Online Marketplaces: The Brightest Stars in the e-Commerce Galaxy?

online commerceGiven a choice between buying a branded product from Amazon and a similarly priced one from an e-commerce store on the brand’s own website, which purchase option do most people choose?

In most cases, people opt for Amazon.

And why wouldn’t they? Online marketplaces like Amazon devote the vast bulk of their energies to removing the obstacles to purchasing products and improving the overall buyer experience.

The e-commerce stores on most company or brand websites don’t get nearly the same degree of laser-focused attention.

So it comes as little surprise that as online e-commerce continues to evolve, marketplaces like Amazon, eBay and Grainger are outpacing general e-commerce websites in terms of their growth and popularity.

Let’s face it, compared to most standard e-commerce sites, e-marketplace sites do a superior job dealing with the four major customer drivers:  selection, value, convenience and user confidence.

It shows in the growth statistics. Looking back over the past decade, Amazon’s yearly growth has averaged around 32%.  Compare those stats to standard sites … and there isn’t much of a comparison.

If anything, the future looks even brighter for marketplaces. With the increased adoption of mobile devices for online shopping, dedicated mobile apps from marketplaces like eBay and Amazon are making buying by phone easier and more convenient than ever.

Their mobile apps iron out the “payment kinks and concerns” that have bothered some mobile purchasers. These apps solve the potential security problem of having to input payment or address/shipping information into the phone when the purchase is made.

The rise of online marketplaces isn’t limited to just Amazon and eBay, either. Numerous other robust e-commerce marketplaces in both the B-to-C and B-to-B realm are thriving, too – not just in the United States but in the developing world also.

The global aspect is quite important, actually. Marketplace e-commerce may represent only about one-third of total online sales in the U.S. … but in China, such marketplaces are capturing closer to 80% of the online business.

It helps that these marketplaces offer many PayPal-like payment options. This solves the problems of payment when fewer people overseas use credit cards for purchases. (In China, less than 5% of online customers pay via credit card.)

These developments don’t presage the end of “conventional” e-commerce sites, of course. But they do suggest that companies should seriously consider online marketplaces as a prime channel for getting their products into the hands of end-users.

After all, it’s only natural that customers are going to take the “path of least resistance” – making the buying process as effortless as possible.

Online marketplaces have that game down to a science. No one does it better.

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