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MenuWhat are the challenges of creating an online marketplace with tangible products?
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The big question that is always a challenge for a marketplace is refereeing between buyers and sellers when there is a conflict. Basically, what processes are in place to make sure there is a resolution if a transaction turns sour between buyer and seller. Ebay, for example, tends to favor the buyer and any loss for the seller is to be viewed as a "cost of doing business." Conversely, Amazon does a bit more with eating some costs themselves if there is an issue. These are gross generalizations about these marketplaces, but in order for a marketplace to succeed it needs to be trusted and liked by BOTH buyers and sellers. Otherwise, each group will continue to look for alternate channels outside your marketplace. Let me know if you would like more insight, specifics or solutions.
I think the most important issue you should think about is getting traffic to your website. I have heard of this idea before-people who want to create an online marketplace where vendors can sell their wares-, not to mention all the sites currently available who do this, and the biggest hurdle is getting the traffic and, hopefully, enough sales, to make it worth the time and effort for you and your vendors.
Roxanne
Challenges that I've seen include:
- having orders placed but not fulfilled
- having vendors work around the payment process
- having shopping cart/marketplace software that handles shopping carts + shipping fees from various locations
A few other hurdles but worth the challenge :)
There are some key challenges I gonna address
Online Identity Verification: When someone visits your website, how do you know if that person is genuinely interested? Are they entering their real name and contact information? For all you know, all of the information they enter could be fake.
Solution: identifies and uses multi-layered authentication for fraud control. Some of its top features include electronic identity verification, SSN verification, instant authentication, and identity checks. Overcome these eCommerce business challenges by staying a step ahead of the hackers.
Competitor Analysis: In the super-competitive eCommerce business world, many competitors are offering similar products and services. So, how do you set yourself apart?
Solution: Conduct a thorough competitor analysis to find out what products your competitors are offering, and how much they’re selling it for. What platforms are they using to connect with customers? How are they generating leads? Do they have any promotions going on?
Customer Loyalty: Did you know that it can cost up to 5 times more to acquire a new customer than retaining an existing one?
Solution: To maintain customer loyalty, you MUST provide excellent customer service. Create positive experiences for your customers so they trust you. After all, if your customers are happy, it’s likely they’ll purchase from you again.
Product Return and Refund Policies: Never hide or try to trick customers about your return policy. Be transparent and make sure customers can easily find details about the return process. Make sure the policy is easily accessible on your website, and include FAQs to make things easier for your customer to understand. And finally, avoid words that are difficult to understand.
I've successfully helped over hundreds of entrepreneurs, marketplace owners, and businesses, and I would be happy to help you. Please send me more information before scheduling a call - so I can give you maximum value for your money. Take a look at the great reviews I’ve received: https://clarity.fm/ripul.chhabra
Prospective buyers are generally forced to depend on surrogates to assess what they are likely to get. They can consult current users to see how well a software program performs and how well the investment banker or the oil well drilling contractor performs. Or they can ask experienced customers regarding engineering firms, trust companies, lobbyists, professors, surgeons, prep schools, hair stylists, consultants, repair shops, industrial maintenance firms, shippers, franchisers, general contractors, funeral directors, caterers, environmental management firms, construction companies, and on and on. In practice, though, even the most tangible of products cannot be reliably tested or experienced in advance. To inspect a vendor’s steam-generating plant or computer installation in advance at another location and to have thoroughly studied detailed proposals and designs are not enough. A great deal more is involved than product features and physical installation alone. Such intangibles can make or break the product’s success, even with mature consumer goods like dishwashers, shampoos, and frozen pizza. To make buyers more comfortable and confident about tangibles that cannot be pretested, companies go beyond the literal promises of specifications, advertisements, and labels to provide reassurance.
You can read more here: https://hbr.org/1981/05/marketing-intangible-products-and-product-intangibles
Besides if you do have any questions give me a call: https://clarity.fm/joy-brotonath
Creating an online marketplace for tangible products certainly comes with its unique set of challenges, even if you have experience with intangible product marketplaces. Here are some key considerations:
1. Logistics and Shipping: With tangible products, you'll need to deal with the logistics of shipping, which includes choosing shipping carriers, calculating shipping costs, and ensuring timely delivery. Vendors may handle shipping themselves, or you might offer a fulfillment service where you take care of shipping and storage, similar to Amazon's FBA (Fulfillment by Amazon) program.
2. Quality Control: Ensuring the quality of physical products can be more complex than with digital ones. Establish quality control standards to maintain a consistent level of product quality across different vendors.
3. Returns and Refunds: Be prepared to handle returns and refunds, which can be more complicated with physical products. Define clear return policies and processes for both customers and vendors.
4. Inventory Management: You'll need to track and manage inventory levels to prevent overselling and ensure that products are in stock when customers place orders.
5. **Vendor Onboarding**: Vendors may need assistance in creating product listings, uploading images, and managing their accounts. Consider providing tools and support to simplify this process.
6. Payment Processing: Determine how you'll handle payments to vendors. Will you use a third-party payment gateway, or will you handle payments and disburse funds to vendors on their behalf?
7. Trust and Security: Building trust is crucial. Implement robust security measures to protect customer data and payment information. Also, establish trust mechanisms such as reviews and ratings to help customers make informed decisions.
8. Legal and Compliance: Comply with legal and regulatory requirements, which can vary depending on your location and the types of products being sold. This may include sales tax, product liability, and intellectual property issues.
9. Customer Support: Provide customer support for inquiries, issues, and disputes. A robust support system can help maintain customer satisfaction.
10. Scalability: Consider how your platform will scale as you onboard more vendors and customers. Ensure that your infrastructure can handle increased traffic and data.
11. Marketing and Promotion: Attracting both vendors and customers will be critical. A well-thought-out marketing strategy can help you grow your marketplace.
As for Amazon's model, you're correct that they allow vendors to fulfill their own products, and they take care of the order process. However, Amazon also offers fulfillment services for vendors who want them. Your approach can be similar, offering flexibility to your vendors.
If you're looking for professional help in building your online marketplace, you might want to consider checking out services like Cleveroad's Retail Solutions: https://www.cleveroad.com/industries/retail/. They can provide valuable expertise and assistance in developing and scaling your marketplace.
Best of luck with your venture into the world of tangible product marketplaces!
Related Questions
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When creating a marketplace, does it make more sense to focus on stimulating demand first or supply?
Focus on the more difficult side of the marketplace. For instance, if you think it'll be easier to get suppliers, then focus first on getting buyers - always be working on your toughest problem (aka your biggest risk). You'll find some great blogging on Marketplace and Platform topics here http://platformed.info (read the ebook too!)CM
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Broad niche or Targeted niche which way to go?
I always suggest going "uncomfortably narrow" initially so that you can really dial in the user experience and build liquidity first. Going broad will be tougher as there's too much noise to signal. Also, it's best to fake the supply side initially of you can to improve the buyers side first, then figure out supply & quality afterwards if customers are buying and you've proven out a demand strategy that will work.DM
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Holding funds in a 2-sided marketplace?
Check out https://www.balancedpayments.com/ They are made for marketplaces. Airbnb CEO among others invested in them and they have some of the best pricing/payout fees. Also some good info on http://www.collaborativeconsumption.com/2013/10/08/online-marketplaces-are-hard/ One of Balanced Payments co-founders is writing this blog series on marketplaces.MA
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How do I sell iPhone cases and make a profit out of them?
Selling any product including "iPhone cases" on websites with high competition like Ebay is surely not an easy mission. There are hundreds of sellers on Ebay and other websites who are already selling cases. If you need to get some sales, you need at least one of the following: 1. High reputation, reviews or feedbacks on the website that you are selling on. 2. The product that you are selling must be unique in some way or simply not found anywhere else. 3. If your products are featured at your own website, then that website of yours must be ranked properly online and marketed decently around social media networks. In your case, a possible approach would be to create your own website to sell your products on or work as an affiliate marketer for other big sellers in exchange for commissions. Depending on your budget, you need to draw the right plan around. If you have a good budget to invest in your business, then creating a website for yourself is a must. Otherwise, you need to rely on other websites and seek to provide unique or special products to get an edge around. Hope that helps!RZ
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What is the best pricing (business model) to apply to a marketplace?
I like to separate your question into 2 sub-questions: #1 How do we determine which side to charge? #2 How much is the right amount to charge? On #1, my answer is that you can charge the side(s) for whom you add the most value. In your examples, Uber really solves a big problem for drivers, it's that they sit idle for a good part of the day, so are willing to pay a lot for new leads. (their alternative is no work) Consumers are charged more for the convenience of a private car but they are probably not so much willing to pay more for a taxi, even if they can hail one from their phones. For AirBnB, it's a mix, it's a way for landlords to monetize idle capacity which they are willing to pay for, but it's also a way for a renter to pay less than they would normally pay for a hotel. On #2 (how much), I like to triangulate a number of factors: - What's the maximum amount I can charge one side, while still being a good deal for them. - How much do I need to charge so that I can become profitable? (the economics are quite different if you charge 3% vs. 12%) - What are comparable services charging for substitutes/competitive offerings? I will just add that there is no formulaic way to determine pricing strategies (curated vs. open), and it's a lot more about what's the comparable and what the value delivered is. That's how I approached the question while deciding the business model at ProBueno.com (my startup)MR
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