How marketplaces will supersede ecommerce and change the way people shop.
By Jason Wyatt, Managing Director Markerplacer
In technology years, it has been a long time since the dawn of internet shopping. Platforms such as Amazon and eBay are still in business, and players such as Gumtree, and comparison shopping sites and aggregators, are having their day. But what’s missing from all those platforms is depth: of products, of product knowledge, of community.
Imagine if you could go to a site and have everything you might want in that category in one place, from the products themselves and reviews of them, to information about availability and advice on how to purchase the right item for your needs. In other words, everything you need to make the right buying decision. That’s a marketplace, and they already exist.
Marketplaces are not just the future of e-commerce, they are the future of all types of commerce because they are centred on how the buyer wants to buy, not how the seller wants to sell. When my co-founder Sam Salter and I started Bike Exchange in 2008, we saw the value in investing in a vertical to try to encapsulate every way a consumer buys a product. We made it our mission to build a platform that would show where all products were physically available, whether it was a store, a warehouse or someone’s garage, and how the buyer could purchase it, whether it was contacting a seller to have a look, or paying to have it delivered.
We happened to start with bikes and bike accessories because we saw a gap in the market in this area. Supported by a tribe as passionate as cyclists, it took off and Bike Exchange now has 85% of the product and content available on the market in the bike segment compared to our competitors’ 10%.
Now it’s evident that any vertical with a distinct tribe is ripe to become a marketplace. You need to understand that people are just shopping, and they want to be supported by an interface that lets them see content that will help them make a decision, whether that’s buying advice, for example what kind of bike a beginner should ride, or being able to compare features and prices and availability easily.
Starting a new marketplace
Having a go-to platform helps buyers remove all the legwork and effort associated with shopping. Since our success with Bike Exchange, we’ve opened a number of marketplaces, including in the baby goods segment (TiniTrader.com.au), homewares (HouseofHome.com.au) and outdoor gear (Outdoria.com.au) and premium live experiences (Tixstar.com.au). While each of these tribes are different, they are similar in their need for a source of deep product knowledge to support their buying decisions and it has become key that the communities of users can congregate in this space through reviews and stories.
When we took these on board we were careful to do our due diligence to find out how well these founders understood business and whether they had what it takes to build a marketplace, including a willingness to do the hard yards, pounding the pavement and getting buy-in from sellers in the initial stages like we did. The result is a product, a distinct marketplace that’s 80% our marketplace platform and 20% their tribal knowledge and networks functioning smoothly in 3-5 years, which is much shorter than most startups take to scale to a comparative size.
There are certainly other consumer segments that have all the hallmarks of being marketplace-ready and entrepreneurs who understand the tribe enough to personalise the buying process and make the user experience incredibly relevant, plus have the skills and network to unite sellers, should consider a marketplace platform. It’s hard to be everything to everybody, but marketplaces are not trying to be. They are built to be something to someone.