What the Disruption of the Online Marketplace Means for Your Small Business As commerce moves fully online, the business model offers even more benefits for savvy entrepreneurs.
By Pritom Das Edited by Amanda Breen
Opinions expressed by Entrepreneur contributors are their own.
Marketplaces revolutionized the way people do business in recent times. In the past, there would always be a middle man, who would buy an item, then sell it to another person at a profit. Or he'd hire someone, then offer that person's services to a customer. Online marketplaces have made it possible for people to connect with each other directly and transact freely on their own terms.
From the launch of eBay in 1995 to the wide range of marketplaces now available, the principle has remained the same – remove the intermediary, reduce costs and give the parties full freedom to contract. As with all other industries, though, the recent pandemic has significantly impacted online marketplaces. Although, unlike many other verticals, the impact has been largely positive.
Related: 5 Practical Tips For Small Businesses Making the First Steps
Remote work
Over the past decade or so, a small but ever-increasing number of businesses have begun experimenting with remote work. For most, this was in the form of allowing employees to work from home on certain days, and for a smaller number, the entire team was remote on a permanent basis, in-person meetings held only when absolutely necessary.
Because governments around the world have been actively restricting in-person meetings in the face of public health risks, more businesses have had to shift to a remote working model, which has accelerated the adoption of distributed teams. Distributed teams offer more than just health benefits: They allow companies to reduce costs, decrease employee stress and potentially increase their productivity.
Online talent marketplaces offer companies the opportunity to hire talent from around the world without the traditional limitation of geography. Businesses can find a writer on Fiverr, a creative designer on DesignBro or a software engineer on Upwork — all without paying an agency or recruiter. Although these marketplaces charge fees, they also typically offer services like payments escrow, which provide security and justify the expense.
Related: Pros and Cons of Remote Work: Will Your Employees Adapt?
Small business support
The pandemic has forced people to confront their humanity squarely, on an individual, national and global level. Now, people are trying to make more conscious decisions about their health and environmental and social choices; for example, supporting small businesses instead of corporate behemoths. Online marketplaces allow small businesses to put their goods up for buyers to browse and order. One popular example in this category is Etsy. The company's revenue grew by 71% in the first six months of 2020, reflecting an increased interest in patronizing small businesses via marketplaces.
As with the talent marketplaces, those that allow people to sell physical products also charge a fee, but most sellers consider the fees to be justified considering the payment escrow, marketing and other benefits that come with selling on the platforms. In addition, the platforms often invest heavily into making their platforms plug and play, making it easy for even the most technically challenged sellers to set up their stores and begin selling in no time at all.
Related: Amazon Marketplace: It's Bigger Than It Looks
Fintech adoption
Although marketplaces make it easy for buyers and sellers or employers and employees to connect and transact, the issue of how to get paid is one that has bedeviled users of marketplaces for a long time. Buyers often cannot pay using a medium that's acceptable to the marketplace, and sellers also often find it difficult to receive payment for goods delivered or services rendered, especially when they live outside the first world.
This problem has accelerated the adoption of new payment options by online marketplaces, and by extension, the people and businesses who use them. From mobile payments and P2P solutions to cryptocurrency, the tide is clearly shifting in favor of allowing as many options as possible, warping the traditional financial system's single funnel to the banks.
Related: Can FinTech Really Help Small Businesses?
Online marketplaces have become more popular because their features are increasingly seen as essential to the way business and trade will be conducted in the future, and the exciting paradigm shift presents abundant opportunities for savvy entrepreneurs.
