[[{"@context":"http:\/\/schema.org","@type":"Article","@id":"https:\/\/www.the-future-of-commerce.com\/2019\/12\/16\/creating-e-commerce-marketplaces\/#Article","articleBody":"When people think about creating e-commerce marketplaces, Amazon often follows by mental association, and with good reason.\nThe retail giant enjoys almost half of the entire US e-commerce marketshare, and it\u2019s safe to say that a majority of US consumers have probably purchased something from the store at some point.\nThe word association is so strong that many incorrectly assume that setting out to start an e-commerce marketplace, and attract sellers to it, would be futile given Amazon\u2019s dominance over both facets of online selling.\nMarketplaces are actually becoming more affordable to set up and operate, and the barriers to entry are diminishing so much that, increasingly, online storeowners are rolling out their own and enjoying success in building catalogs and growing revenue.\nDone well, creating e-commerce marketplaces can allow operators to capture revenue from industry giants and help brands stay relevant in an Amazon-dominated world.\nIs it a David and Goliath battle in some respects? Yes. And, at least at the time of writing, it\u2019s definitely a battle worth fighting.\nThe Amazon flywheel effect: Platforms matter\nAnyone who has observed a flywheel in motion knows that it generates its own momentum over time, becoming easier to speed up. As Newton once put it: \u201ca body in motion will remain in motion.\u201d\nThe analogy has often been applied to Amazon to describe how, once active, the marketplace has been observed to perpetuate itself and accelerate, as brand recognition grows and sellers rush to gain pixel space where their competitors are active, whether they are joining the program as Fulfillment by Amazon (FBA) or Fulfillment by Merchant (FBM) associates. This can be demonstrated by the steady growth of third party sellers on Amazon \u2013 58% and climbing, according to this recent letter to shareholders.\nAs more merchants are drawn to the platform, the selection of products increases, as does competitive pricing. This draws in more buyers, creating a virtuous cycle: merchants want to be where consumers are, and consumers want to be where price and selection are best.\nAmazon doesn\u2019t have a patent on this concept \u2013 it applies equally to the very concept of marketplace selling as whole. As merchants grow more accustomed to the idea of selling through third party online stores, it becomes the new normal and merchant inertia diminishes.\nThis kind of disruption isn\u2019t just being seen within e-commerce. In the internet era platforms (services which create the infrastructure needed for an ecosystem consisting of buyers and sellers to form) are achieving dominance and have quickly entrenched themselves as the business model of the future \u2013 think Uber, AirBnB, and Netflix.\nBy contract, pipelines \u2014 in which businesses sell to consumers strictly through their own managed channels without any kind of reciprocal feedback loop \u2014 are the remnants of yesterday. It\u2019s about two-way relationships and more widely distributed selling channels. For would-be marketplace operators, this means that getting the ball rolling is easier and more urgent than ever.\nChallenges of e-commerce marketplace selling\nStarting a marketplace has many advantages, but let\u2019s take a look at some of the challenges brands can face in starting these.\nCuration:\u00a0Marketplaces are brands in their own right, but they also need some kind of central ethos and look-and-feel that reflects the parent company operating them.\nFor that reason, curation is particularly important. Marketplace entrants must pay attention to the merchant signup process, and institute checks and balances to ensure that appropriate merchants sign up to the marketplace. This might require developing sets of merchant qualification criteria, and deploying staff members to assist in the screening process of new signups. Merchants that don\u2019t provide proper customer support or actively maintain an inventory on the marketplace are likely to damage the reputation of the website.\nOnboarding and administration: Attrition is the bane of marketplace operators, and onboarding is the most delicate phase during which careful relationship management with prospective merchants is a must.\nMarketplace operators need to invest in a satisfactory customer experience and closely guide merchants during the signup process to ensure that they will not give up when attempting to upload their inventory and establish a presence on their marketplace. Operators must remember that, in the Amazon era, the ease of the onboarding and maintenance processes for their marketplaces will constantly be judged against the high standards set by the leader.\nCustomer experience:\u00a0The marketplace needs to have a customer experience (CX) that will impress both its customers and merchants selling on the platform. A marketplace that\u2019s backed by inadequate customer support and success functions is unlikely to succeed. Paying attention to the functionality and scalability of the platform right from the beginning is important \u2013 if your marketplace isn\u2019t easy to use and manage, growing it will be difficult.\nTop considerations for brands considering creating e-commerce marketplaces\nMarketplace-launchers also need to consider:\nTransparency: Marketplaces differ in how they present the fulfillment options they can operate with to merchants participating in the program. The optics of this, from consumers\u2019 perspectives, can have important ramifications. Some typical configurations include:\nA transparent mixture of direct selling and selling from third parties\n\u201cWhite labeled\u201d third party participation in the marketplace\n\u201cWhite labeled\u201d fulfillment of own products through third parties\nCustomer Service: Post-sales service is another critical area which prospective market operators need to pay close consideration.\nMarketplace owners may wish to attempt to enforce Service Level Agreements (SLAs) which supersede those of the merchants listing on the website, or alternatively let them set their own.\nIn the latter case, marketplace owners must be transparent with customers about reasonable expectations for service and post-sales support. This is another reason why ensuring the integrity of the sellers taking part in the marketplace, maintaining open channels of communication with them, and having well managed governance standards is critically important.\nChange Management: Selling as \u201cone-to-many\u201d is a very different proposition than selling \u201cmany-to-many\u201d.\u00a0 Organizations need to adequately plan for the development, implementation, documentation, and governance of the new business processes required to successfully operate a marketplace, and will frequently need outside help to do so.\nPoorly implemented marketplaces mean big problems\nWhen creating e-commerce marketplaces, brands need to adopt a mentality of \u201cdo it well, or don\u2019t do it at all.\u201d\nPoorly implemented and executed marketplaces can have massively detrimental effects on brand image. In a streamlined marketplace environment, customers are often not even cognizant of that they\u2019re buying from a fulfillment partner rather than the marketplace itself (assuming it operates its own distribution channels). Just consider Amazon, whose branding is so strong and associated with the marketplace that the two have become synonymous in the eyes of most buyers.\nThis means that if a customer has a poor experience as a result of a marketplace seller, they\u2019re likely to remember the brand behind the marketplace, rather than the seller who actually supplied them the goods, in an unfavorable light.\nFinally, unless support and service SLAs are well delineated and communicated, marketplace operators can easily find themselves stuck down a rabbit hole of responsibility trying to remedy the defects of marketplace partners. If they haven\u2019t been properly vetted, dealing with these issues could easily monopolize the time and energy of a brand\u2019s in-house support resources, causing a chilling effect on the overall CX.\nGetting it right can pay off\nOn the flip side, operating a successful marketplace presents enormous opportunity for brands to grow revenue and widen distribution channels. In the Amazon era, brands of all sizes need to adapt to life selling across the platform rather than down the pipeline.\nSetting up a successful marketplace allows brands to:\nDrastically increase the product categories they\u2019re able to sell to customers (consider Best Buy\u2019s decision to begin retailing kitchen goods)\nBreak into new demographics and target new buyer personas who may be interested in the brand\u2019s direct inventory\nCreating e-commerce marketplaces: Act with urgency\nAmazon shouldn\u2019t be thought of as having monopolized the marketplace space; rather it\u2019s created an industry disruption. While many brands can benefit from this rising tide, not all will.\nThanks to new technology and partners, rolling out marketplaces is more accessible to enterprises of various sizes. However, no one can say how long this window, open wider than ever before, will stay that way.\nWhile the long tail of marketplaces is growing, brands that don\u2019t become marketplace operators in time will logically be relegated to marketplace sellers soon thereafter.\nStart-ups, mid-market, enterprise: Today, every B2B business needs e-commerce to grow. We can help. Learn more NOW.","author":{"@type":"Person","@id":"https:\/\/www.the-future-of-commerce.com\/2019\/12\/16\/creating-e-commerce-marketplaces\/#Article_Person","image":{"@type":"ImageObject","@id":"https:\/\/www.the-future-of-commerce.com\/2019\/12\/16\/creating-e-commerce-marketplaces\/#Article_Person_ImageObject","url":"https:\/\/23x6xj3o92m9361dbu2ij362-wpengine.netdna-ssl.com\/wp-content\/uploads\/2019\/11\/Eric-Gutoski-1-150x150.jpg"},"name":"Eric Gutoski","sameAs":"https:\/\/www.linkedin.com\/in\/ericgutoski\/","url":"https:\/\/www.the-future-of-commerce.com\/contributor\/eric-gutoski\/"},"dateModified":"2021-11-17T20:32:42+00:00","datePublished":"2019-12-16T09:00:00+00:00","description":"Creating e-commerce marketplaces can allow operators to capture revenue from industry giants and help brands stay relevant in an Amazon-dominated world.","headline":"Creating e-commerce marketplaces to stay relevant in an Amazon world","image":{"@type":"ImageObject","@id":"https:\/\/www.the-future-of-commerce.com\/2019\/12\/16\/creating-e-commerce-marketplaces\/#Article_ImageObject","height":"630","url":"https:\/\/www.the-future-of-commerce.com\/wp-content\/uploads\/2019\/12\/creating_competitive_marketplaces-1200x630.jpg","width":"1200"},"mainEntityOfPage":"https:\/\/www.the-future-of-commerce.com\/2019\/12\/16\/creating-e-commerce-marketplaces\/","name":"Creating e-commerce marketplaces to stay relevant in an Amazon world","publisher":{"@type":"Organization","@id":"https:\/\/www.the-future-of-commerce.com\/","additionalType":"https:\/\/www.wikidata.org\/wiki\/Q1193236","description":"Relevant, timely information & analysis on commerce trends, both consumer-facing and B2B.","logo":{"@type":"ImageObject","@id":"https:\/\/23x6xj3o92m9361dbu2ij362-wpengine.netdna-ssl.com\/wp-content\/themes\/hybris_foc\/assets\/images\/layout\/logo-new-2x.png?_=1","height":"96","url":"https:\/\/23x6xj3o92m9361dbu2ij362-wpengine.netdna-ssl.com\/wp-content\/themes\/hybris_foc\/assets\/images\/layout\/logo-new-2x.png?_=1","width":"500"},"name":"The Future of Customer Engagement and Experience","sameAs":["https:\/\/podcasts.apple.com\/us\/podcast\/a-call-for-a-better-experience\/id1479742201","https:\/\/twitter.com\/FutureOfCEC","https:\/\/www.linkedin.com\/groups\/4844282","https:\/\/www.the-future-of-commerce.com\/feed\/"],"url":"https:\/\/www.the-future-of-commerce.com\/"},"url":"https:\/\/www.the-future-of-commerce.com\/2019\/12\/16\/creating-e-commerce-marketplaces\/#Article"},{"@context":"http:\/\/schema.org","@type":"Organization","logo":{"@type":"ImageObject","url":"https:\/\/23x6xj3o92m9361dbu2ij362-wpengine.netdna-ssl.com\/wp-content\/themes\/hybris_foc\/assets\/images\/layout\/logo-new-2x.png?_=1","height":"96","width":"500","@id":"https:\/\/23x6xj3o92m9361dbu2ij362-wpengine.netdna-ssl.com\/wp-content\/themes\/hybris_foc\/assets\/images\/layout\/logo-new-2x.png?_=1"},"name":"The Future of Customer Engagement and Experience","sameAs":["https:\/\/podcasts.apple.com\/us\/podcast\/a-call-for-a-better-experience\/id1479742201","https:\/\/twitter.com\/FutureOfCEC","https:\/\/www.linkedin.com\/groups\/4844282","https:\/\/www.the-future-of-commerce.com\/feed\/"],"additionalType":"https:\/\/www.wikidata.org\/wiki\/Q1193236","url":"https:\/\/www.the-future-of-commerce.com\/","description":"Relevant, timely information & analysis on commerce trends, both consumer-facing and B2B.","@id":"https:\/\/www.the-future-of-commerce.com\/"},{"@type":["Article"],"@id":"https:\/\/www.the-future-of-commerce.com\/2019\/12\/16\/creating-e-commerce-marketplaces\/#Article","@context":{"@vocab":"http:\/\/schema.org\/","kg":"http:\/\/g.co\/kg"},"url":"https:\/\/www.the-future-of-commerce.com\/2019\/12\/16\/creating-e-commerce-marketplaces\/","publisher":[{"@id":"https:\/\/www.the-future-of-commerce.com\/"}],"author":[{"@type":"Person","@id":"https:\/\/www.the-future-of-commerce.com\/2019\/12\/16\/creating-e-commerce-marketplaces\/#Article_author_Person","url":"https:\/\/www.the-future-of-commerce.com\/contributor\/eric-gutoski\/","image":[{"@type":"ImageObject","@id":"https:\/\/www.the-future-of-commerce.com\/2019\/12\/16\/creating-e-commerce-marketplaces\/#Article_author_Person_image_ImageObject","url":"https:\/\/23x6xj3o92m9361dbu2ij362-wpengine.netdna-ssl.com\/wp-content\/uploads\/2019\/11\/Eric-Gutoski-1-150x150.jpg"}],"sameAs":"https:\/\/www.linkedin.com\/in\/ericgutoski\/","name":"https:\/\/www.the-future-of-commerce.com\/contributor\/eric-gutoski\/"}],"subjectOf":[{"@type":"FAQPage","@id":"https:\/\/www.the-future-of-commerce.com\/2019\/12\/16\/creating-e-commerce-marketplaces\/#Article_subjectOf_FAQPage","mainEntity":[{"@type":"Question","@id":"https:\/\/www.the-future-of-commerce.com\/2019\/12\/16\/creating-e-commerce-marketplaces\/#subjectOf_FAQPage_mainEntity0","name":"The Amazon flywheel effect: Platforms matter","acceptedAnswer":[{"@type":"Answer","@id":"https:\/\/www.the-future-of-commerce.com\/2019\/12\/16\/creating-e-commerce-marketplaces\/#subjectOf_FAQPage_mainEntity0_acceptedAnswer_Answer","text":"Anyone who has observed a flywheel in motion knows that it generates its own momentum over time, becoming easier to speed up. As Newton once put it: \u201ca body in motion will remain in motion.\u201dThe analogy has often been applied to Amazon to describe how, once active, the marketplace has been observed to perpetuate itself and accelerate, as brand recognition grows and sellers rush to gain pixel space where their competitors are active, whether they are joining the program as Fulfillment by Amazon (FBA) or Fulfillment by Merchant (FBM) associates. This can be demonstrated by the steady growth of third party sellers on Amazon \u2013 58% and climbing, according to this recent <a href=\"https:\/\/blog.aboutamazon.com\/company-news\/2018-letter-to-shareholders\" target=\"_blank\" rel=\"noopener noreferrer\">letter to shareholders<\/a>.As more merchants are drawn to the platform, the selection of products increases, as does competitive pricing. This draws in more buyers, creating a virtuous cycle: merchants want to be where consumers are, and consumers want to be where price and selection are best.Amazon doesn\u2019t have a patent on this concept \u2013 it applies equally to the very concept of marketplace selling as whole. As merchants grow more accustomed to the idea of selling through third party online stores, it becomes the new normal and merchant inertia diminishes.This kind of disruption isn\u2019t just being seen within e-commerce. In the internet era platforms (services which create the infrastructure needed for an ecosystem consisting of buyers and sellers to form) are achieving dominance and have quickly entrenched themselves as the business model of the future \u2013 think Uber, AirBnB, and Netflix.By contract, pipelines \u2014 in which businesses sell to consumers strictly through their own managed channels without any kind of reciprocal feedback loop \u2014 are the remnants of yesterday. It\u2019s about two-way relationships and more widely distributed selling channels. For would-be marketplace operators, this means that getting the ball rolling is easier and more urgent than ever."}]},{"@type":"Question","@id":"https:\/\/www.the-future-of-commerce.com\/2019\/12\/16\/creating-e-commerce-marketplaces\/#subjectOf_FAQPage_mainEntity1","name":"Challenges of e-commerce marketplace selling","acceptedAnswer":[{"@type":"Answer","@id":"https:\/\/www.the-future-of-commerce.com\/2019\/12\/16\/creating-e-commerce-marketplaces\/#subjectOf_FAQPage_mainEntity1_acceptedAnswer_Answer","text":"Starting a marketplace has many advantages, but let\u2019s take a look at some of the challenges brands can face in starting these.<strong>Curation:&nbsp;<\/strong>Marketplaces are brands in their own right, but they also need some kind of central ethos and look-and-feel that reflects the parent company operating them.For that reason, curation is particularly important. Marketplace entrants must pay attention to the merchant signup process, and institute checks and balances to ensure that appropriate merchants sign up to the marketplace. This might require developing sets of merchant qualification criteria, and deploying staff members to assist in the screening process of new signups. Merchants that don\u2019t provide proper customer support or actively maintain an inventory on the marketplace are likely to damage the reputation of the website.<strong>Onboarding and administration: <\/strong>Attrition is the bane of marketplace operators, and onboarding is the most delicate phase during which careful relationship management with prospective merchants is a must.Marketplace operators need to invest in a satisfactory customer experience and closely guide merchants during the signup process to ensure that they will not give up when attempting to upload their inventory and establish a presence on their marketplace. Operators must remember that, in the Amazon era, the ease of the onboarding and maintenance processes for their marketplaces will constantly be judged against the high standards set by the leader.<strong>Customer experience:&nbsp;<\/strong>The marketplace needs to have a customer experience (CX) that will impress both its customers and merchants selling on the platform. A marketplace that\u2019s backed by inadequate customer support and success functions is unlikely to succeed. Paying attention to the functionality and scalability of the platform right from the beginning is important \u2013 if your marketplace isn\u2019t easy to use and manage, growing it will be difficult."}]},{"@type":"Question","@id":"https:\/\/www.the-future-of-commerce.com\/2019\/12\/16\/creating-e-commerce-marketplaces\/#subjectOf_FAQPage_mainEntity2","name":"Top considerations for brands considering creating e-commerce marketplaces","acceptedAnswer":[{"@type":"Answer","@id":"https:\/\/www.the-future-of-commerce.com\/2019\/12\/16\/creating-e-commerce-marketplaces\/#subjectOf_FAQPage_mainEntity2_acceptedAnswer_Answer","text":"Marketplace-launchers also need to consider:<strong>Transparency: <\/strong>Marketplaces differ in how they present the fulfillment options they can operate with to merchants participating in the program. The optics of this, from consumers\u2019 perspectives, can have important ramifications. Some typical configurations include:\n<li>A transparent mixture of direct selling and selling from third parties<\/li>\n<li>\u201cWhite labeled\u201d third party participation in the marketplace<\/li>\n<li>\u201cWhite labeled\u201d fulfillment of own products through third parties<\/li>\n<strong>Customer Service: <\/strong>Post-sales service is another critical area which prospective market operators need to pay close consideration.Marketplace owners may wish to attempt to enforce Service Level Agreements (SLAs) which supersede those of the merchants listing on the website, or alternatively let them set their own.In the latter case, marketplace owners must be transparent with customers about reasonable expectations for service and post-sales support. This is another reason why ensuring the integrity of the sellers taking part in the marketplace, maintaining open channels of communication with them, and having well managed governance standards is critically important.<strong>Change Management: <\/strong>Selling as \u201cone-to-many\u201d is a very different proposition than selling \u201cmany-to-many\u201d.&nbsp; Organizations need to adequately plan for the development, implementation, documentation, and governance of the new business processes required to successfully operate a marketplace, and will frequently need outside help to do so."}]},{"@type":"Question","@id":"https:\/\/www.the-future-of-commerce.com\/2019\/12\/16\/creating-e-commerce-marketplaces\/#subjectOf_FAQPage_mainEntity3","name":"Poorly implemented marketplaces mean big problems","acceptedAnswer":[{"@type":"Answer","@id":"https:\/\/www.the-future-of-commerce.com\/2019\/12\/16\/creating-e-commerce-marketplaces\/#subjectOf_FAQPage_mainEntity3_acceptedAnswer_Answer","text":"When creating e-commerce marketplaces, brands need to adopt a mentality of \u201cdo it well, or don\u2019t do it at all.\u201dPoorly implemented and executed marketplaces can have massively detrimental effects on brand image. In a streamlined marketplace environment, customers are often not even cognizant of that they\u2019re buying from a fulfillment partner rather than the marketplace itself (assuming it operates its own distribution channels). Just consider Amazon, whose branding is so strong and associated with the marketplace that the two have become synonymous in the eyes of most buyers.This means that if a customer has a poor experience as a result of a marketplace seller, they\u2019re likely to remember the brand behind the marketplace, rather than the seller who actually supplied them the goods, in an unfavorable light.Finally, unless support and service SLAs are well delineated and communicated, marketplace operators can easily find themselves stuck down a rabbit hole of responsibility trying to remedy the defects of marketplace partners. If they haven\u2019t been properly vetted, dealing with these issues could easily monopolize the time and energy of a brand\u2019s in-house support resources, causing a chilling effect on the overall CX."}]},{"@type":"Question","@id":"https:\/\/www.the-future-of-commerce.com\/2019\/12\/16\/creating-e-commerce-marketplaces\/#subjectOf_FAQPage_mainEntity4","name":"Getting it right can pay off","acceptedAnswer":[{"@type":"Answer","@id":"https:\/\/www.the-future-of-commerce.com\/2019\/12\/16\/creating-e-commerce-marketplaces\/#subjectOf_FAQPage_mainEntity4_acceptedAnswer_Answer","text":"On the flip side, operating a successful marketplace presents enormous opportunity for brands to grow revenue and widen distribution channels. In the Amazon era, brands of all sizes need to adapt to life selling across the platform rather than down the pipeline.Setting up a successful marketplace allows brands to:\n<li>Drastically increase the product categories they\u2019re able to sell to customers (consider Best Buy\u2019s decision to begin retailing kitchen goods)<\/li>\n<li>Break into new demographics and target new buyer personas who may be interested in the brand\u2019s direct inventory<\/li>\n"}]},{"@type":"Question","@id":"https:\/\/www.the-future-of-commerce.com\/2019\/12\/16\/creating-e-commerce-marketplaces\/#subjectOf_FAQPage_mainEntity5","name":"Creating e-commerce marketplaces: Act with urgency","acceptedAnswer":[{"@type":"Answer","@id":"https:\/\/www.the-future-of-commerce.com\/2019\/12\/16\/creating-e-commerce-marketplaces\/#subjectOf_FAQPage_mainEntity5_acceptedAnswer_Answer","text":"Amazon shouldn\u2019t be thought of as having monopolized the marketplace space; rather it\u2019s created an industry disruption. While many brands can benefit from this rising tide, not all will.Thanks to new technology and partners, rolling out marketplaces is more accessible to enterprises of various sizes. However, no one can say how long this window, open wider than ever before, will stay that way.While the long tail of marketplaces is growing, brands that don\u2019t become marketplace operators in time will logically be relegated to marketplace sellers soon thereafter."}]}]}],"image":[{"@type":"ImageObject","@id":"https:\/\/www.the-future-of-commerce.com\/2019\/12\/16\/creating-e-commerce-marketplaces\/#Article_image_ImageObject","url":"https:\/\/www.the-future-of-commerce.com\/wp-content\/uploads\/2019\/12\/creating_competitive_marketplaces-1200x630.jpg","height":"630","width":"1200"}],"mainEntityOfPage":"https:\/\/www.the-future-of-commerce.com\/2019\/12\/16\/creating-e-commerce-marketplaces\/","datePublished":"2019-12-16T09:00:00+00:00","description":"Creating e-commerce marketplaces can allow operators to capture revenue from industry giants and help brands stay relevant in an Amazon-dominated world.","headline":"Creating e-commerce marketplaces to stay relevant in an Amazon world","name":"Creating e-commerce marketplaces to stay relevant in an Amazon world","dateModified":"2022-03-03T16:30:32+00:00","articleBody":"\n        When people think about creating e-commerce marketplaces, Amazon often follows by mental association, and with good reason.\nThe retail giant enjoys almost half of the entire US e-commerce marketshare, and it\u2019s safe to say that a majority of US consumers have probably purchased something from the store at some point.\nThe word association is so strong that many incorrectly assume that setting out to start an e-commerce marketplace, and attract sellers to it, would be futile given Amazon\u2019s dominance over both facets of online selling.\nMarketplaces are actually becoming more affordable to set up and operate, and the barriers to entry are diminishing so much that, increasingly, online storeowners are rolling out their own and enjoying success in building catalogs and growing revenue.\nDone well, creating e-commerce marketplaces can allow operators to capture revenue from industry giants and help brands stay relevant in an Amazon-dominated world.\nIs it a David and Goliath battle in some respects? Yes. And, at least at the time of writing, it\u2019s definitely a battle worth fighting.\nThe Amazon flywheel effect: Platforms matter\nAnyone who has observed a flywheel in motion knows that it generates its own momentum over time, becoming easier to speed up. As Newton once put it: \u201ca body in motion will remain in motion.\u201d\nThe analogy has often been applied to Amazon to describe how, once active, the marketplace has been observed to perpetuate itself and accelerate, as brand recognition grows and sellers rush to gain pixel space where their competitors are active, whether they are joining the program as Fulfillment by Amazon (FBA) or Fulfillment by Merchant (FBM) associates. This can be demonstrated by the steady growth of third party sellers on Amazon \u2013 58% and climbing, according to this recent letter to shareholders.\nAs more merchants are drawn to the platform, the selection of products increases, as does competitive pricing. This draws in more buyers, creating a virtuous cycle: merchants want to be where consumers are, and consumers want to be where price and selection are best.\nAmazon doesn\u2019t have a patent on this concept \u2013 it applies equally to the very concept of marketplace selling as whole. As merchants grow more accustomed to the idea of selling through third party online stores, it becomes the new normal and merchant inertia diminishes.\nThis kind of disruption isn\u2019t just being seen within e-commerce. In the internet era platforms (services which create the infrastructure needed for an ecosystem consisting of buyers and sellers to form) are achieving dominance and have quickly entrenched themselves as the business model of the future \u2013 think Uber, AirBnB, and Netflix.\nBy contract, pipelines \u2014 in which businesses sell to consumers strictly through their own managed channels without any kind of reciprocal feedback loop \u2014 are the remnants of yesterday. It\u2019s about two-way relationships and more widely distributed selling channels. For would-be marketplace operators, this means that getting the ball rolling is easier and more urgent than ever.\nChallenges of e-commerce marketplace selling\nStarting a marketplace has many advantages, but let\u2019s take a look at some of the challenges brands can face in starting these.\nCuration:\u00a0Marketplaces are brands in their own right, but they also need some kind of central ethos and look-and-feel that reflects the parent company operating them.\nFor that reason, curation is particularly important. Marketplace entrants must pay attention to the merchant signup process, and institute checks and balances to ensure that appropriate merchants sign up to the marketplace. This might require developing sets of merchant qualification criteria, and deploying staff members to assist in the screening process of new signups. Merchants that don\u2019t provide proper customer support or actively maintain an inventory on the marketplace are likely to damage the reputation of the website.\nOnboarding and administration: Attrition is the bane of marketplace operators, and onboarding is the most delicate phase during which careful relationship management with prospective merchants is a must.\nMarketplace operators need to invest in a satisfactory customer experience and closely guide merchants during the signup process to ensure that they will not give up when attempting to upload their inventory and establish a presence on their marketplace. Operators must remember that, in the Amazon era, the ease of the onboarding and maintenance processes for their marketplaces will constantly be judged against the high standards set by the leader.\nCustomer experience:\u00a0The marketplace needs to have a customer experience (CX) that will impress both its customers and merchants selling on the platform. A marketplace that\u2019s backed by inadequate customer support and success functions is unlikely to succeed. Paying attention to the functionality and scalability of the platform right from the beginning is important \u2013 if your marketplace isn\u2019t easy to use and manage, growing it will be difficult.\nTop considerations for brands considering creating e-commerce marketplaces\nMarketplace-launchers also need to consider:\nTransparency: Marketplaces differ in how they present the fulfillment options they can operate with to merchants participating in the program. The optics of this, from consumers\u2019 perspectives, can have important ramifications. Some typical configurations include:\n\nA transparent mixture of direct selling and selling from third parties\n\u201cWhite labeled\u201d third party participation in the marketplace\n\u201cWhite labeled\u201d fulfillment of own products through third parties\n\nCustomer Service: Post-sales service is another critical area which prospective market operators need to pay close consideration.\nMarketplace owners may wish to attempt to enforce Service Level Agreements (SLAs) which supersede those of the merchants listing on the website, or alternatively let them set their own.\nIn the latter case, marketplace owners must be transparent with customers about reasonable expectations for service and post-sales support. This is another reason why ensuring the integrity of the sellers taking part in the marketplace, maintaining open channels of communication with them, and having well managed governance standards is critically important.\nChange Management: Selling as \u201cone-to-many\u201d is a very different proposition than selling \u201cmany-to-many\u201d.\u00a0 Organizations need to adequately plan for the development, implementation, documentation, and governance of the new business processes required to successfully operate a marketplace, and will frequently need outside help to do so.\nPoorly implemented marketplaces mean big problems\nWhen creating e-commerce marketplaces, brands need to adopt a mentality of \u201cdo it well, or don\u2019t do it at all.\u201d\nPoorly implemented and executed marketplaces can have massively detrimental effects on brand image. In a streamlined marketplace environment, customers are often not even cognizant of that they\u2019re buying from a fulfillment partner rather than the marketplace itself (assuming it operates its own distribution channels). Just consider Amazon, whose branding is so strong and associated with the marketplace that the two have become synonymous in the eyes of most buyers.\nThis means that if a customer has a poor experience as a result of a marketplace seller, they\u2019re likely to remember the brand behind the marketplace, rather than the seller who actually supplied them the goods, in an unfavorable light.\nFinally, unless support and service SLAs are well delineated and communicated, marketplace operators can easily find themselves stuck down a rabbit hole of responsibility trying to remedy the defects of marketplace partners. If they haven\u2019t been properly vetted, dealing with these issues could easily monopolize the time and energy of a brand\u2019s in-house support resources, causing a chilling effect on the overall CX.\nGetting it right can pay off\nOn the flip side, operating a successful marketplace presents enormous opportunity for brands to grow revenue and widen distribution channels. In the Amazon era, brands of all sizes need to adapt to life selling across the platform rather than down the pipeline.\nSetting up a successful marketplace allows brands to:\n\nDrastically increase the product categories they\u2019re able to sell to customers (consider Best Buy\u2019s decision to begin retailing kitchen goods)\nBreak into new demographics and target new buyer personas who may be interested in the brand\u2019s direct inventory\n\nCreating e-commerce marketplaces: Act with urgency\nAmazon shouldn\u2019t be thought of as having monopolized the marketplace space; rather it\u2019s created an industry disruption. While many brands can benefit from this rising tide, not all will.\nThanks to new technology and partners, rolling out marketplaces is more accessible to enterprises of various sizes. However, no one can say how long this window, open wider than ever before, will stay that way.\nWhile the long tail of marketplaces is growing, brands that don\u2019t become marketplace operators in time will logically be relegated to marketplace sellers soon thereafter.\n  Start-ups, mid-market, enterprise:\nToday, every B2B business needs\ne-commerce to grow.\nWe can help. Learn more NOW.\n\u00a0\n\u00a0\n\n\n\n\t\n      "}],{"@context":"https:\/\/schema.org\/","@type":"BreadcrumbList","itemListElement":[{"@type":"ListItem","position":1,"name":"2019","item":"https:\/\/www.the-future-of-commerce.com\/2019\/#breadcrumbitem"},{"@type":"ListItem","position":2,"name":"12","item":"https:\/\/www.the-future-of-commerce.com\/2019\/\/12\/#breadcrumbitem"},{"@type":"ListItem","position":3,"name":"16","item":"https:\/\/www.the-future-of-commerce.com\/2019\/\/12\/\/16\/#breadcrumbitem"},{"@type":"ListItem","position":4,"name":"Creating e-commerce marketplaces to stay relevant in an Amazon world","item":"https:\/\/www.the-future-of-commerce.com\/2019\/12\/16\/creating-e-commerce-marketplaces\/#breadcrumbitem"}]}]