Online marketplace

An online marketplace (or online e-commerce marketplace) is a type of e-commerce website where product or service information is provided by multiple third parties. Online marketplaces are the primary type of multichannel ecommerce and can be a way to streamline the production process.

In an online marketplace, consumer transactions are processed by the marketplace operator and then delivered and fulfilled by the participating retailers or wholesalers. These type of websites allow users to register and sell single items to many items for a "post-selling" fee.

In general, because marketplaces aggregate products from a wide array of providers, selection is usually more wide, and availability is higher than in vendor-specific online retail stores.[1] Since 2014 online marketplaces have become abundant.[2] Some online marketplaces have a wide variety of general interest products that cater to almost all the needs of the consumers, others are consumer specific and cater to a particular segment.

B2B online marketplaces

Some of the earliest online marketplaces were for business-to-business (B2B) trading. Early examples of online platforms that enabled e-commerce between businesses include VerticalNet, Commerce One, and Covisint. Contemporary B2B online marketplaces focus on a limited range of specific products or service, such as EC21, Elance and eBay Business, and have not achieved the dominance online marketplaces have obtained in B2C retail. B2B purchasing requires that online marketplaces facilitate complex transactions, [3] such as a request for quotation (RFQ), a request for information (RFI) or request for proposal (RFP).

Online retailing
A Lazada warehouse in Cabuyao, Laguna, Philippines in 2018. Third-parties can ship inventory to customers from Lazada's warehouses and sell their products through Lazada's online marketplace.

Online marketplaces are information technology companies that act as intermediaries by connecting buyers and sellers. Examples of prevalent online marketplaces for retailing consumer goods and services are Amazon, Taobao and eBay. On the website of the online marketplace sellers can publish their product offering with a price and information about the product's features and qualities. Potential customers can search and browse goods, compare price and quality, and then purchase the goods directly from the seller. The inventory is held by the sellers, not the company running the online marketplace. Online marketplaces are characterized by a low setup cost for sellers, because they do not have to run a retail store.[4] While in the past Amazon Marketplace has served as a role model for online marketplaces, the expansion of the Alibaba Group into related business such as logistics, e-commerce payment systems and mobile commerce is now trailed by other marketplace operators such as Flipkart.[5]

For consumers, online marketplaces reduce the search cost, but insufficient information on the quality of goods and an overloaded goods offering can make it more difficult for consumers to make purchasing decisions. Consumers' ability to make a purchasing decision is also hampered by the fact that an online marketplace only allows them to examine the quality of a product based on its description, a picture and customer reviews.[6] Another characteristic of online marketplaces is that the same product can be offered by several merchants. In this case, consumers can often make the selection of a merchant with the support of reviews of that merchant, for example. Despite many conceivable factors influencing merchant selection, customers choose primarily on the basis of the lowest price for a particular product.[7]

For services and outsourcing

There are marketplaces for the online outsourcing of professional services like IT services,[8] search engine optimization, marketing, and skilled crafts & trades work.[9] Microlabor online marketplaces such as Upwork and Amazon Mechanical Turk allow freelancers to perform tasks which only require a computer and internet access.[10] According to Amazon, its Mechanical Turk marketplace focuses on "human intelligence tasks" that are difficult to automate computationally. This includes content labelling and content moderation.[11]

Microlabor online marketplaces allow workers globally, without a formal employment status, to perform digital piece work, such as for example rate an image according to content moderation guidelines. Gig workers are paid for each task, for example U.S.$0.01 for each moderated image, and accumulate payment on the microlabor platform.[12]

The sharing economy
An Uber driver in Bogotá, Colombia with the Uber app on a dashboard-mounted smartphone

In 2004 Yochai Benkler noted that online platforms, alongside free software and wireless networks, allowed households to share idle or underused resources.[13] As the sharing economy inspires itself largely from the open source philosophy,[14] open source projects dedicated to launching a peer to peer marketplace include Cocorico[15] and Sharetribe.[16] In 2010 CouchSurfing was constituted as for-profit corporation and by 2014 online marketplaces that consider themselves part of the sharing economy, such as Uber and Airbnb, organized in the trade association Peers.org.[17] In 2015 Alex Stephany, the founder of online marketplace JustPark, defined the sharing economy as the economic value arising from making underutilized assets available online.[18]

Criticism

A 2014 study of oDesk, an early global online marketplace for freelance contractors, found that the service outsourcing of microwork increased opportunities for freelancers regardless of their geographic location, but the financial gains for most contractors were limited as experience and skills did not translate into higher payment.[19]

A general criticism is that the laws and regulations surrounding online marketplaces are quite underdeveloped. As of consequence, there is a discrepancy between the responsibility, accountability and liability of the marketplace and third parties. In recent years online marketplaces and platforms have faced much criticism for their lack of consumer protections.[20]

Market economy

In 1997 Yannis Bakos studied online marketplaces and came to regard them as a special type of electronic marketplaces. He argued that they reduce economic inefficiencies, by lowering the cost of acquiring information about the sellers' products. The operators of online marketplaces are able to adapt their business model because of the data they hold on the platform users. Online marketplace operators have a unique ability to obtain and use in their economic decision making personal data and transaction data, but also social data and location data. Therefore academics have described online marketplaces as new economic actor, or even as a new type of market economy. In 2010 Christian Fuchs argued that online marketplaces operated informational capitalism. The inherent feedback loop allows the operators of online marketplaces to grow their effectiveness as economic intermediaries. In 2016 Nick Srnicek argued that online marketplaces give rise to platform capitalism.[21] In 2016 and 2018 respectively, Frank Pasquale and Shoshana Zuboff cautioned, that the data collection of online marketplace operators result in surveillance capitalism.[22]

See also

References
  1. Determining where to sell online November 7, 2008
  2. Why online marketplaces are booming August 20, 2014.
  3. Dave Chaffey, Fiona Ellis-Chadwick, Richard Mayer, Kevin Johnston (2009). Internet Marketing: Strategy, Implementation and Practice. Pearson Education. p. 111. ISBN 9780273717409.{{cite book}}: CS1 maint: uses authors parameter (link)
  4. Matthew L. Nelson; Michael J. Shaw; Troy J. Strader, eds. (2009). Value Creation in E-Business Management: 15th Americas Conference on Information Systems, AMCIS 2009, SIGeBIZ track, San Francisco, CA, USA, August 6-9, 2009, Selected Papers. Springer Science & Business Media. pp. 156–157. ISBN 9783642031328.
  5. Oswald Mascarenhas (2018). Corporate Ethics for Turbulent Markets: The Market Context of Executive Decisions. Emerald Group Publishing. p. 123. ISBN 9781787561892.
  6. Matthew L. Nelson; Michael J. Shaw; Troy J. Strader, eds. (2009). Value Creation in E-Business Management: 15th Americas Conference on Information Systems, AMCIS 2009, SIGeBIZ track, San Francisco, CA, USA, August 6-9, 2009, Selected Papers. Springer Science & Business Media. pp. 156–157. ISBN 9783642031328.
  7. Manuel Rolf Adler; Atilla Wohllebe (2020). "Consumers Choosing Retailers On Online Marketplaces: How Can Retailers Differentiate Apart From The Price? – An Exploratory Investigation". International Journal of Applied Research in Business and Management. 1 (1): 27–36. doi:10.51137/ijarbm.2020.1.1.3.
  8. "Leveraging offshore IT outsourcing by SMEs through online marketplaces". U.L. Radkevitch, E. Van Heck, O. Koppius, University Rotterdam, Journal of Information Technology Case and Application, Vol. 8, No. 3, Date posted: August 23, 2006 ; Last revised: November 24, 2013
  9. Head and Hands in the Cloud: Cooperative Models for Global Trade to be Murray, Kevin, RMIT University, Melbourne, Australia, 2013
  10. Sarah T. Roberts (2019). Behind the Screen: Content Moderation in the Shadows of Social Media. Yale University Press. p. 46. ISBN 9780300235883.
  11. Sarah T. Roberts (2019). Behind the Screen: Content Moderation in the Shadows of Social Media. Yale University Press. p. 47. ISBN 9780300235883.
  12. Sarah T. Roberts (2019). Behind the Screen: Content Moderation in the Shadows of Social Media. Yale University Press. p. 47. ISBN 9780300235883.
  13. Arun Sundararajan (2016). The Sharing Economy: The End of Employment and the Rise of Crowd-Based Capitalism. MIT Press. p. 31. ISBN 9780262034579.
  14. "The Sharing Economy: Why People Participate in Collaborative Consumption". ResearchGate. Retrieved 2019-05-31.
  15. ☑ Cocorico is an open source marketplace solution for peer-to-peer marketplaces.: Cocolabs-SAS/cocorico, Cocolabs SAS, 2019-05-31, retrieved 2019-05-31
  16. Sharetribe Go is an open source marketplace platform, also available with SaaS model, Sharetribe, 2019-05-31, retrieved 2019-05-31
  17. Cristiano Codagnone, Athina Karatzogianni, Jacob Matthews (2018). Platform Economics: Rhetoric and Reality in the "Sharing Economy". Emerald Group Publishing. pp. 51–52. ISBN 9781787438101.{{cite book}}: CS1 maint: uses authors parameter (link)
  18. Arun Sundararajan (2016). The Sharing Economy: The End of Employment and the Rise of Crowd-Based Capitalism. MIT Press. pp. 29–30. ISBN 9780262034579.
  19. Beerepoot, Niels; Lambrefts, Bart (31 March 2014). "Competition in online job marketplaces: towards a global labour market for outsourcing services?". Global Networks. 15 (2): 236–255. doi:10.1111/glob.12051.
  20. Nicholls, Rob. "Who bears the cost when your Uber or Airbnb turns bad?". Retrieved 2016-08-02.
  21. Nick, Srnicek (2016). Platform Capitalism.
  22. Sarah Barns (2019). Platform Urbanism: Negotiating Platform Ecosystems in Connected Cities. Springer Nature. p. 115. ISBN 9789813297258.
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