A marketplace, also known as a retail market, is usually a place where buyers and sellers regularly meet for the sale and purchase of goods. In many parts of the developed world, such a marketplace may be defined as a large bazaar, a fixed exchange, a supermarket, or itinerant booth, or palengke. In developing countries, such markets are normally the only venues for businesses to meet and conduct transactions. However, the word “market” has a much wider meaning than the one used here.
For example, an online marketplace is not a stand-alone site where buyers and sellers meet and transact. Rather, it is an online service that allows users to log in and make purchases through an interactive website, usually facilitated by a shopping cart program. Some e-commerce sites, such as eBay, have taken this technology one step further by allowing users to shop using a toolbar on their computer screen. Buyers and sellers can then enter keystrokes into the shopping cart to find items, both physically and virtually. Sellers pay when they receive an actual sale, while buyers pay when they make a successful transaction. Payment occurs within a secure system maintained by the seller or buyer.
One type of online marketplace that is increasingly popular among entrepreneurs is the multi-vendor platform. Multi-vendor platforms allow vendors to list their products and services on more than one site, which maximizes exposure. In addition, they offer multiple payment options, such as through PayPal or Billpoint. For sellers, being able to list their products on numerous platforms reduces the cost of promotion, while allowing more buyers to visit the vendor’s site at once. Because the inventory is not centralized in one location, there is no need to provide information about the product’s availability to clients.
An online store may also utilize a multi-store platform, which has similar benefits to a multi-vendor site, but allows merchants to manage their inventory and pay per item in one location. These platforms are usually hosted by third-party vendors. Vendors use software to create a data feed that lists each vendor’s items, while a website manages the back end. The software manages the inventory, billing and order management for the online store, as well as sales, refunds and communication with clients. The software also controls the layout of the website, sales tools, marketing tools and analytics.
Different types of online marketplaces exist. Some focus on physical products, while others focus on digital products. Virtual goods and software are also available as online marketplaces. Each type has different characteristics that set it apart from the other. Generally, however, all online marketplaces share some characteristics that are necessary for the functioning of the marketplace definition.
Online marketplaces offer sellers and buyers a chance to meet, interact and share information about products and services. They provide buyers with the ability to research and buy goods and services with a wide range of vendors. They allow sellers to post detailed information about their products and to accept offers from buyers. They also give sellers and buyers a chance to engage in business transactions without actually leaving their homes. All these features make online marketplaces an important part of the global marketplace.