Online Marketplace Apps and Its Types

Last Updated on July 13, 2022

An online marketplace is a platform that makes the process of shopping from different sources smooth. An app that does not own any products and forms a partnership with inventory owners to process buying, selling, payment, and delivery-related activities is called an online marketplace app. The online marketplace can be utilized by anyone owning an inventory as well.

Why Are Digital Marketplace Apps Trending?

The last decade has witnessed the rise of online shopping. The pandemic of Covid-19 also significantly impacted the online purchasing habits of people.

Online marketplace apps are the better way to promote the products. It takes less marketing costs, retailers receive new channels to grow their reach, customers can compare the prices of items, sellers can have an analytic report of their sales, and the cost of web security is also a responsibility of the apps hence the online marketplace apps are being preferred by the customers as well as sellers.

According to Digital Commerce 360, only in 2021 top 100 online marketplace apps have earned a revenue of $3.23 trillion from the US alone. 49 out of these 100 apps have faced a growth of 17% in 2021. The online marketplace apps can be divided into three groups based on their business models. 

3 Types Of Online Marketplace Apps

1. B2C online marketplace apps

The apps that are based on the business-to-customer business model are referred to as B2C online marketplace apps. Among the three business models, this one is the most common. In this business model, the app businesses are able to sell their product or services directly to the buyer or customer.

Key points of B2C

• Cost-efficient
• Huge reach
• No involvement of third parties
• Less staffing

Example Of A B2C Marketplace

Amazon is one of the biggest B2C online marketplace apps in the world. Jeff Bezos founded Amazon back in 1994. 

Key points 

• Amazon has more than 310 million users
• In the Q1 of 2022 Amazon generated $116.44 billion in revenue
• Amazon has a huge inventory of 12 million products
• According to Marketplace Pulse, Amazon is the most downloaded shopping app in the US

Related Read: Top Multivendor Marketplace Apps

2. B2B Online Marketplace Apps

Apps based on the B2B business model are called B2B online marketplace apps. B2B is a business model in which one business operator sells his items or services to another operator.

Key points of B2B:

• Security of business due to contract
• Items can be bought in huge quantity
• Secured payment options
• Tax prices can be included

Example Of A B2B Marketplace

Alibaba.com fits as an accurate example of a B2B online marketplace app. Alibaba.com is one of the top online marketplaces in the world. Jack Ma is the founder of Alibaba.com. The platform was launched back in 1999. 

Key points

• Alibaba.com has more than 1.31 billion users
• The app has generated a revenue of $134.6 billion in 2022 till now
• With 2.8 million suppliers and more than 5900 categories of products, Alibaba.com provides its customers with a huge range of options
• Retailers can manage the prices of their items

Related Read: How Do B2B Marketplaces Work With Examples

3. C2C Online Marketplace Apps

C2C business model-based marketplace apps are named C2C online marketplace apps. In this business model apps are designed to transact goods or services in between customers.

Key points of C2C:

• Charges an amount from sellers to list their item product in the portal
• Sellers can earn huge amounts
• Availability of rare items
• Easy for both buyer and seller to communicate with each other

Example Of A C2C Marketplace

Craigslist is a good example of C2C online marketplace app. In this app, one can find jobs, houses for sale, cars for sale, and many other goods such as electronics. In 1995 Craig Newmark founded Craigslist.

Key points

• Craigslist has a user count of 60 million only from US
• The app generated 660 million as revenue in 2021
• The app receives over 80 million ad posts every month
• A person can list an item of one category at a location once every 2 days

3 Other Types Of Marketplace Apps

Type	Definition	Example
Vertical	This online marketplace app buys and sells only one categorical product	Taskrabbit
Horizontal	This online marketplace app focuses on lots of product categories	Etsy
Global	This online marketplace app’s service is not limited to any particular area	Amazon

Revenue Generation Models For E-Marketplace Applications

• Commission model

This is the common revenue-generating model in B2B and B2C business models based on online marketplace apps. In this model, the app will charge the user for every single transaction as a service charge. 

Both the seller and buyer can not be charged for a transaction. The app is required to charge either the seller or the buyer.

• Advertising model

The advertising strategy is often used by marketplaces to attract a huge number of customers. Online marketplace apps often use this strategy and offer third parties to promote their goods or service through an ad on their platform in exchange for a fee.

• Listing fee model

This is a common way of generating profits for online marketplace apps. In this model, the app charges a predetermined fee for every product listing from the seller. This is commonly found in the C2C business model-based apps.

• Membership model

An online marketplace app comes with a large number of features. In recent times the apps are using freemium and premium tactics to generate more money. In freemium, the app users will only get specific features and in premium, users will have access to every feature such as quick delivery, early access to sales, and much much more.  

Related Read: Guide To Launch A Marketplace For Services

Essential Features For An Online

Marketplace

• Frequent update of products: Online marketplace apps need to update the descriptions, images, and videos frequently to provide the customer’s updated data on the goods and services.

• • Manual Search: A manual search option has to be available in every online marketplace app. As it will help the customer search for the required goods in a quick time.
  • Push notifications: Push notifications help in providing alerts to the customers regarding sales or the availability of items. So it is a good idea to have a push notification feature in the online marketplace apps.

• Contact system: A contact system is mandatory in any goods or service providing app. As it enables the buyer and seller to connect with each other. So it is necessary to have a contact system such as chat, call, and mail options in an online marketplace app. 

• Rating and review: Having a rate and review system in a shopping platform is mandatory as it helps the customers predict and understand the benefits and issues of the product. Adding it can increase consumer satisfaction.

• Security: In modern times nothing on the internet is free of the threat of cyber attack. Therefore an OTP-based login can secure the data of customers.

Wrapping Up

Online marketplace apps are becoming a huge tool for sellers to gain the maximum amount for goods and services. It helps in gaining a huge reach with minimal costs. 

The online marketplace apps however are not all similar in terms of operating business. There are three categories and every category is planned for a different purpose of selling and buying. 

There are positives to each of the three models that can be obtained by an entrepreneur if he decides on his target audience. 

There are apps like Amazon and Alibaba.com that follow both B2C and B2B business models in order to keep the operation intact. 

There are certain models for revenue generation as well. Based on the products and features on the app, the charges are decided.

Frequently Asked Questions About Marketplace Applications (FAQs)