Problems with market place model of e-commerce


Let’s start with the point that what is the difference between a typical e-commerce store and a market place.

In earlier model of e-commerce, the e-commerce had to maintain the inventory of all the listed items on the website. They had to take the pain of inventory management, logistic etc., but in the market place model you are just a display medium. Now the inventory is maintained by actual seller itself, once a item is sold through market place website the request is sent to seller and once the item is dispatched, the amount is released to the seller. Though there may be other models also but this is the widely used model by ebay, Amazon, Flipkart etc.

Is it a replacement for e-commerce as we know it?

We shouldn’t say that it is a replacement for E-commerce, the model is different e.g., the inventory changes constantly, you will never see the same product twice on a marketplace.

What’s in it for you?

First of all, a marketplace offers a large choice of products. And because many producers sell on the same platform, there is a broader diversity than in a regular online store with a small set of brands. Also, marketplaces are commonly used by small businesses , so prices are also expected to be lower.

Everybody wins
For the marketplace owner: drop shipping allows a zero stock policy.
For the vendors: focus on product development and not at all on the selling platform becomes possible.
For the customer: comparing becomes a breeze.

What you have to be aware of

Extremely high competition between vendors appears in a marketplace. Because all products are sold on the same platform, with the same design, and are usually ranked under categories, the vendors’ brand image is difficult to get through. Moreover, quality proof is lower than in a real brand store. Nothing can guarantee the quality of two different products (especially true for second hand ones).

For the marketplace owners, controlling each product becomes a real issue.
For vendors, the product has to sell itself.
For customers, trust in quality and loyalty is more challenging.

In my own experience, unfortunately I got to buy something from ebay, I have replaced the item for 3 times but each and every time I got delivered a duplicate item. Though, they offered me 110% claim but will it make me satisfy? No!!!

This is the main issue with market places as the market place platforms do not have complete control over the quality of the product being delivered. And if something is getting wrongly delivered it’s the market place whose reputation is on stack not the seller.

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Mohit Bansal(23) is B.Tech in Electronics and Communication Engineering from Indian School of Mines, Dhanbad, India. He has interest in business and entrepreneurship and has published couple of research articles. He is also associated with various NGOs. He is with Techaloo when it was just in concept stage. The Techaloo site was not existing even then. Currently Mohit is working with Mu Sigma as a Business Analyst Profile.

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