Marketplace as a sales model: what is it and how is it different from dropshipping?

Marketplace as a sales model – today, we’d like to explain the details of online marketplaces and how your company can benefit from such a business model – but is it the same as dropshipping?

Find out below!

What is an online marketplace and how to start one?

At a first glance, an online marketplace might look similar to a regular e-commerce retail store – however, when you take a better look, the two are often fundamentally different. An online marketplace connects buyers and sellers on a single platform, while a retail store usually acts as the only seller to a customer base of buyers.

To run an online marketplace, you don’t need your own inventory of products – apart from managing the marketplace system and ensuring steady revenue with methods like commission fees or paid membership, you only need people willing to sell their products on your platform, and people willing to buy those products from the sellers on your platform. This creates the so-called Chicken and Egg problem – how do you convince manufacturers to use a platform without established buyers or the opposite?

With rising competition, you need a good business plan and solid software to beat other platforms – making your marketplace fast and easy to use is important, but so is making it safe and reliable. You’ll also need a good understanding of the industry you’re aiming for to find a customer niche with a specific need your marketplace can fulfill.

Now we know what an online marketplace is – but how do we make creating one profitable?

Marketplace business models – pros and cons of the marketplace approach

A marketplace is a type of online service, provided by you for both buyers and sellers, and as with any such type of service, you would expect to be paid for it. There are many ways of making money as an online marketplace – let’s take a look at some of the most popular marketplace business models:

• Commissions. We already mentioned commissions, as they are the most common approach to making revenue as an online marketplace – simply charge your customers either a percentage or a flat fee for each transaction. Platforms like eBay and Etsy all use this model, as its main advantage is that your customers only pay for what they get. However, you’ll still have to convince customers that there is enough value in what they’re paying for to warrant its price.
• Paid membership. Instead of having your users pay for each transaction, you can ask them to pay a flat monthly or yearly fee for using your platform. Memberships can be broken down into tiers, offering more functionality at a higher price. This approach is great for dedicated customers who will frequently use your marketplace, as their costs don’t grow together with the number of transactions. Take note that it’s already a delicate task to build a marketplace supply, finding sellers to satisfy buyers and buyers to satisfy sellers, and the membership model might make it even more difficult at first.
• Paid listings, premium features, visibility preference. Online marketplaces pick and choose the features of their specific business approach. You can even hide some of them behind a paywall, providing basic experience for free and extending it at a price. This can be commonly seen with featured listings and other visibility preference methods – or you can ask a set fee for every listing, but you’ll need a lot of them if your business model depends solely on that.

As with every business approach, there are pros and cons to the marketplace model:

• Required staff isn’t proportional to the number of products sold
• You don’t have to handle manufacturing and delivery
• It’s easy to offer a wide variety of products
• Many monetization options
• Finding customers might not be easy at first – your user base is split in two and you’ll need both sellers and buyers to make the model work
• You’ll need proper software to assure enjoyable user experience
• Rising competition

Marketplace as a sales model – examples of successful marketplaces

There are many companies who made it big as online marketplaces – the first one that might come to mind is Amazon. Even though the company offers a wide variety of services, from cloud computing to entertainment, Amazon Marketplace is a huge e-commerce platform that combines Amazon’s regular offerings with an immense online marketplace.

In fact, over 55% of sales on Amazon’s platform come from third-party sellers. While now the company offers an extensive range of product categories, they started just with online book selling.

Finding a niche is the key to establishing a successful marketplace – just take a look at Etsy. Etsy gave creators a platform to sell their arts and crafts, from handmade plushies to elaborate sculptures costing tens of thousands dollars. Making money on flat listing fees and 3.5% commision rate of all sales, plus advertisement revenue from featured sellers, Etsy created a global platform which enables artists to express themselves and sell their creations – and generates over $1.7 billion in revenue based on Etsy’s 2020 annual report.

Are marketplaces the same as dropshipping?

Even though a marketplace might look very similar to dropshipping, they are in fact two very distinct business models. Dropshipping involves first buying the product from a 3rd party by a retailer, who then sells it to buyers under their own brand. While the dropshipper handles the shipping directly to the buyer, product ownership rights are held by the retailer until sold to a customer.

In case of a marketplace, the retailer simply brokers a deal between a 3rd party seller and a buyer, without interacting with the physical product or service at all. The branding remains unchanged, and the seller ships the product directly. The buyer transfers the payment to the marketplace retailer, who then transfers it to the 3rd party seller after taking any potential commissions. While both approaches are similar, dropshipping involves fundamental accounting differences and transfers most of responsibility for the product on the retailer.

Is now the best time to adopt the marketplace model?

Online marketplaces are booming, with the competition getting fiercer and fiercer each year – now might be the best time to join the game and reap the benefits, before others can satisfy the market.

Marketplaces are highly scalable and, when successful, continue to grow almost by themselves. Your job is to create a system that’s easy to use and offers extensive functionality, depending on whether you’re aiming for the B2C or B2B market – or you can skip right to managing by using a professional marketplace platform instead.

Projections confirm the trend to continue, and the popularity of online marketplaces will only grow. When adopting the marketplace model, remember that there is no universal approach that’ll suit all – you’ll need to combine and rework business models to make it big, depending on your industry and competition, your target market, and customer needs.

Marketplace – summary

If you think that your organization has a chance to develop using the opportunities offered by the marketplace operators – contact us! We have many years of experience in integrating sales systems with all marketplaces operating on the market (e.g. Amazon, eBay, Allegro). As well as implementing omnichannel sales support systems – including marketplace trading platforms – we are also partners with leading marketplace technology providers (e.g. Mirakl).

If you would like to find out more about the opportunities offered by the implementation of your own marketplace for B2B and B2C sales, we would be delighted to introduce you to this topic – CONTACT US.

10 ideas to boost your BLACK FRIDAY eCommerce marketing strategy!

Because of the ongoing pandemic, to a large extent, digital shopping is taking over offline sales at an extremely rapid rate. According to studies, eCommerce sales in the United States increased from ~16% to ~20% between 2019 and 2020, compared to an only 1,5% difference between 2018 and 2019.

To make the most out of the Black Friday season and maximize your eCommerce profits, you need a proper plan. Building the right strategy for Black Friday is the key to success, saving you the headache of brainstorming and implementing ideas at the last moment. It is also an exceptional moment to introduce a digital aspect to your brick and mortar store, which is only a small investment compared to the potential increase in sales!

Black Friday eCommerce strategy | Marketing tips

However, how exactly do you prepare a Black Friday eCommerce strategy? What are the best ideas to increase your revenue and help your company grow? To help you answer those questions, we have prepared this guide of the 10 best ideas to build your eCommerce strategy for the Black Friday season!

Step 1: Start with the basics – setting up your platform, advertising, and UX

Let’s start with the fundamentals – if you have no clue what to do to prepare your eCommerce business for the upcoming Black Friday shopping rage, these ideas will be perfect to begin with.

• Consider your business approach when setting up an eCommerce platform

Whether your company specializes in B2B or B2C products/services matters significantly when launching an eCommerce platform. The two types of clients each have their own buying behaviors that need to be considered and often look for distinct features first.

B2B eCommerce platforms might prefer a more streamlined design, while B2C platforms can benefit from visible customer reviews and transparent product highlights.

• Expand your advertising channels

Are you utilizing your social media channels optimally when reaching customers? Going deep with your target research might bring you valuable information on how to better target your Facebook and Instagram ads, so make sure you do it right – or get a team of experienced analysts to do it for you!

You can also think about diversifying your outreach channels – transferring some of your advertising budget into paid advertisements might pay out in the future, as statistics show it is one of the most effective ways of reaching new customers, especially close to Black Friday.

• Perform a thorough UX analysis

Are your customers suddenly leaving your website in the middle of the buying process and you can’t figure out why? It just might be an UX flaw that’s turning your clients away!

Conducting a deep UX analysis will give you valuable insight into how your eCommerce platform performs from the user’s point of view. Taking action appropriate to the results is the key to guaranteeing a smooth user experience and is one of the best eCommerce marketing ideas for you to implement.

Step 2: consider branching out your eCommerce marketing strategy efforts | Remarketing, SEO, and ERPs

Now we’re getting into details – if you haven’t looked at these when devising your eCommerce marketing strategy, it is the best time to do so if you want solid results for Black Friday!

• Try out Remarketing

Returning clients can be just as important as new ones – even more so for B2B businesses! With an ever-increasing saturation of varying client types, clinging on to your customer base is the key to increasing sales. Remarketing is a feature of Google Ads that will allow you to retain more clients after Black Friday ends, in a simple and easy way.

• Search Engine Optimization – boost your visibility

SEO has been proven times and times again to be an effective tool in increasing website outreach, and through this boosting revenue. Google’s algorithms are getting more and more sophisticated with every update, so making sure your SEO features fit in organically with the content is a fool-proof approach to positioning.

• A one-in-all solution to business management with ERPs

Making sure your eCommerce platform works without hicks and allows scalability are the keys to growth. An ERP (Enterprise Resource Planning) is an extensive software, which when properly integrated with your eCommerce platform, gives you an easy way to manage all vital processes of your company using a unified system. Proper ERP integration is crucial to making sure every piece fits together in a perfect harmony.

Step 3: specific tools to use – specialized copy, newsletters, and automation

Here, we want to give you some specific ideas to implement in your eCommerce marketing strategy for Black Friday, which can immediately improve your turnover for the upcoming holidays.

• Publish Black Friday oriented copy

Taking advantage of your content is crucial to reaching out more customers before, during, and after Black Friday. Think about publishing posts, stories, or articles that are relevant to the Black Friday shopping spree – sharing shopping tips and best deals are great ways of reaching out to customers.

• Implement newsletter segmentation

As research shows, it is much more effective to send out personalized newsletters to each segment of your audience, instead of just bombarding them all with the same emails. This way, you’ll be able to meet the specific needs of each customer segment and actually get through to them instead of just annoying them.

• Increase order values with automated rewards

Loyalty rewards are a classic strategy for increasing retention rate and purchase frequency. Giving your customers automatic access to these rewards during checkout has been shown to increase order values – after all, clients prefer such simple solutions to browsing the Internet in search of coupon codes for hours.

Black Friday eCommerce marketing strategy – final thoughts | Always keep experimenting!

The best way of staying ahead of your competition is constant experimentation – never stop developing new ideas and trying them out, as it will give you a wider perspective on which strategies are effective.

Now that you know how to prepare an effective Black Friday eCommerce marketing strategy, nothing is stopping you from maximizing your sales for the holiday season. However, if you need a pair of extra hands to bring your online store to the next level, contact us at ORBA – we help clients with everything eCommerce related, from UX design, eCommerce development and implementation, to service & maintenance!

ORBA is among the top 7% of elite eCommerce development teams!

At ORBA, for a long time, we have been looking for a way to show to the world how much we have achieved in terms of the satisfaction of our clients, but also of the well-being of our internal team. Now, after passing Pangea verification, we can communicate through our Pangea.ai profile.

Our way to celebrate participation in the Pangea community

We approached the participation in the Pangea.ai verification process twice. Pangea analyzed our TeamVibe, contacted our Clients directly, and also researched our internal policies, documents, financials, etc. During the first iteration, we received lots of valuable information, plus a list of areas to improve. We are happy to say that we took them to heart and implemented actions that helped us succeed in the verification process to become part of an elite group of IT companies. Also, we are very happy to learn that the work we focused on last year: our values, communication, practices & project reporting have not gone unnoticed. Now, good practices in these elements are the foundation of our company.

The most important discovery and knowledge

The part of the audit concerning the health condition of our team brought us the most joy. We managed to achieve a result of 8.4, which is higher than the statistical average for the companies that are members of the Pangea program. Over 77% of our team members took part in the survey, so the result is very satisfying for us.

We know that the effectiveness of ORBA is determined by the members of our team, so we are very happy that our team members are satisfied with their work at ORBA. Friendly relationships are significant, but we have also found areas that we can manage even better in the future. It concerns, among others, the area of feedback & recognition.

We know how important the flow of information is. We intend to focus on the “1 on 1” meeting format to ensure that we are able to listen to our team members and convey our appreciation on an ongoing basis for their commitment and more.

“We meet regularly with our team members and discuss topics related to their personal and professional development. The goal is team satisfaction, which translates into the quality of our work and, as a result, the satisfaction of our clients.” – Julia Szczepankowska, Head of HR Department in Orba.

“Among the top 7% eCommerce development companies”

We can already feel the effects of such actions: our customer satisfaction survey by Pangea gave us a score of 8.6/10, including 10/10 in our key “project management” section. Such amazing results would not be possible without the excellent team and the involvement we put into working with our clients.

We have been in the industry for many years. We walked the path from a small software house to a company that is part of a large IT group and organization that successfully carries out tasks for the largest, including Fortune 500 companies. Our team has grown (ORBA has almost 100 qualified specialists); therefore we are able to efficiently carry out large, extensive eCommerce implementations. This allows us to enjoy the recognition of our clients:

“The cooperation between our companies has been positive, without any hiccups. Our experience of working with ORBA can confirm that they are a trustworthy partner.” – Arkadiusz Luciński, CEO LPP

We are calmly looking into the future

We are very happy that we managed to join the elite group of 7% top eCommerce development companies. It is a significant step for us, confirming how much we have achieved. It also means that we are on a good course. We still intend to improve ourselves, our processes, and the level with which we carry out tasks assigned to us by our clients.

Our success is the ability to attract the best talents and establish cooperation with clients for whom our values and work culture are important. Relationships based on mutual trust help you achieve the highest business goals.

Achieving high scores in the Pangea audit is part of the process. The goal is to continuously develop and improve in the elements that will make us leaders in the rapidly changing world of IT technology. It is the best we can do to ensure the satisfaction of our customers.

Place a bet and toss a coin in the air!

E-commerce and surroundings – brief glimpse into trends for 2020.

A new year always brings new opportunities – while we cannot predict the future, we for sure must look at trends and make assumptions consider them for predictions around relevant topics in today’s business world.

Earth First! Ecological awareness – dare to care.

Indifferent to your personal beliefs and thoughts around climate change, we cannot deny that in today’s world this is an important topic which will be screamed out loud in 2020 and beyond: we are seeing and living through a shift towards greener living, companies and people alike are attempting to reduce their carbon footprint, new environmental laws are being introduced worldwide and the younger generations are now considering “how green a company is” when calibrating a product’s quality.

 

But what does this have to do with e-commerce, which is not involved directly in selling eco-commodities? Everything.

Below you will find 5 simple ways to make your e-commerce eco-friendly (and more attractive to likely buyers who will judge you on your impact to our planet!):

• Packaging is now a top concern – less plastic, more recycled cardboard! We, as a society, are becoming scared by plastic pollution and looking for remedies everywhere for it. Changing your packaging materials won’t save the world or it’s climate, but it is a first step in a great direction.
• Make your Corporate Social Responsibility values a major part of your unique selling proposition. Don’t hug trees but plant them – every item / $ spent in your e-store will increase a dedicated fund to forest your local area. Take it a step further and organize a tree-planting drive. This can show love for your community and desire to build strength in it – which can only result in strong appeal for your customers!
• Does your e-shop cross-sell products with eco-friendly alternatives? It is easy to manage your cross and up selling in stores based on Magento 2 – believe us, at ORBA we spent over 95k working hours with this e-commerce platform. Create a vegan or Earth-friendly alternative and upsell it! People will pay more for recycled if they see you believe in the cause![DH1] 
• While we are at it, why not create a new set of attributes for your products? i.e.: “ecological impact”? Some food manufacturers today are starting to list carbon footprint or ecological impact in food production (see Quorn veggie meat’s new labelling[DH2] ). This is the beginning of a huge trend  by all predictions – lead the charge!
• Show how to reduce carbon footprint by educating your customers in how to use your products more efficiently, especially if you are dealing with electronic devices. Underline cost saving benefits as well – promotions can add up! Why not set up a return for recycling program in exchange for a future discount?

Toss a coin to your audience and make them fans

Cashing in on pop culture is not new. However, there are multiple new globally sweeping trends which everyone can use to engage their public, their customers or their peers even more. Today’s big topic may be The Witcher Netflix series – get our reference for the coin? Thought so! Now we have broken the ice and have a conversation starter. Don’t be afraid to cash in on today’s trending topic, icon, meme or challenge to increase brand awareness – and you can do all of it without needing deep pockets. In fact, you can spend next to nothing to achieve this. No license from the author, no sponsorship for tv series? Where is the catch?! No catch, just a different scale and approach – buy some paper books and make them a prize in your survey / quiz / contest, then post it on your social media account and count your shares and likes!

 

If books are better for dust and not for you, you can always summon your followers or gain new ones by calling for action in real time. Enough with these empty phrases. Just announce a competition in which “best Witcher or Witcher’s inspired cosplay published with photo in this tread will have a chance to win…” Sit down and see the responses. Trend it on social media for a small cost and you are doubly winning.

 

Almost every kind of online shop can adopt these tactics – thanks to “halo effect” you will be part of the buzz around The Witcher’s fandom. Let someone else make the marketing campaigns (and spend a ton of money in the process) to promote it, you just use name of the bestselling book series to attract and engage your target group and a lot of potential fans, completely unrelated to your business but eager to get the prize.

 

If you can’t predict trends, make them! Do you have interesting ideas and recognitions as well? Share them with us in the comments, like original post and follow us on LinkedIn or Facebook to win a complete set of books (you can chose the language!), I bet you will not guess which ones… ?

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New Strategic Advisor for ORBA – Andy Walter

As of September 2018, ORBA is a member of the Lingaro Group, a digital transformation and data analytics partner to Fortune Global 500 enterprises. Accordingly, Lingaro Group leadership has extended Strategic Advisor Andy Walter’s responsibilities to include guiding ORBA’s continued growth.

ORBA, a top e-commerce expert, continues to strengthen its position in American markets. The company is pleased to announce its best year since its founding in 2010. In 2018, ORBA’s year-on-year revenue and headcount growth of 70% and 50%, respectively, are both results of an ongoing commitment to meeting and anticipating clients’ evolving requirements in the fast-moving, strategically important world of online sales

From its North American headquarters in Cincinnati, ORBA provides top brands like Strauss Coffee, Microsoft, and Chicago Steak Company with innovative B2B and B2C e-commerce platforms that scale with the growing strategic importance of web sales and incorporate the best emerging technologies that actually support day-to-day business.

As of September 2018, ORBA is a member of the Lingaro Group, a digital transformation and data analytics partner to Fortune Global 500 enterprises. Accordingly, Lingaro Group leadership has extended Strategic Advisor Andy Walter’s responsibilities to include guiding ORBA’s continued growth.

“Today’s customers want to buy online, so it is no surprise leading North American enterprises need to get their online sales right. But this is uncharted territory for many of them. ORBA has the proven ability to understand where customers want to go with e-commerce and the technical capabilities to get them there. It’s a great team that I’m excited to be working with” said Walter.