The Evolution of E-commerce

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Jun 23, 2021
The Evolution of E-commerce

What is a marketplace?

An online marketplace is a central E-commerce website that sells different brands of products from multiple vendors, shops or people. A marketplace takes one of two forms: standalone or an integration into an existing E-commerce platform.

Global b2b E-commerce: $12.7 Trillion by 2024 (Grand View Research) and online marketplaces will account for $3.6T, or about 28%.

Gartner Pie Chart

The Three Phases of E-commerce

1. Develop a conventional E-commerce Website

  • Buy, warehouse and sell inventory that you own
  • Manage your own logistics
  • Manage all operational aspects, including marketing, merchandising, and pricing

ADVANTAGES

  • Quickly expand your product offerings
  • Limited requirements to add new products
  • No need to negotiate pricing

DISADVANTAGES

  • Must ensure that sellers meet customer expectations
  • Recruiting new sellers can be challenging
  • Developing a seamless seller onboarding process is complex

2. Integrate dropship into your E-commerce strategy

  • Logistics model in which a manufacturer ships product purchased from your site directly to the customer
  • Manage all aspects of marketing, merchandising, pricing

ADVANTAGES

  • No need to buy inventory
  • Expand your portfolio of product offerings

DISADVANTAGES

  • Must negotiate pricing separately with each manufacturer
  • Lower profit margins
  • Dependent on each manufacturer to ship in a timely manner

3. Implement a Marketplace on your E-commerce platform

  • Continue to offer products that you inventory
  • Take a commission for each product sold
  • Add new products and brands without buying inventory

ADVANTAGES

  • Quickly expand your product offerings
  • Limited resource requirements to add new products
  • No need to negotiate pricing

DISADVANTAGES

  • Must ensure that sellers meet customer expectations
  • Recruiting new sellers can be challenging
  • Developing a seamless seller onboarding process is complex