Market Place E-Commerce Model

One of the prominent drivers of the fourth Wave of e-commerce will be Marketplace
providers. According to Shopify, revenues from global marketplace providers are expected to
be more than double from $18.7 billion in 2017 to $40.1 billion in 2022. There are several
types of marketplace providers (see figure below) and our project will be focused on the
service aggregator model.

BENEFITS OF MARKETPLACE ECOMMERCE

A local Marketplace E-Commerce model that aggregate service providers or product sellers
can benefit the parties in a number of ways
Marketplace owners: A marketplace allows the allows the owners to take a commission on
services or products sold locally or charge a subscription fee per month on the sellers or
buyers. Hence there are multiples ways to earn income
Sellers: Sellers without the technical knowledge, budget or the marketing capability to
establish their own eCommerce website can use the marketplace to gain visibility and reach
more customers.
Consumer: Marketplace empower customers to find the highest quality product or the most
reasonably priced product by allowing them to see aggregated options on a single website
CHALLENGES OF MARKETPLACE ECOMMERCE MODELS
The marketplace model along with its advantages comes with its own set of challenges. If the
marketplace becomes very large, price competition can go to a point where sellers compete
for the lowest price and this could result in low profits for the marketplace owners (through
commissions) as well as the sellers.
Another issue is that of quality assurance. Since sellers are third parties, marketplaces do not
have adequate control over the timeliness of delivery or the quality of services/products. A
review system can help combat this problem by allowing consumers to give feedback and if
the negative feedback crosses a threshold the sellers can be removed.

MARKETPLACE IMPLEMENTATION
Before choosing to implement marketplace eCommerce, one needs to take care of the
following:
• Payment gateway
• Fee structure
• Fulfillment options
• Accountability of both customer and seller