An online marketplace (or online e-commerce marketplace) is a type of

e-commerce E-commerce (electronic commerce) refers to commercial activities including the electronic buying or selling products and services which are conducted on online platforms or over the Internet. E-commerce draws on technologies such as mobile co ...

website where product or service information is provided by multiple third parties. Online marketplaces are the primary type of multichannel ecommerce and can be a way to streamline the production process. In an online marketplace, consumer transactions are processed by the marketplace operator and then delivered and fulfilled by the participating

retailer Retail is the sale of goods and services to consumers, in contrast to wholesaling, which is the sale to business or institutional customers. A retailer purchases goods in large quantities from manufacturers, directly or through a wholesal ...

s or

wholesaler Wholesaling or distributing is the sale of goods or merchandise to retailers; to industrial, commercial, institutional or other professional business users; or to other wholesalers (wholesale businesses) and related subordinated services. In ...

s. These types of

websites A website (also written as a web site) is any web page whose content is identified by a common domain name and is published on at least one web server. Websites are typically dedicated to a particular topic or purpose, such as news, education ...

allow users to register and sell single items to many items for a "post-selling" fee. Because marketplaces aggregate products from a wide array of providers, the selection is wider, and availability is higher than in vendor-specific online retail stores. Some online marketplaces have a wide variety of general interest products that cater to almost all the needs of the consumers, others are consumer specific and cater to a particular segment. Online marketplaces became abundant in 2014.

B2B online marketplaces

Business-to-business Business-to-business (B2B or, in some countries, BtoB) refers to trade and commercial activity where a business sees other businesses as its customer base. This typically occurs when: * A business sources materials for its production process for ...

(B2B) online marketplaces are platforms that allow companies to buy and sell products or services to other businesses. These marketplaces typically focus on a specific product or service category and are used by businesses to find suppliers, negotiate prices, and manage logistics. Some examples of B2B online marketplaces include VerticalNet, Commerce One, and Covisint, which were some of the earliest B2B marketplaces to emerge in the early days of

. More contemporary B2B marketplaces include EC21, Elance, and

eBay eBay Inc. ( , often stylized as ebay) is an American multinational e-commerce company based in San Jose, California, that allows users to buy or view items via retail sales through online marketplaces and websites in 190 markets worldwide. ...

Business, which focus on specific product or service categories and facilitate complex transactions such as requests for quotations (RFQs), requests for information (RFIs), and requests for proposals (RFPs).

Online retailing

Online marketplaces are

information technology Information technology (IT) is a set of related fields within information and communications technology (ICT), that encompass computer systems, software, programming languages, data processing, data and information processing, and storage. Inf ...

companies that act as intermediaries by connecting buyers and

seller Sales are activities related to selling or the number of goods sold in a given targeted time period. The delivery of a service for a cost is also considered a sale. A period during which goods are sold for a reduced price may also be referred ...

s. Examples of prevalent online marketplaces for

retailing Retail is the sale of goods and services to consumers, in contrast to wholesaling, which is the sale to business or institutional customers. A retailer purchases goods in large quantities from manufacturers, directly or through a wholesal ...

consumer goods A final good or consumer good is a final product ready for sale that is used by the consumer to satisfy current wants or needs, unlike an intermediate good, which is used to produce other goods. A microwave oven or a bicycle is a final good. W ...

and services are

Amazon Amazon most often refers to: * Amazon River, in South America * Amazon rainforest, a rainforest covering most of the Amazon basin * Amazon (company), an American multinational technology company * Amazons, a tribe of female warriors in Greek myth ...

Taobao Taobao is a Chinese online shopping platform. It is headquartered in Hangzhou and is owned by Alibaba. According to Alexa rank, it was the eighth most-visited website globally in 2021. Taobao.com was registered on April 21, 2003 by Alibaba Cl ...

and

. On the

website A website (also written as a web site) is any web page whose content is identified by a common domain name and is published on at least one web server. Websites are typically dedicated to a particular topic or purpose, such as news, educatio ...

of the online marketplace sellers can publish their product offering with a

price A price is the (usually not negative) quantity of payment or compensation expected, required, or given by one party to another in return for goods or services. In some situations, especially when the product is a service rather than a ph ...

and information about the product's features and qualities. Marketplace sellers often utilize a marketplace integrator or channel integration software to efficiently list and sell products across multiple online marketplaces. Potential customers can

search Searching may refer to: Music * "Searchin', Searchin", a 1957 song originally performed by The Coasters * Searching (China Black song), "Searching" (China Black song), a 1991 song by China Black * Searchin' (CeCe Peniston song), "Searchin" (C ...

and browse goods, compare price and quality, and then purchase the goods directly from the seller. The

inventory Inventory (British English) or stock (American English) is a quantity of the goods and materials that a business holds for the ultimate goal of resale, production or utilisation. Inventory management is a discipline primarily about specifying ...

is held by the sellers, not the company running the online marketplace. Online marketplaces are characterized by a low setup cost for sellers, because they do not have to run a

retail store The retail format (also known as the retail formula) influences the consumer's store choice and addresses the consumer's expectations. At its most basic level, a retail format is a simple marketplace, that is; a location where goods and services ar ...

. While in the past

Amazon Marketplace Amazon Marketplace is an e-commerce platform owned and operated by Amazon that enables third-party sellers to sell new or used products directly to consumers on a fixed-price online marketplace alongside Amazon's regular offerings. Using Amazon M ...

has served as a role model for online marketplaces, the expansion of the

Alibaba Group Alibaba Group Holding Limited, branded as Alibaba (), is a Chinese Multinational corporation, multinational technology company specializing in E-commerce in China, e-commerce, retail, Internet, and technology. Founded on 28 June 1999 in Hangzho ...

into related business such as

logistics Logistics is the part of supply chain management that deals with the efficient forward and reverse flow of goods, services, and related information from the point of origin to the Consumption (economics), point of consumption according to the ...

e-commerce payment system An e-commerce payment system (or an electronic payment system) facilitates the acceptance of electronic payment for offline transfer, also known as a subcomponent of electronic data interchange (EDI), e-commerce payment systems have become increa ...

s and

mobile commerce The term mobile commerce was originally coined in 1997 by Kevin Duffey at the launch of the Global Mobile Commerce Forum, to mean "the delivery of electronic commerce capabilities directly into the consumer’s hand, anywhere, via wireless techno ...

is now trailed by other marketplace operators such as

Flipkart Flipkart Inc. is an Indian e-commerce company, headquartered in Bangalore, and incorporated in Singapore as a private limited company. The company initially focused on online book sales before expanding into other product categories such as con ...

. For consumers, online marketplaces reduce the search cost, but insufficient information on the quality of goods and an overloaded goods offering can make it more difficult for consumers to make purchasing decisions. Consumers' ability to make a purchasing decision is also hampered by the fact that an online marketplace only allows them to examine the quality of a product based on its description, a picture and customer reviews. Another characteristic of online marketplaces is that the same product can be offered by several merchants. In this case, consumers can often make the selection of a merchant with the support of reviews of that merchant, for example. Despite many conceivable factors influencing merchant selection, such as convenience, seller ratings, delivery options and a wider selection of goods, customers choose primarily on the basis of the lowest price for a particular product.

Peer-to-Peer (P2P) online marketplaces

Peer-to-peer Peer-to-peer (P2P) computing or networking is a distributed application architecture that partitions tasks or workloads between peers. Peers are equally privileged, equipotent participants in the network, forming a peer-to-peer network of Node ...

(P2P) online marketplaces enable direct transactions between individuals, often facilitated by an intermediary platform that provides services such as payment processing, dispute resolution, and user verification. Unlike traditional e-commerce platforms that primarily follow a business-to-consumer (B2C) model, P2P marketplaces allow users to act as both buyers and sellers, fostering decentralized commerce

For services and outsourcing

There are marketplaces for the online outsourcing of professional services like IT services,

search engine optimization Search engine optimization (SEO) is the process of improving the quality and quantity of Web traffic, website traffic to a website or a web page from web search engine, search engines. SEO targets unpaid search traffic (usually referred to as ...

, marketing, and skilled crafts & trades work. Microlabor online marketplaces such as

Upwork Upwork Inc., formerly Elance-oDesk, is an American freelancing platform headquartered in Santa Clara and San Francisco, California. The company was formed in 2013 as Elance-oDesk after the merger of Elance Inc. and oDesk Corp. The merged compa ...

and

Amazon Mechanical Turk Amazon Mechanical Turk (MTurk) is a crowdsourcing website with which businesses can hire remotely located "crowdworkers" to perform discrete on-demand tasks that computers are currently unable to do as economically. It is operated under Amazon Web ...

allow

freelancer ''Freelance'' (sometimes spelled ''free-lance'' or ''free lance''), ''freelancer'', or ''freelance worker'', are terms commonly used for a person who is self-employed and not necessarily committed to a particular employer long-term. Freelance w ...

s to perform tasks which only require a computer and internet access. According to

, its Mechanical Turk marketplace focuses on "human intelligence tasks" that are difficult to automate computationally. This includes content labelling and content moderation. Microlabor online marketplaces allow workers globally, without a formal employment status, to perform digital

piece work Piece work or piecework is any type of employment in which a worker is paid a fixed piece rate for each unit produced or action performed, regardless of time. Context When paying a worker, employers can use various methods and combinations of m ...

, such as classifying an image according to content moderation guidelines.

Gig worker Gig workers are independent contractors, online platform workers, contract firm workers, on-demand workers, and temporary workers. Gig workers enter into formal agreements with on-demand companies to provide services to the company's clients. ...

s are paid for each task performed, for example US$0.01 for each moderated image. Gig workers accumulate payment on the microlabor platform.

The sharing economy

In 2004

Yochai Benkler Yochai Benkler ( ; born 1964) is an Israeli-American author and the Berkman Professor of Entrepreneurial Legal Studies at Harvard Law School. He is also a faculty co-director of the Berkman Klein Center for Internet & Society at Harvard Univers ...

noted that online platforms, alongside

free software Free software, libre software, libreware sometimes known as freedom-respecting software is computer software distributed open-source license, under terms that allow users to run the software for any purpose as well as to study, change, distribut ...

and

wireless networks A wireless network is a computer network that uses wireless data connections between network nodes. Wireless networking allows homes, telecommunications networks, and business installations to avoid the costly process of introducing cables in ...

, allowed households to share idle or underused resources. As the sharing economy inspires itself largely from the

open source Open source is source code that is made freely available for possible modification and redistribution. Products include permission to use and view the source code, design documents, or content of the product. The open source model is a decentrali ...

philosophy, open source projects dedicated to launching a peer to peer marketplace include Cocorico and Sharetribe. In 2010

CouchSurfing CouchSurfing is a hospitality exchange service by which users can request free short-term homestays or interact with other people who are interested in travel. It is accessible via a website and mobile app. It uses a subscription business model ...

was constituted as

for-profit corporation A for-profit corporation is an organization which aims to earn profit through its operations and is concerned with its own interests, rather than the interests of the public (nonprofit corporation). Structure A for-profit corporation is usually an ...

and by 2014 online marketplaces that consider themselves part of the sharing economy, such as

Uber Uber Technologies, Inc. is an American multinational transportation company that provides Ridesharing company, ride-hailing services, courier services, food delivery, and freight transport. It is headquartered in San Francisco, California, a ...

and

Airbnb Airbnb, Inc. ( , an abbreviation of its original name, "Air Bed and Breakfast") is an American company operating an online marketplace for short-and-long-term homestays, experiences and services in various countries and regions. It acts as a ...

, organized in the

trade association A trade association, also known as an industry trade group, business association, sector association or industry body, is an organization founded and funded by businesses that operate in a specific Industry (economics), industry. Through collabor ...

''Peers.org''.

Criticism

A 2014 study of oDesk, an early global online marketplace for

freelance ''Freelance'' (sometimes spelled ''free-lance'' or ''free lance''), ''freelancer'', or ''freelance worker'', are terms commonly used for a person who is self-employed and not necessarily committed to a particular employer long-term. Freelance w ...

contractors, found that the service

outsourcing Outsourcing is a business practice in which companies use external providers to carry out business processes that would otherwise be handled internally. Outsourcing sometimes involves transferring employees and assets from one firm to another ...

microwork Microwork is a series of many small tasks which together comprise a large unified project, and it is completed by many people over the Internet. Microwork is considered the smallest unit of work in a virtual assembly line. It is most often used ...

increased opportunities for freelancers regardless of their geographic location, but the financial gains for most contractors were limited as experience and skills did not translate into higher payment. A general criticism is that the laws and regulations surrounding online marketplaces are quite underdeveloped. As of consequence, there is a discrepancy between the responsibility,

accountability In ethics and governance, accountability is equated with answerability, culpability, liability, and the expectation of account-giving. As in an aspect of governance, it has been central to discussions related to problems in the public secto ...

and liability of the marketplace and third parties. In recent years online marketplaces and platforms have faced much criticism for their lack of

consumer protection Consumer protection is the practice of safeguarding buyers of goods and services, and the public, against unfair practices in the marketplace. Consumer protection measures are often established by law. Such laws are intended to prevent business ...

Market economy

In 1997

Yannis Bakos Yannis Bakos is a professor at the Leonard N. Stern School of Business at New York University. His primary area of expertise is the economic and business implications of information technology, the Internet, and online media. He is the co-founder ( ...

studied online marketplaces and came to regard them as a special type of electronic marketplaces. He argued that they reduce economic inefficiencies, by lowering the cost of acquiring information about the sellers' products. The operators of online marketplaces are able to adapt their

business model A business model describes how a Company, business organization creates, delivers, and captures value creation, value,''Business Model Generation'', Alexander Osterwalder, Yves Pigneur, Alan Smith, and 470 practitioners from 45 countries, self-pub ...

because of the data they hold on the platform users. Online marketplace operators have a unique ability to obtain and use in their economic decision making

personal data Personal data, also known as personal information or personally identifiable information (PII), is any information related to an identifiable person. The abbreviation PII is widely used in the United States, but the phrase it abbreviates has fou ...

and transaction data, but also social data and location data. Therefore academics have described online marketplaces as new

economic actor Economics () is a behavioral science that studies the production, distribution, and consumption of goods and services. Economics focuses on the behaviour and interactions of economic agents and how economies work. Microeconomics analyses ...

, or even as a new type of

market economy A market economy is an economic system in which the decisions regarding investment, production, and distribution to the consumers are guided by the price signals created by the forces of supply and demand. The major characteristic of a mark ...

. In 2010 Christian Fuchs argued that online marketplaces operated ''informational capitalism''. The inherent

feedback loop Feedback occurs when outputs of a system are routed back as inputs as part of a chain of cause and effect that forms a circuit or loop. The system can then be said to ''feed back'' into itself. The notion of cause-and-effect has to be handle ...

allows the operators of online marketplaces to grow their effectiveness as economic intermediaries. In 2016

Nick Srnicek Nick Srnicek (born 1982) is a Canadian writer and academic. He is currently a lecturer in Digital Economy in the Department of Digital Humanities, King's College London. Srnicek is associated with the political theory of accelerationism and a ...

argued that online marketplaces give rise to platform capitalism. In 2016 and 2018 respectively, Frank Pasquale and

Shoshana Zuboff Shoshana Zuboff (born November 18, 1951) is an American author, professor, social psychologist, philosopher, and scholar. Zuboff is the author of the books ''In the Age of the Smart Machine: The Future of Work and Power'' and ''The Support Econ ...

cautioned, that the data collection of online marketplace operators result in surveillance capitalism.

References

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