The e-commerce scene has evolved and grown exponentially since the first wave of product and service-focused online marketplaces, and of course, the ubiquity of the smartphone. They’ve paved the way for technological innovation within online marketplaces and inspired many startups to launch their own.
There are still great opportunities for online marketplaces to enter new verticals and disrupt legacy industries. New and emerging startups have entered almost every niche or vertical, but only a small percentage make it in the long haul. Certain niche markets, more than others, are saturated with competitors.
The fact that innovation occurs at a virtually unprecedented speed in the Internet era makes the future of your own marketplace even more daunting. Who knows, one moment your marketplace could be thriving, and the next, without any warning at all, it could be obsolete, just like MySpace or Friendster.
In such a competitive landscape, what can entrepreneurs today learn from online marketplaces that managed to beat their competitors and make it big? What has enabled them to stay at the forefront of e-commerce?
Anticipate the future, but do your research
You may see what others don’t, or you may have an idea of the next big opportunity, but nothing will make that idea more focused and viable than research.
In the early 90s, many people knew that Internet businesses would be the next big thing, but Amazon founder Jeff Bezos took it a step further by researching the top 20 mail-order businesses in the U.S. He identified one key product — books — which suppliers already had electronic lists for and would benefit most from being sold through the Internet instead of mail-order.
Bezos entered the online market with this original focus, and following Amazon’s initial success, Bezos was able to expand the site’s offerings, which brings us to our next point:
Never stand still
Bezos could’ve been satisfied with Amazon’s $20,000/month book sales, and eBay founder Pierre Omidyar could’ve been satisfied with just selling collectibles, but they weren’t. Sure, eBay and Amazon were big back then, but they really became household names when they broadened their product categories.
Not only did they expand worldwide, but they also began acquiring companies that would complement their core business. eBay bought PayPal, which facilitated its online payments. Amazon bought Zappos, which enabled it to establish itself as a major player in the footwear category. These examples are only two of these marketplace giants’ strategic acquisitions.
Another success story of the dot-com bubble, Alibaba, began with its B2B platform but broadened its platform. Today, Alibaba operates a number of China’s most successful sites, including China's largest C2C marketplace Taobao; Tmall.com, the country's largest B2C marketplace; and Alipay, a third-party online payment platform.
In short, when building a marketplace, stagnation is your worst enemy, and innovation is key to long term success. After all, there's always room for improvement.
Focus on the users
The user experience is everything. It determines whether or not customers will come back to your site and how passionate people will be about what your brand. The most successful marketplaces have these few things in common:
Features such as “Follow”, “Recommend for You” and “Related” are a great way to keep your offerings relevant to the user. eBay even has geo targeting to make sure the items that show up on a user’s page can be shipped to their location. These features let the customers be involved in choosing what they want to see. The more relevant it is, the more likely the user will find value in your marketplace, and the more likely the user will visit your site again.
Part of creating a positive user experience is to make it as fast as possible for the users to find what they’re looking for. This can be done through minimising the time it takes for a webpage to load, and by making the site search-oriented — either by using a search bar, search autocomplete, or suggestions of popular categories.
Photo credit: http://assets.baymard.com/blog/autocomplete-design-02-amazon-40a5184636c9cb11692e29a65f2fecdf.jpg
3. Allow feedback and reviews
Give the users as much information as possible to help them make informed decisions before purchasing an item or service. Displaying ratings and reviews from other customers usually does the job. Sites such as Booking.com send out emails to solicit reviews from customers, and the feedback helps other Booking.com users to see how reputable the provider is so they can choose the best product or service experience.
In addition to boosting bookings, this provides extra value to the customers.
4. Fast and efficient communication
Give your customers assurance by sending them e-mail updates and confirmation. Amazon leads in this category as it offers real-time package tracking. Early startups may not be able to afford this luxury, but you should still cover the basics, including a dedicated customer support team and confirmation emails and updates. Social media and newsletters are also effective ways to communicate general updates and promotions to your customers.
To make it to the top, you have to be persistent. As in Amazon’s case, it could take years before your marketplace can finally become profitable. Take the time and effort to test out what works and what doesn’t, and most importantly, never give up on your vision.