into the marketplaces world and the reasons to their success.