Democratising Online Trade: The vital role of vertical marketplaces
In the dynamic landscape of the past two decades, E-commerce has witnessed astounding growth, with industry giants like Amazon, Flipkart, and Snapdeal setting the stage for horizontal marketplaces. These platforms have enabled sellers from around the world to tap into vast customer bases, both locally and globally, leveraging their capabilities to unlock unprecedented opportunities. However, despite their immense reach, horizontal marketplaces fall short of providing businesses with a critical factor necessary for propelling them to the next phase of growth: brand recall.
In the fiercely competitive E-commerce landscape, carving out a niche and establishing top-of-mind recall for brands has become an arduous and daunting task. The prevalence of horizontal marketplaces only compounds this challenge, making it increasingly difficult for brands to differentiate themselves effectively. As the industry enters its next growth phase, the imperative is clear: brands must embrace a new approach that not only drives revenue growth but also cultivates a unique brand niche. Vertical marketplaces emerge as the ideal solution, offering a dual benefit – bolstering revenues by increasing order value and creating a profound impact on consumers’ consciousness.
Vertical marketplaces indeed offer a viable and advantageous option for brands operating within specific industries. By curating vendors that sell products falling within the category the brand operates in, these marketplaces can unlock numerous benefits, particularly from an Economies of scale perspective.
The advantages of vertical marketplaces include:
- Increased Order Value and Revenue Growth: Through a focused approach on a specific industry, vertical marketplaces can attract a targeted customer base looking for niche products. This concentration leads to higher order values, as customers often purchase complementary items, thus driving revenue growth for both the marketplace and participating vendors.
- A Larger Brand Catalogue: By bringing together multiple vendors within the same industry, the vertical marketplace presents customers with a comprehensive and diverse range of products under one virtual roof. This extensive brand catalog enhances customer choice and satisfaction, fostering repeat business and loyalty.
- Brand Recall: Vertical marketplaces enable brands to establish a strong presence within their specialised domain. As customers repeatedly visit the marketplace for their industry-specific needs, the associated brands gain increased visibility and brand recall, becoming top-of-mind choices for consumers.
- Superior User Experience for the Customer: By centralising products and vendors in a single website, vertical marketplaces simplify the shopping process for customers. It streamlines their browsing and purchasing experience, making it more convenient and efficient, which, in turn, encourages more frequent visits and transactions.
Vertical marketplaces offer evident benefits, but it is essential to emphasise the additional advantages derived from collaborating with other brands in the industry. The highly saturated market poses challenges that can be effectively tackled through partnerships with like-minded businesses. Such collaborations not only foster customer loyalty but also attract returning customers who share a keen interest in the niche you operate within.
With increased collaboration, new challenges arise, necessitating modern solutions. Managing multiple partners becomes a complex endeavour, involving three crucial work processes. Firstly, onboarding vendor partners while preserving their brand identity on their respective websites and establishing their presence on your platform. Secondly, selecting the right products and synchronising inventory from partner websites can prove arduous. Thirdly, ensuring timely and secure payments to vendors involves another set of manual tasks.
The second stream of work processes revolves around efficiently handling orders from both vendors and your store. Additionally, shipping and processing returns constitute the third stream of processes, further adding to the complexities of collaborative business ventures.
Technology presents a promising solution to address the complexities of the three umbrella processes in modern vertical marketplaces. However, the current landscape features fragmented order management, vendor management, and shipper management platforms, which can individually simplify specific tasks but collectively make the overall process more cumbersome.
To overcome these challenges, the key lies in combining expertise in E-commerce with a dedicated vertical marketplace platform. An ideal setup involves a marketplace expert well-versed in the intricacies of E-commerce, alongside a platform that streamlines all three work processes within a single, user-friendly dashboard. This combination becomes paramount for establishing a successful marketplace.
By building on this essential foundation, the E-commerce industry can be propelled forward. Streamlining the three umbrella processes through innovations like automation, AI, and blockchain can significantly simplify supply chains for both the marketplace and vendors. The result is a reduction in operational costs and the creation of new revenue streams.
A vertical marketplace has the potential to evolve into a self-sustaining network, attracting brands, buyers, and influencers to converge and thrive. Embracing this concept requires continuous collaboration with marketplaces and staying attuned to industry trends and customer needs.
At Shipturtle, we have successfully built numerous marketplaces and continuously work on introducing new innovations to enrich the vertical marketplace concept. Our close attention to market dynamics and customer feedback has enabled us to introduce features that not only benefit our customers but also contribute to the democratisation of E-commerce.
In conclusion, with the right technology, expertise, and dedication to innovation, vertical marketplaces can revolutionise the E-commerce landscape and pave the way for a more efficient, interconnected, and sustainable marketplace ecosystem.
