Online marketplaces are taking over more and more industries now. Corporations and enterprises experience more frequent rises and falls due to digital transformation in business or digital shifts, as well as customers’ change of hearts.
But how come the digital world became so influential in such a short period of time? How can corporations stay afloat in this constantly changing world?
Digital shifts in the corporate world
The digital shift means a move from physical to digital form. The most popular examples can be found in the financial industry. With the introduction of PayPal, a lot of banks understood that in order to stay relevant, they had to make changes, which resulted in a digital transformation in banking. That’s what MetroBank did. For the last couple of years, they’ve integrated APIs to their digital platform. Now customers can open an account online or via an app, get their account number and perform transactions.
The second shift happened as a transition from a pipeline to the platform model. The pipeline business creates individual value for consumers of services and products, whereas a platform model (or a marketplace business model) focuses on connecting suppliers with consumers and maximizing the value of the ecosystem itself. The examples of the platform business model are online marketplaces, e.g. Airbnb, Uber, and Amazon.
Marketplaces as an example of digital transformation
Online marketplace is a middleman between suppliers and consumers. The popularity of marketplaces is understandable. For consumers: due to great competition, the prices are much lower in comparison with standalone shops and agencies. For suppliers: marketplaces are an incredible way to expand their business.
Some say that marketplaces are disruptors of a variety of industries. A marketplace is a disruptive business model, meaning it changes business models, attracts more consumers and offers such a profound customer experience which enterprises just can’t seem to compete with.
With the creation of a marketplace model, traditional enterprises undergo a great change. Since marketplaces dictate the rules in many industries now, enterprises have started to incorporate the functionality of marketplaces, e.g. creating a personalized customer experience, quick booking system, and easier purchasing process. They are the ones who have experienced a digitalization of their business.
Booming industry of marketplaces
Online marketplaces are a relatively new trend but many well-known product and service brands are already using marketplace benefits.
Marketplaces are uncharted territory for corporations. They offer quick growth which is so important for many companies.
There are several examples of corporations that have already created online marketplaces in order to broaden and promote their core product: Canon, which manufactures imaging products in addition to their core business has launched a peer-to-peer marketplace for renting their cameras – Kyōyū. Enterprise Holding, Inc, which offers transport solutions has launched its own car sharing marketplace – CarShare. Spark New Zealand, a telecommunications company, has built a service marketplace – Wedo. Expert Witness Exchange (Legal Services) has created Expert Witness Exchange Marketplace.
What makes customers go crazy about online marketplaces?
Online marketplaces often represent a sharing economy – an economic model of consumption where goods and services are shared and accessed via a platform.
Marketplace benefits for customers:
- Trust: Online marketplaces are trusted by consumers more than standalone corporate websites due to their review and feedback system.
- Convenience: Marketplaces make it easier for consumers to compare products/services and prices.
- Low prices: the prices are driven down by great competition.
- Free shipping: only if your purchase is higher than X price + often multiple shipping options.
- Opportunities: Online marketplaces create new opportunities for freelancers and small businesses since they offer a platform where people can sell their skills, so to speak.
These benefits are quite influential for corporations. Nevertheless, there is a way to combine all of the above influential features with the chance to empower a company’s reputation – create an online marketplace that will promote your core business without disrupting your innovative business model.
How and why should corporations use marketplaces?
There are actually a couple of ways to use marketplaces in the corporate world:
- Build a marketplace that will broaden and promote your initial company
- Place your services/products on the marketplace in order to widen your audience and test your unique direct-to-customer channel of business.
According to Adam Broadway, CEO of Near.me, corporations are now realizing that building a community is an important factor in keeping in touch with their customers, which is why they’re building marketplaces to centre all their audience on one platform.
He says “There’s a much higher conversion rate of the brand’s core products or services when they’re adding value”.
This means that creating an online marketplace that will provide additional value to your core business can boost your ratings, broaden your audience and promote your business.
Top industries for marketplace creation
There are industries where online marketplaces are already popping up all over. However, according to our research on LinkedIn, there are still several promising industries for corporations to start their online marketplace.
Top 10 industries for corporations to create their marketplace in:
Automotive is probably the most popular and promising industry for big corporations. We all know these marketplaces: Uber, BlaBlaCar, and Lyft.
But have you ever wondered if there are also corporations that embraced car sharing, carpool, rides as a service or renting a car as their additional service? Well, there are.
A great example is a German car manufacturer – The Daimler Group which launched its own service marketplace car2go.
#2 Energy & Utilities
Energy retailers are well-known for selling products but not services. Although the industry of utilities has a broad customer base, they don’t use it very smartly. Nowadays the demand for bringing all people onto one platform is increasing. Moreover, the platform has to provide value that many customers seek, like advising consumers on purchasing choices for energy-efficient products for the home.
Vandebron is an example of a sustainable energy marketplace in the utility industry. There are a lot of possibilities for corporations in this industry, e.g. a marketplace with energy consultants or a marketplace which empowers clients to surf and compare a tremendous assortment of items over a variety of consumer electronics, home appliances, heating, ventilating and air-conditioning systems, smart home devices and lighting. The marketplace does not sell them — it guides clients toward spots where these items can be purchased.
A possible type of marketplace for enterprises in the sphere of telecommunications is WiFi sharing through an app.
#4 Information Technology and Services
Traditionally this industry offers software development and support, computer systems design, and data processing facilities management. However, marketplaces in this kind of industry vary – Skyhub, elo7.
This industry refers not only to construction but also to corporations that offer building materials. The possibility here for these enterprises can be creating a marketplace that offers handyman solutions. An example of this kind of marketplace is Wedo. Below you can find types of services that Wedo offers.
If your company works in the insurance sphere, then you are in luck. This industry offers different types of insurance for different fields. You can either make a marketplace that provides life insurance, real estate insurance or even create an online health insurance marketplace.
#7 Consumer Goods
This industry includes numerous types of products including electronic gadgets. A good example of a corporation that decided to create a sharing marketplace is Canon. They created a marketplace for renting their cameras – Kyōyū.
If you work in the industry that provides consumer goods, then you can let your flight of the imagination go. Build a marketplace for renting dresses or cars. Or even create a marketplace similar to Amazon. Your options are endless.
Remember when your only possibility to study was one-on-one with a teacher? Now you can explore the possibility of e-learning. Look at the example of Coursera. This online education marketplace has become so well-known due to platform possibilities.
#9 Real Estate
The Real Estate industry is one of the biggest fish out there. There are lots of corporations in this industry that seek to increase their profit and broaden their business. One of the solutions to do so is to create an online marketplace with real estate listings. Altisource is an example of a corporation that has built two online real estate marketplaces – Hubzu and Owners.com.
#10 Food & Beverages
Food sharing, catering, meals, and grocery deliveries – these are types of services that corporations can offer if they’re in the industry of food and beverages. An example of such a marketplace is Honestbee.
In a nutshell, corporations face many challenges nowadays, such as digital and platform shifts. Their main goals are:
- Increase their profit
- Promote their business
- Expand their business
- Stay relevant to their audience
In order to achieve these goals, they have to embrace the changes and take a step further. Marketplaces will help them to do so. Marketplaces are a gold mine for entrepreneurs who are ready to try new methods in order to expand their business. Not only are marketplaces attractive to customers, but they are also attractive to suppliers.
There are two ways to use marketplaces for corporations: either build one yourself or place your products/services on the platform.
We’ve also listed the top ten niches for corporations to find out whether their industry is promising and suitable for creating an online marketplace.