Today, marketplaces account for 50% of global online retail sales. And online marketplaces are only rising in popularity.
The growth of businesses like Amazon, Uber, and Airbnb have proven the success of the marketplace model. And the technology needed to facilitate the complexities that are innate to marketplaces has finally matured.
There’s never been a better time to become an online marketplace entrepreneur.
James Currier founded Tickle.com which sold to Monster in 2004 for $110million. Since then, he has started NFX Guild, a Venture Capital firm that only invests in companies that will benefit from the network effect: products that become more valuable to each user as the number of users grow.
Currier believes that over the next few years, “the majority of interesting new companies will be fueled by network effects. Many of them will be [online] marketplaces.”
So if you’re wrestling an idea that involves the creation of an online marketplace, now is the time to get started.
Here are 3 reasons why now is the time to launch an online marketplace:
1. Countless industries are ripe for disruption through an online marketplace.
Airbnb disrupted the hotel industry with an online marketplace that connects people who need a place to stay with people who have space available. Uber disrupted the transportation industry with an online marketplace that connects drivers with people who need a ride. Expedia disrupted the travel industry by connecting the wanderlust with travel service providers.
One of our customers, CUPS, is disrupting the independent coffee shop industry by connecting independent coffee shops to the suppliers that supply the products, services, and information they need to run their business.
Entrepreneurs can identify opportunities to aggregate demand and use technology to connect that demand to the supply.
There are countless industries ripe for disruption. In fact, Venture Capitalists at the NFX Guild predict that industries like healthcare, travel, and business consulting will be the next to be disrupted.
2. An online marketplace business requires a different skill set than a traditional retailer.
"Uber, the world’s largest taxi company, owns no vehicles. Facebook, the world’s most popular media owner, creates no content. Alibaba, the most valuable retailer, has no inventory. And Airbnb, the world’s largest accommodation provider, owns no real estate.” – Tom Goodwin
The internet has completely changed the way we manage supply chains and distribution today. Technology now enables us to connect people who need something to people who have something to offer - and to make money in the process.
Etsy.com, for example, doesn’t hold any products being sold by the artists and vendors on its online marketplace. Instead, Etsy simply facilitates the connection of the shopper with the seller and is able to take a cut of that transaction to cover
Not having to hold and manage inventory eliminates costs associated with identifying and managing warehousing and fulfillment centers. It eliminates the need to be an expert in sourcing, shipping, and logistics. It enables you to focus on being a successful technology company.
3. Technology has caught up and makes online marketplace development (better than) possible.
Building an online marketplace from scratch used to require significant capital investment, a flexible timeline, and many people resources.
Fortunately, modern technology has caught up with the needs associated with developing an online marketplace making it faster, cheaper and easier than ever before.
A platform like Sitecore® OrderCloud® has the ability to combine a best-in-class B2C experience for buyers with complex business logic capable of connecting a network of suppliers who each have unique requirements of their own.
If you’re an entrepreneur wondering if now is the time to get started with your idea, the answer is yes. There’s never been a better time to launch a disruptive, online marketplace.