‘Market Place’ is a wide term and probably people find many ways to describe it in their own words, but for me it simply means where many sellers come at a place to sell their goods and buyers have the luxury to buy a product which they think matches most with their requirement. Over the years studies has showed that in the marketplace structure goods industry is in the rise whereas service industry is still trying to make its way and people are putting up their hopes on the startup industry which will change the way people think or look at marketplaces.
A reason can be the use of digital media for service industry, people tend to trust the marketplaces for buying/selling goods more than actually using or buying a service through digital media. But this conception of people is changing everyday more and more everyday with new digital innovations of marketplaces.
According to me one of the biggest barrier of service innovation is the information about services, the service let’s say that I receive is good and give it good reviews may not be good for you, so these information’s about services can be subjective and thus people may not chose a service from a digital media. Also due to primarily budget constraints, small business owners lack the luxury to set up their whole information in the marketplace, thus can be also a barrier for service industry.
Another problem for the service owners can be that in few countries of the World, it is comparatively easier to get the licensing of their services done to bring the product in the marketplace, but in some countries/states it takes forever and thus it does not prove that whoever brings their services first to the market, their services are best.
I will give you guys a real life example which happened last week with me, so I was travelling from Luxembourg to my home country India, so now the place (town) that I belong from had only normal expensive taxi service system when I left India 3 years back and people had no other choice or options to book a different cab service which is reasonable. And to my surprise this time when we landed there, we decided to take an Uber as someone from my family told me that they have now started this service there. I was not too hopeful as I had no local mobile sim-card (so no local connectivity) where the Uber driver will call to ask where exactly I am at the airport. But of course I was wrong and under estimating the Uber services, they tracked my GPS location and reached exactly where I was standing outside one of the arrival gates in airport. I was happy and satisfied and the reason that I gave this example is because service innovation is slowly booming and those who can continuously try to expand/grow and increase more services or bring innovations to their existing services will survive in the market and Uber is a classic example how they made their excellent travel/transportation service convenient for people, gave employment to thousands of people by being independent drivers and expanded globally and bringing new value proposition to the customer experience every now and then.
Another example we can take that how our parents always gave us this lesson when we were children to never sit in anyone’s car who we are not familiar with, but if we see today the service innovation has brought quite a change in our mindsets that now days people are not afraid to try any new services which is coming in the market.
The concept of marketplaces has evolved from time to time and as a service/product buyer we can see the change significantly. Earlier in this industry platforms like eBay for example used to reveal all the information of the buyer to customer and vice versa, this strategy was created to stay from conflicts which may happen between the both parties while buying and receiving the products and companies like eBay did not gave any personalised suggestions or advice to the either party to help deciding buying or selling the products/services and charged a minimal amount just because of the platform of the marketplace. But this culture is changing rapidly and at present marketplace industry is all about going above and beyond and diving deep into the cause of troubles and problems of the customers and provide both parties an excellent support from the platform. One major example which we all have used at least once in our lives is Amazon, it is said to be one of the most customer focused company in the World who is continuously innovating new ways to simplify purchase and delivery process. Personally I have such good user experiences buying products from them and never worrying about the leakage or exposing of my personal information to the sellers, Amazon itself handles it well and takes care of all the process from beginning to end which provides satisfaction to the customers and the sellers. We are expecting the marketplaces to innovate new ways and make the process simpler in the coming days.
Now let’s talk about marketplaces which are not digitally involved, we are talking about local marketplaces which we see in our neighbourhood. I will again take a real life example of a market which is very popular where I used to stay in India. The situation was like farmers and local producers from all over India comes to a predefined place where they come and put up a stall and try to sell their products and one may ask that how we can define the liquidity or how we can understand that the business of this marketplace is growing. This we can define by the large number of participants who contribute by buying the products or services within the same area and that’s how we define that liquid the marketplace is.
In the business of marketplaces the network effect plays a crucial role that whether the popularity that a new (marketplace) company is gaining is coming because they ran paid promotions or they grew their popularity in an organic way, by that what I mean is by referrals or word of mouth or by sheer popularity of the product/service. But we can determine the growth more if organic users comes naturally rather if we do a paid campaign. But initially for most of the startups the founders prefer to do paid campaigning to make people aware of their brands and then people who sees the advertisements, may buy the products/services and if they like it, then they may refer it to their family or friends and how it organically grows and which is good in the long run. But measurement of all the traffic that is coming directly or via some external links has to be documented, and the more people coming through direct links, the higher the chance that people actually linking the products or services or the referrals are actually working and the company is getting successful to convey the value propositions to their customers.
I personally think that every marketplace operates differently and it has several building blocks or we can call them layers as well which operates the whole business. The first layer consists of the core engine where all the observation of customers demand and the sellers supply happens, and the pricing strategy and interactions to avoid churns while operating. The second layer consists of all the basic things with making of important decisions like analysing the sales. These both layers are very crucial and important for successfully running the marketplace.
Let’s take another real life example which I am currently in. So while I am writing this blog, let me tell you guys what is the situation like in an Indian airport and how marketplace plays a crucial role for the passengers who flies or get stuck at the airport. So due to the current India Pakistan war that is happening, international flights are getting delayed by more than 10 hours, and people flying abroad are getting affected mentally and physically and that’s where the marketplace in the airports comes to rescue where we can shop from hundreds of international and national brands, vendors from all over the world has a franchisee in the airport which includes medical stores as well. The concept of marketplace has taken over the whole World and progressing the needs of the society by giving them thousands of options to choose from.
Happy reading folks!
Belinda Fashionista 