Marketplace Business Model vs Aggregator Business Model [2023 Update]

Making online purchases or ordering various services via the Internet has been a new norm for so long that we might not have offline shops in the future anymore. Especially during the pandemic, lockdowns made people move online and forget about the queues and the necessity to wander around a shop to get what one needs. More and more businesses also moved online, allowing customers to order anything from almost any part of the world and receive it at their doorstep. So, let’s look at the E-Commerce Marketplace and Aggregator business models to find out how you can improve your business strategy.

Answering Important Questions First

It became convenient for everybody, because now customers don’t need to spend their time looking for a perfect shirt at every possible shopping center. Businesses, on the other hand, don’t have to spend money on renting a place in a shopping center and additional taxes or even hiring an extra number of employees. Online shopping solves many struggles for each side. As a result, sales on online platforms have increased significantly in recent years. According to the Statista Research Department, global retail e-commerce sales CAGR is expected to grow by 11.16% from 2023 to 2027.

While deciding which business model to follow to make your ecommerce company thrive, we recommend starting with the basics. There are different types of models and value delivery methods that one can choose from. To make the decision-making process easier, let’s address the elephant in the room.

• What are you selling?

The main advantage of online shopping is that there is a space for any product. Even a very specific item can find its buyer. Whether you are selling physical goods, digital products, or services, each type has its own nuances. Therefore, it is important to understand what your goal is: being able to cover as many customer needs as possible or entering a certain niche.

• Do you know your target audience?

It is also vital to understand who will be buying your products and services and how often they will be buying them. For example, besides the well-known e-commerce models, such as Business-to-Business (B2B), Business-to-Consumer (B2C), Consumer-to-Business (C2B), Consumer-to-Consumer (C2C), Business-to-Administration (B2A), and Consumer-to-Administration (C2A), there is a Business-to-Business-to-Consumer (B2B2C) model. Platforms similar to Amazon are great examples of such a model. Also, if your e-commerce business is a side gig, you may not be able to take on large B2B orders or government contracts. Each option has its own specifics and its own target audience, so you need to decide what you want exactly.

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• Is it obvious what makes your product better?

If you want your product or service to stand out among others, then show what you have to offer and make sure that it is obvious. Otherwise, why should your customers choose you among other companies? However, it is also important to understand that the more variety you offer, the more resources you will need to spend.

For example, you want to be an intermediary between the buyers and various suppliers so that the customers will be able to get the products they need at one place without the need of dealing with several providers, and want to provide customers with many color, size, and package options, you should be ready to deal with those several providers yourself.

• Which value delivery method do you prefer?

A product can be designed in several ways to bring the most value to customers who are using it. In case of whitelabeling, you offer your own product to multiple retailers so that they will be able to use it as their own. A white label is then rebranded and priced based on the niche market. As for the private label, this product is exclusively sold to one customer and is unique to them.

If you choose to go for the B2B ecommerce model and want to sell products in bulk and at a discount to other businesses, this method is known as wholesaling. Choosing this approach means that you are ready to be responsible for warehouse and inventory management, stocking, shipping, etc., because you will be ordering goods directly from a supplier.

Another option, known as dropshipping, is the value delivery method when you don’t need to deal with the packaging, warehousing, and shipping operations. Each of these steps is processed by a third-party supplier. A dropshipper simply acts as an intermediary between buyers to manufacturers. There is also a subscription model. In this case, you commit to provide your customers with products or services over an extended period at consistent and predetermined intervals.

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• Which types of ecommerce platforms can you choose from?

Deciding on the type of ecommerce platform is also a high impact decision, because there are several options you can go for and your business’ website will be running on the software you choose. First of all, you can opt for Software-as-a-Service (SaaS). This is a cloud-based platform that offers responsive customer support, integration compatibility, as well as security and PCI compliance. You can also use a Platform-as-a-service (PaaS), which is a complete development and deployment environment in the cloud that connects you with other business systems.

An open-source platform is software with free source code that can be easily modified. It means that it has more options for customization, provides users with high flexibility, and allows them to have full control over the interface. There is also a licensed ecommerce platform, which is basically a paid option of an open-source platform. However, it offers more features and options to modify. Proprietary software is another type of a platform that you can choose from. It is developed solely by a business to meet the exact needs and offers full control over data.

Read Also Open-Source Software vs. Proprietary Software: Being in Two Minds While Weighing All Pros and Cons

Marketplace vs Aggregator Business Models

Now that we sorted out some concerns, let’s get back to the main topic of our article and look at two common business models that vendors usually follow.

Both models require thorough analysis, so, together with our BA specialists, we have reviewed both Marketplace Business Model and Aggregator Business model and are glad to share our detailed analysis on features as well as pros and cons with others. To know more, visit our site: https://xbsoftware.com/blog/marketplace-vs-aggregator-business-model/