Online Marketplaces: Definition & Examples

Instructor: Beth Hendricks

Beth holds a master's degree in integrated marketing communications, and has worked in journalism and marketing throughout her career.

When is an Amazon purchase not really an Amazon purchase? When it's from an Amazon online marketplace seller. In this lesson, we'll dive into the concept of online marketplaces and look at a few popular examples.

Going to the Market

Have you ever visited a farmers market? Generally, you can walk long aisles of stall after stall of different farmers selling a variety of produce directly to consumers. It's a good way to support your local economy, while trying some of the freshest produce around.

An online marketplace is similar to a farmers market packed full of vendors and their goods.
online, marketplace, ebay, amazon, uber, etsy, farmer, market

A farmers market is similar in concept to another type of marketplace, except this one lives in cyberspace. And, chances are, you've shopped at one or more of the examples we'll discuss in a bit.

What Is an Online Marketplace?

An online marketplace, sometimes called an electronic marketplace, is an e-commerce site where third-party companies can sell their products or services to consumers. All of the transactions are processed through the website owner.

For example, when you visit Amazon's online market, you can purchase books and other goods directly from Amazon, but you can also find - and buy - products from sellers all over the world. Another example is sharing economy platforms, like eBay and Etsy, where sellers ''share'' in the space to make profits, bring together all types of independent sellers into a one-stop shop that is convenient for consumers to not only check prices for the best deals, but do so all under one electronic roof.

Now that we have looked at examples of online marketplaces, let's look at an example of something that is not an online marketplace. When you purchase groceries online from your local grocery store for home delivery, you are not shopping in an online marketplace - even though you are shopping online.

How Does an Online Marketplace Work?

All businesses have inventory, right? A list of products and services that are for sale? A business may even have its own website with its inventory listed there. But, in an online marketplace, these sellers take all of that inventory information and upload it to the third-party site. It can essentially transform a small, local business into one with national, or even international, reach. Sellers' products become available for purchase to all the marketplace's customers, and in exchange for a larger audience, the third-party sellers pay fees to the umbrella website.

Online marketplaces are useful for connecting buyer and seller, but are also helpful because they handle the payment and processing of any orders, which adds an extra level of security for consumers and assistance for sellers. Generally, online marketplaces will also step in after the purchase if there is a problem that needs to be resolved.

Online Marketplace Examples

Can you think of some popular examples of online marketplaces? In all likelihood, you've been a patron of one (or all!) of these at some point in your online shopping. Here are a couple obvious choices, and one or two that might surprise you.

eBay

What started off as a venue for regular people to buy and sell from one another has become a large marketplace for some of the world's biggest retailers, including Target, Best Buy and GNC. It provides another channel of customers and revenues for mainstream brands.

Amazon

Amazon touts its online marketplace as a way to reach more than 150 million U.S. consumers alone, making it an ideal electronic market for third-party sellers. For consumers, the convenience of seeing both Amazon-fulfilled purchases and third-party suppliers on the same page gives lots of options for finding the best deal available.

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