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

e-commerce E-commerce (electronic commerce) is the activity of electronically buying or selling of products on online services or over the Internet. E-commerce draws on technologies such as mobile commerce, electronic funds transfer, supply chain manag ...

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 sale to business or institutional customers. A retailer purchases goods in large quantities from manufacturers, directly or through a wholesaler, and ...

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 type of

websites A website (also written as a web site) is a collection of web pages and related content that is identified by a common domain name and published on at least one web server. Examples of notable websites are Google, Facebook, Amazon, and Wiki ...

allow users to register and sell single items to many items for a "post-selling" fee. In general, because marketplaces aggregate products from a wide array of providers, selection is usually more wide, and availability is higher than in vendor-specific online retail stores. Since 2014 online marketplaces have become abundant. 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.

B2B online marketplaces

Business-to-business (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. ( ) is an American multinational e-commerce company based in San Jose, California, that facilitates consumer-to-consumer and business-to-consumer sales through its website. eBay was founded by Pierre Omidyar in 1995 and became ...

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). B2B online marketplaces differ from consumer-facing online marketplaces like

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

and

, which are designed for retail sales to individual consumers. B2B marketplaces are typically more specialized and focused on facilitating transactions between businesses, and may require more complex negotiation and logistical processes.

Online retailing

Online marketplaces are

information technology Information technology (IT) is the use of computers to create, process, store, retrieve, and exchange all kinds of data . and information. IT forms part of information and communications technology (ICT). An information technology syste ...

companies that act as

intermediaries An intermediary (or go-between) is a third party that offers intermediation services between two parties, which involves conveying messages between principals in a dispute, preventing direct contact and potential escalation of the issue. In law ...

by connecting buyers and sellers. Examples of prevalent online marketplaces for

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

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 a intermediate good, which is used to produce other goods. A microwave oven or a bicycle is a final good, b ...

and services are

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

and

. On the

website A website (also written as a web site) is a collection of web pages and related content that is identified by a common domain name and published on at least one web server. Examples of notable websites are Google, Facebook, Amazon, and W ...

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 given by one party to another in return for goods or services. In some situations, the price of production has a different name. If the product is a "good" in the ...

and information about the product's features and qualities. Potential customers can

search Searching or search may refer to: Computing technology * Search algorithm, including keyword search ** :Search algorithms * Search and optimization for problem solving in artificial intelligence * Search engine technology, software for find ...

and

browse Browsing is a kind of orienting strategy. It is supposed to identify something of relevance for the browsing organism. When used about human beings it is a metaphor taken from the animal kingdom. It is used, for example, about people browsing o ...

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

inventory Inventory (American English) or stock (British English) refers to 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 the sha ...

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. While in the past Amazon Marketplace has served as a role model for online marketplaces, the expansion of the Alibaba Group into related business such as

logistics Logistics is generally the detailed organization and implementation of a complex operation. In a general business sense, logistics manages the flow of goods between the point of origin and the point of consumption to meet the requirements of ...

, e-commerce payment systems and mobile commerce is now trailed by other marketplace operators such as Flipkart. 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, customers choose primarily on the basis of the lowest price for a particular product.

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 website traffic to a website or a web page from search engines. SEO targets unpaid traffic (known as "natural" or "organic" results) rather than dire ...

, marketing, and skilled crafts & trades work. Microlabor online marketplaces such as Upwork and Amazon Mechanical Turk allow freelancers 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 On Internet websites that invite users to post comments, content moderation is the process of detecting contributions that are irrelevant, obscene, illegal, harmful, or insulting with regards to useful or informative contributions. The purpose of ...

. Microlabor online marketplaces allow workers globally, without a formal employment status, to perform digital piece work, such as for example rate an image according to content moderation guidelines. Gig workers are paid for each task, for example U.S.$0.01 for each moderated image, and 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 or libre software is computer software distributed under terms that allow users to run the software for any purpose as well as to study, change, and distribute it and any adapted versions. Free software is a matter of liberty, n ...

and wireless networks, 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 the source code, design documents, or content of the product. The open-source model is a decentralized so ...

philosophy, open source projects dedicated to launching a peer to peer marketplace include Cocorico and Sharetribe. In 2010 CouchSurfing was constituted as for-profit corporation and by 2014 online marketplaces that consider themselves part of the sharing economy, such as

Uber Uber Technologies, Inc. (Uber), based in San Francisco, provides mobility as a service, ride-hailing (allowing users to book a car and driver to transport them in a way similar to a taxi), food delivery ( Uber Eats and Postmates), pa ...

and Airbnb, 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. An industry trade association partic ...

''Peers.org''. In 2015 Alex Stephany, the founder of online marketplace JustPark, defined the sharing economy as the economic value arising from making underutilized assets available online.

Criticism

A 2014 study of

oDesk Upwork Global 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 merg ...

, an early global online marketplace for freelance contractors, found that the service outsourcing of microwork 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 Accountability, in terms of ethics and governance, is equated with answerability, blameworthiness, liability, and the expectation of account-giving. As in an aspect of governance, it has been central to discussions related to problems in the pub ...

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

Market economy

In 1997 Yannis Bakos 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 an organization creates, delivers, and captures value,''Business Model Generation'', Alexander Osterwalder, Yves Pigneur, Alan Smith, and 470 practitioners from 45 countries, self-published, 2010 in economic, soci ...

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

economic actor Economics () is the social 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 analyzes w ...

, or even as a new type of market economy. In 2010

Christian Fuchs Christian Fuchs (; born 7 April 1986) is an Austrian former professional footballer who played as a left back. He began his senior career as a teenager at Wiener Neustadt before signing his first professional contract at 17 with SV Mattersburg ...

argued that online marketplaces operated ''informational capitalism''. The inherent feedback loop allows the operators of online marketplaces to grow their effectiveness as economic intermediaries. In 2016 Nick Srnicek argued that online marketplaces give rise to platform capitalism. In 2016 and 2018 respectively, Frank Pasquale and Shoshana Zuboff cautioned, that the data collection of online marketplace operators result in surveillance capitalism.

References

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