Marketplace BasicsHow to leverage a platformthat connects buyers and sellers

Disclaimer This e-Book is a resource of Krish TechnoLabs, and published with an objective to support merchants and business owners about the most successful E-commerce model and its ecosystem – Marketplace. It covers basic concept, features required, types of marketplaces, how to start, etc. regarding marketplace model. This content is more towards sharing guideline and does not give any judgement/decisions. The content shared in this eBook is derived from experiences, observations and various sources available. One can use this document with credit mention of KRISH TECHNOLABS PVT LTD, India.

ContentsIntroduction............................................................................................03

Objective of Document..............................................................03

Basic Flow of Transaction in Marketplace..................................04

How does transaction happen?..............................................04

Key Actors - Buyers / Sellers / Marketplace Admin..........06

Who Does what?..........................................................................06

Marketplace Vs Single Webstore....................................................07

Single Webstore...........................................................................07

The Marketplace..........................................................................07

Comparison...................................................................................08

Types of Marketplaces.......................................................................10

B2C / B2B / C2C / Auction........................................................10

Physical / Services / Intangible property.............................10

Vertical / Generalist....................................................................11

Pure Play / Hybrid.......................................................................11

Marketplace Eco-System...................................................................12

Essential Features for Marketplace...............................................14

For Marketplace Operator.........................................................14

For Sellers......................................................................................14

For Buyers.....................................................................................15

Benefits of starting a Marketplace................................................16

What should I plan before starting a Marketplace?.................17

About Us..................................................................................................19

Rocket Bazaar..............................................................................19

Krish TechnoLabs........................................................................19

IntroductionThe marketplace is a platform that brings together the buyers and sellers to efficiently transact. The entire process of buying and selling is enabled, monitored and managed by the organization which runs the marketplace. The most common marketplaces we use or know are eBay, Amazon, Flipkart, Alibaba, etc.

Every marketplace is based on the “sharing economy” model, where people, through an online platform, share the access to goods and services. It is designed with an objective to provide a platform to retailers, wholesalers, traders, manufacturers or individuals who want to exploit the power of selling online but may not have the website or reach to huge chunk of buyers.

Every Marketplace is developed with a core objective to create a profitable eCommerce ecosystem. Given the diverse nature of industries, organizations and buyers, different types of marketplaces are available out there today. Some are generic, they sell everything, while some are industry-specific, niche by nature.

If you’re looking forward to opening your own marketplace, chances are you would be bombarded with a number of queries and confusion about it. Operating a Marketplace is a new skill, and you would face challenges in areas of strategy, organising, technology, marketing, logistics and people management. And it is obvious! This whitepaper will give you a fundamental insight into the concept of the marketplace, core process, differentiator between site and marketplace, types of the marketplaces, ecosystem, benefits, and most importantly “How to start a marketplace?”

Interesting FindingAccording to a study released by E-commerce Foundation, retailers across Europe believe that by 2020, marketplaces will hold 40% of total global online retail.

03

Basic Flow ofTransaction inMarketplaceHow do transactions happen? Generally, the consumers visit marketplace site, browse through categories, see the product details, price, ratings of the vendor, etc. and if they like it, they will buy that product. The consumer may or may not pay for product, based on given options by a marketplace. This order is processed by marketplace operator, and then the delivery of the purchased product is fulfilled by the seller [retailers /wholesalers/ manufacturer].

The consumer is constantly updated by marketplace website for the status of the order. On receipt of goods, the consumer has to pay, if pending, and the transaction is marked as delivered or complete.

04

Role ofMarketplace:

05

MARKETPLACEOPERATOR

Sendsthe Order

Orders on theMarketplace

Ships the Product

= feeds (information, logistic, financial...)

SELLERS BUYERS

e-merchants, Individuals,brands, retailers,

wholesalers...

individuals,professionals

MISSION / ROLE HOW?

By setting up services and

tools to streamline interaction

and exchanges

Sellers > BuyersBuyers > Sellers

Connectingbuyers & Sellers

Showcase /catalogue

logistics / stock management

payment

communication

Customer service

Key Actors - Buyers / Sellers / Marketplace Admin The marketplace has primarily three major entities - Buyers, Sellers and Marketplace owner / operator

Who Does what?

Buyers: Buyers are the consumers/ users who get in touch with the sellers through the marketplace and purchase the required product and services. They are the driving force for the business and based on their buying behaviour and needs; the marketplace has to keep up the product mix. They are at the centre of this business model. All the facilities are created such that buyers can transact on the marketplace.

Sellers: Sellers can be the vendors/ suppliers/ manufacturers/ distributors or Individuals who’re there to sell their products and services. To be a seller on the marketplace, one has to pass through the registration process and upload credentials/documents required by the marketplace. To generate additional revenues, they start selling on marketplaces. They deliver the product purchased by the buyers.

Marketplace owner / operator: It is the marketplace operator who attracts buyers and sellers, provides a platform for transactions, tracks the transactions, manages distribution and collection of payments, and acts as a mediator for issues. It is liable for offering a transparent and safe environment for all the stakeholders using advanced tools and services that include stock management, catalogue management, transactions, verified information, etc.

Marketplace operator influence sales by bringing a variety of products, conducting auctions, offers, pre-bookings, etc. In some of the B2B marketplaces, you can find a request for ‘quote’ facility as well instead of ordering online. Marketplaces guarantee substantial gains for all players involved (operator, sellers, and buyers).

06

Marketplace Vs Single Webstore

Single Webstore An online retail website, where products or services are sold to the customers directly by the retailer/manufacturer/brand owner himself. Some of the examples can be zara.com, nike.com, emirates.com, etc. Here, the seller himself is engaged in collecting, processing and fulfilling orders. This is most common and traditionally available model. For bigger companies they convert their sites into MBO – a multi-brand online store where they own rights for selling products from multiple brands and they sell on their own website. For example – shoppersstop.com, croma.com, etc.

The Marketplace The marketplace model, as mentioned above, gathers sellers as well as buyers both at a single place. It is run and managed by the admin of the marketplace. They generally have multiple categories and products are sold by multiple sellers. It is competitive in nature where sellers need to be conscious about their product prices and ratings.

07

Comparison

08

Single Webstore Marketplace

Scale of webstore is smaller than Marketplace model. However, working capital needed is considerable as you need to invest in making a site, marketing it, keeping stocks and fulfilling orders.

Investment Needs

Starting and running a marketplace needs huge investments. Working capital is needed to make & run the IT infrastructure, sales and marketing, business development team salary, logistics and managed warehouse operations, etc.

Being a webstore owner, you would sell your own products or products which you got permission to sell online.

Products On marketplace, you invite vendors / sellers to upload and sell their products. Where your role is to publish and market their products /services

As products sold on webstore are your own products, you need to manage liabilities / warranty for them

Liability of goods

As products sold on marketplace are third-party goods, marketplace owner does not own liability. They pass on to seller.

Here goods sold are your own products, so margin can be higher. But average order value and number of orders would be limited.

Profit Margin In marketplace, being a platform your earn commission for products sold by sellers. In beginning years profit margins are in negative but later on it adds to exponential profit

In a single webstore, generally, number of orders would be lesser compare to marketplace.

Orders Number of orders to be handled is huge, if marketplace is success. It may go into millions of order per annum. Ex. Amazon

Single webstore or website of MBO, would have limited variety of goods

Variety of products / services

Marketplace can be horizontal / vertical by nature and number of goods / categories are always higher compare to webstore.SS

09

Single Webstore Marketplace

Here, you hold products and sell online, so earning comes in account of seller.

Earning Model Here, seller would get money at the end of settlement period for their goods sold. Being a marketplace, organization earn from transaction commission, managed warehouse services, promotions, logistics, etc.

A store would always have limited budget for online marketing / branding [except you are a fortune brand]

Promotion and Advertising

As a marketplace, promotions, offers and sale would run throughout the year. That is one of the biggest expense marketplace has.

Convenience is very high and profitability is less as every segment of retail is run and managed by the retailer

Profit and Convenience

Assures profit and convenience as the vendor get ready-made platform and well-connected market

It is to be managed by webstore owner. Which deviates their focus from making and selling

Warehousing / logistics

Marketplace has specific functions / tie-ups for warehousing and managed logistics. As it is part of their core duty to fulfil orders to retain customers and sellers.

Types ofMarketplacesThere are multiple types of marketplaces found online! They can be categorized based on customer type, what they sell, type of focus and ownership.

B2C / B2B / C2C / Auction

B2C: Business to Customers – This marketplace brings sellers in direct contact with the end customers. Here products are sold in retail. Ex. Amazon, Flipkart, Etsy, etc.

B2B: Business to Business – This marketplace is focused on bringing industrial buyers and consumers together. Here suppliers, manufacturers, vendors and other business players come together for wholesale or industrial buying. Ex. Alibaba.com

C2C: Customer to Customer – This platform is a space on which often individuals sell their goods and products to other people or customers. It can be fresh or used products. Ex. eBay, OLX

Physical / Services / Intangible property

Physical: In this type of marketplace, there is an exchange of physical/tangible goods between buyer and seller. Ex. eBay, Flipkart, Amazon

Services: Here people or companies sell out intangible goods like travel services, hotel bookings, cabs, housekeeping, professional services, etc. Ex. Upwork, Expedia, MakeMyTrip, etc.

Intangible Property: Here sellers with intellectual properties would upload their intangible goods on royalty to people who want to buy it. For example, Apps, Images, Music, etc. Ex. Google App, iTunes, Getty Images, Shutterstock, Theme Forest, etc.

10

Vertical / Generalist

Vertical: It is a category focused marketplace, where only one or a few types of goods are sold. They are of a particular niche and are known for a variety of goods in the same domain. Ex. MakeMyTrip, iTunes, Expedia, Zomato, etc.

Generalist: It is a marketplace which has a wide range of products/services from multiple categories. Where users would visit for their each and every need. Ex. Amazon, eBay, Flipkart

Pure Play / Hybrid

Pure Play: These marketplace owners don’t own any goods/services. They promote products and services of vendors / third party. They are in purest form as a platform.

Hybrid: These marketplace owners sell their own goods along with goods of other sellers/vendors. As they have vested interest in promoting their own goods, it is considered a hybrid model.

11

MarketplaceEco-SystemTo run a marketplace, you will have to act as a conglomerate. One company cannot own all the services/facets which are essential for marketplace success. Below are some of the key components/parties needed:

Payment Gateways: They enable transaction by supporting various payment methods for customers. They cover credit card, debit card, EMI, subscription, etc. and are linked to marketplace account. In some of the marketplaces, payment is directly transferred to vendor/seller after deducting marketplace fees. One can avail payment gateways from private companies or banks. Ex. PayPal, Stripe, PayU, CCAvenue, etc.

Warehousing and Distribution Partners: These are associates responsible for taking care of warehousing, logistics, and order fulfillment. When the marketplace is grown above some level, they expand into warehousing and logistics as well. Ex. UPS, Bluedart, Delhivery, etc.

Last Mile Logistics: It’s the last lap of delivery that is focused on delivering the product in hands of customer. Generally, logistics players would not have distribution networks in rural/remote areas. They take goods to bigger town/city. From that point, last mile logistics companies who are local players would take care of the delivery of goods and collection of money from customers in the case of COD.

Marketing Agencies: They are an essential part of marketplace ecosystem that plays a vital role in reaching millions of customers and generating orders. Due to them, offers/promotions reach to end customers which results in web traffic and orders.

12

Managed Service / Digitization Agencies: These agencies are responsible for the digitization of services, content publishing, photography/image editing and data uploading of goods. In recent years, they have come into limelight because they help companies focus on their production & marketing activities.

Accounting / Tax Consultants & Liaison Agencies: They help marketplace/vendors in accounting, calculation of tax, managing compliances, filing returns and duties, etc. they also act as intermediates for claims by clients/government bodies. They are essential to safeguard the interest of all stakeholders.

Packing Material Providers: These packaging agencies are responsible for providing packaging materials which are used for final delivery to the end users.

Influencers: They are the people who an extensive reach, followers and can endorse or promote products/services for better marketing as it is heard better when said by influencers.

IT Vendors: To make and manage marketplace, all platform owners don’t have in-house IT teams. They have IT partners who make and manage essential software/server components. Without their support, the marketplace would not come into existence.

13

Essential Featuresfor MarketplaceTo run a marketplace solution below features are essential. This is not a comprehensive features list, but must have features.

For Marketplace Operator • Catalogue which supports products from multiple vendors• Vendor management system to register, manage and

transact with vendors• Split Order and PO Generation mechanism to send right

orders to right vendors and fulfil them• Facility to manage multiple Logistics companies and routing

orders to nearest company• Commission structure management to have differential

commission model based on Category, Vendor and Offers• Secure Payment options and automated Tax management • Notification to manage interaction with vendors, customers

and team members• Access and rights management to get things done from

various teams• Exhaustive configuration panel to run marketplace• RMA – returns management and accounting

For Sellers • Vendor Registration and self-care, to see own status, orders,

products, commission with dashboard• Select & sell or Upload & sell facility to sell same products

which is sold by others or to upload new product which is not sold by others

• Order confirmation / rejection / complaints / returns review panel

• Orders history and analytics• Invoice and tax management• My feedback • Drop shipping management with parcel tracking

14

For Buyers • Advanced search• Attractive buying experience and interfacing • Select & buy comparing multiple vendors• Related produces and recommendations• Product / vendor rating and review• My Account with Profile, orders management, returns,

payment history, cards management, etc.

15

Benefits of startinga MarketplaceThe marketplace is a hub of multiple vendors, buyers, and sellers. Being the operator of the marketplace, you can manage and control process of the transaction and earn out of each transaction made on marketplace. Major places where you can benefit as a marketplace owner are:

Sales Commission: You can earn commission on every sale that occurs in your marketplace which can be based on your policies.

Advertising: As the marketplace is visited by hundreds of people every day you can earn putting up advertisements, like banners, posts, etc. or may have your own brand partners. You can sell this premium space to vendors for promoting their brands.

Subscriptions: You may help your sellers by offering them access to business indicators for better sales strategy or API access and a simpler stock or notification flow at a small price or by providing them extra features and earn on a monthly basis.

Offer Operational Convenience to Vendors: Offering a convenient and seamless well-functioning platform/marketplace to your vendors/sellers at a small price can generate a significant revenue resource for you. Nowadays, managed e-commerce services for photography, warehousing, content writing, orders management, etc. are provided by marketplaces or their sub-companies, which can add revenue to your marketplace.

Selling own products: Some of the marketplaces that are hybrid in nature, would promote and sell their own goods along with other vendors’ goods. They leverage heavy traffic of marketplace in selling their goods.

And many more…

16

What should I planbefore startinga Marketplace?There are few aspects you need to consider before starting a marketplace as it is a big venture and a lot of factors play a role in its success!

Comprehensive Business Plan: Having a business plan in place is necessary to have a clear roadmap of your start-up till round of investments and exit. It helps progress in your business. It also needs phase wise planning.

Finances: Money matters in any business especially when it is a big investment as a marketplace. It is a large scale initiative which would need a lot of funding from you or from others.

Technology: IT is a backbone. You would need all kind of tools and technologies to make, run and manage marketplace. And for each actor in the marketplace you would need technology according to their needs. You would require investing in technology on a regular basis.

People: How many people would you engage in the process in terms of resources, hires, stakeholders and partners is also a pre-thought aspect.

Process: To run marketplace you would need structured processes to run each department. Along with that your methodology to deal with entire ecosystem is also a key area.

Marketing Strategy: The implementation of right marketing strategy is one of the most crucial aspects that can bring your business to its full swing if planned beforehand. Marketplace’s success and funding are decided based on the number of users, number of orders, number of vendors and products, etc. Your marketing strategy would make or break future of marketplace.

17

Eco-System: One has to be efficient in managing all players in Eco-system defined in above section. They play a vital role in the success of marketplace.

18

RocketBazaar.com is an initiative of Krish TechnoLabs, Magento Enterprise Solution Partner

USA340 S Lemon AVE #1879Walnut, CA 91789

Phone: +1-(248)-275-1202

FRANCEParis, Stade de France,Zac du Cornillon Nord, Door E, Saint Denis,93216, France

Phone: +33 (0)1 84 20 81 53

DUBAILower Ground Floor,Silver Tower (AG),Cluster I JLT, Dubai

Phone: +971-543341033

INDIA (Ahmedabad)402, Aarya Arcade,Nr. Shree Krishna Center,Mithakali Six Road,Navrangpura, Ahmedabad, Gujarat, India

Phone: +91-98250 50837

INDIA (Bangalore)Level 14 & 15, Concorde Towers,UB City, 1 Vittal Mallya Road,Bangalore -560 001Karnataka, India.

Phone: +91-98250 50837

website: www.rocketbazaar.com | email: sales@rocketbazaar.com

Rocket BazaarAs the name suggests, we help, curate and hand hold enterprises that aim at

establishing a marketplace of their own leveraging our extensive experience in

e-commerce landscape. We help businesses shoot their online revenue many folds

offering technology and expertise essentials. Our marketplace solution is comprehensive

and covers essential features for buyers, sellers, and marketplace owners. To know more

details review www.rocketbazaar.com