The government’s announcement in march regarding the allowance of 100% FDI in marketplace model set the bell ringing in e-commerce market. As most of the big e-commerce websites are adopting the marketplace model, we need to understand that what exactly is all about and how it can be the new shift in the market.
A marketplace model refers to an arrangement in which the e-commerce websites allow the small vendors and entrepreneur to use their digital platform so as to connect with large base of buyers. In lieu of their usage of the platform, the vendors pay a certain percentage of profit they gained through each transaction made online. It marks a shift from the traditional inventory based model where the e-commerce websites used to keep the stock in their warehouses. They had to update it regularly in accordance with the market’s demand.
With most of the e-commerce business in developed countries going the marketplace way, the developing countries are also adopting the same. The reason for this can be sited from the fact that, the nature and structure of the marketplace model is such that it caters the demand of all the stakeholders involved. The customers get a wide range of product to choose form, while the sellers get an access to larger consumer base. The e-commerce website on the other hand enjoys certain benefits in terms of cost cuts, customer satisfaction, conversion rate, and commission from the sellers.
Another reason why the marketplace model holds a key is its inclusive nature. The offline shop owners who were left ignored after the advent of e-commerce era now get a chance to evolve themselves and reap the benefits of the digital market.
While providing such benefits, the one thing which marketplace model does silently is its contribution to the economy. By bringing in the small and medium vendors and start up in the picture, it widens the base of economy. Especially in developing countries where a large portion of market is captured by SMEs and start ups.
Transparency and seamless delivery are other such aspects which favors the marketplace model. With similar guidelines for all the sellers it promotes healthy competition. At the same time, it promotes transparency as the customers clearly know with whom they are transacting.
In order to shift your e-commerce website to the marketplace model you need to install the marketplace module of the CMS platform you are using for your website. For example, various marketplace module like Knowband’s Magneto’s marketplace extension, PrestaShop’s marketplace module etc. are available online. These modules are user friendly and easy to adopt, and allow you to get an overview through the free trial facility provided.
With the wind sailing in direction of the marketplace model, we need to wait and watch as how long it will take for the marketplace model to capture the market. Nevertheless with its add advantages, it presents a strong case against the traditional inventory based model.
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