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V. VIRTUAL MARKETPLACE
5.1 How the Virtual Marketplace Is Reshaping Retail

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Unlike e-commerce sites that involve businesses selling their own products through a website,
virtual marketplaces are where third-party sellers can do business. Amazon and eBay are popular
examples of virtual marketplaces. Also known as e-commerce marketplaces, such sites may feature
individual traders, large-scale manufacturers of goods, or anything in between.

❖ How Virtual Marketplaces Work

• Unlike conventional e-commerce websites, virtual marketplaces transfer the burden of

maintaining inventories, logistics,
images, product descriptions, and
pricing to the seller. There is more
than one operational model for
marketplaces, but the most common
method involves marketplaces
providing a way for sellers to connect
their goods to interested buyers.

• Marketplaces display sellers'

wares, collect orders and payments,
forward orders to sellers, track
deliveries, and release payment to
sellers after deducting a fee.

(Image retrieved from: https://blog.shortpixel.com/wp-content/uploads/2019/12/online-marketplace.png)

• Many sellers on virtual marketplaces sell on their own websites as well, but virtual
marketplaces often benefit from higher traffic than individual business sites might. For some
smaller businesses, listing on virtual marketplaces is a way to promote individual products
and the overall brand.

• For small operations, selling on virtual marketplaces can do away with the requirement of
having a dedicated website, hosting, technology, payment gateway, accounting software,
and other necessities for selling online.
❖ The Advantages

• Selling on a virtual marketplace isn't the best decision for every business, but it does have
advantages that make it a good option for some, such as:

o Time and resources can be focused on products instead of on designing and maintaining
your own virtual store. The biggest virtual marketplaces have mobile apps as well,
expanding their reach, and, again, you don't have to worry about designing or maintaining
an app.
o Visibility for your products and your business can improve when placed in front of the high
traffic many virtual marketplaces attract. This increased visibility can help drive customers
to your own website or
your own brick-and-
mortar location.
o Small businesses can
get off the ground with
relatively low startup
costs by using a
virtual marketplace to
promote and sell
goods.

(Image retrieved from: https://blog.shortpixel.com/wp-

content/uploads/2019/12/online-marketplace.png)

❖ The Disadvantages

• The virtual marketplace is not a bed of roses. There also are some drawbacks:

o High web traffic is great, but the volume of products and brands on virtual marketplaces
makes it difficult to stand out from the crowd.
o The benefits of a virtual marketplace don't come free. As of 2018, Amazon charges $40
per month for sellers who sell more than 40 items per month, and there are additional
fees on top of that, depending on needs.
o Virtual marketplaces have their own rules about what can be listed and how it can be
listed, and you must be able to work within those constraints, as opposed to having your
own.

❖ The Future

• In 2017, Amazon bought Whole Foods and began pushing the sale and delivery of groceries.
That same year, Toys R Us filed for bankruptcy, and in 2018, it announced it was closing and
selling all its locations in the U.S. and the United Kingdom. The company's struggles were
blamed largely on the growth of online sales.

• These two examples are representative of the impact virtual marketplaces have had on retail
sales. The ability of customers to purchase even food and groceries online in addition to toys,
electronics, and other big-ticket items makes it difficult for even some of the biggest
businesses to survive.

• These trends suggest the businesses that will be most successful moving forward are the
ones that can limit overhead and effectively connect with customers through websites and
mobile apps.

REFERENCES:

• Khurana, A. (2019, June 5). How the virtual marketplace is reshaping retail. The Balance Small Business. Retrieved March
17, 2022, from https://www.thebalancesmb.com/virtual-marketplace-model-successful-
1141741#:%7E:text=Unlike%20e%2Dcommerce%20sites%20that,popular%20examples%20of%20virtual%20marketplac
es