Article provided by PayFast
At no other time in history has there been a more exciting time to be in e-commerce. With the popularity of online shopping overtaking traditional brick-and-mortar shops and shopping malls globally, if you’re in retail then it’s now more imperative than ever to have an online presence. However, while running and selling products or services on your online store is all very good and well, if you aren’t a player in the digital marketplace economy then you’re missing out on an amazing business opportunity.
Before we get into the benefits of running or selling on a marketplace platform, we first need to define what it is. To put it simply, in our e-commerce space, a platform matches buyers with third-party sellers and provides them with an opportunity to interact and transact. Platforms are all about convenience. As a seller on a platform, costs are saved on marketing to find and retain buyers, as well as on website development and hosting. As a platform owner, you get to save money and the hassle of having to buy, store, manage and deliver products to buyers. From a buyer’s perspective, shopping on a platform streamlines their shopping experience by enabling them to browse and make purchases from multiple sellers on a single website (with often one checkout process).
The rise of platforms
A high percentage of business models that were thriving a few years ago aren’t anymore due to technology (as in digital platforms) disrupting the industry. Video and DVD rental stores, and even satellite TV channels have been ousted out by streaming sites like Netflix; hotel chains are losing in popularity to Airbnb; and metered taxis, especially here in South Africa, are almost a thing of the past thanks to convenient ride hailing apps like Uber. Even social networks are taking a piece of the pie, as is the case of Facebook Marketplace that allows people to buy and sell goods with people in their community with no listing cost.
If you are an e-commerce and tech entrepreneur and are keen to launch the next big thing, then it could be worth considering launching a marketplace platform. In the run up to the October Heavy Chef session in Cape Town, invited speaker, Snapplify’s CEO Wesley Lynch, reflected on the success of his digital education marketplace platform. He explained that through the platform he is able to open up services and technology to third parties, acting as “the glue in the digital education ecosystem.”
The Snapplify platform doesn’t own or develop any of the educational content, their role is solely to match the buyers (in this case students, teachers and schools) with the sellers (educational e-book authors and developers). Snapplify facilitates this by using technology to identify learners and to deliver the content to them. They also manage the payment infrastructure as well as collect and interpret analytics to offer feedback to the sellers on their platform about the effectiveness of content. This is a prime example of how technology enables valuable marketing intelligence that can be used to get a better understanding of customers and how to better cater for them.
Benefits of running a marketplace platform
Other than valuable customer insights, there are a number of other great benefits to running a marketplace platform. Once you have picked an objective or identity (for example Snapplify with digital educational resources and iTickets with event tickets), you can start building a digital ecosystem by onboarding partners (i.e. third party sellers) that will offer value to your target market. More partners means you will be able to quickly and easily expand the products or services listed on your platform, and if there is more than one partner offering a certain product, then it will greatly reduce the risk of stockouts and create competitive pricing that benefits the consumer. The ultimate goal is to be a one-stop-shop destination, and having the right partners can help you achieve just that.
PayFast is dedicated to helping all of our merchants, big and small, single proprietors and platform owners succeed. Our latest solution, Split Payments, is a first-of-its-kind offering in South Africa that has been designed to cater for the specific needs of marketplace platforms. Every time a payment is made on a platform that Split Payments has been integrated with, we can instantly split the funds between the platform and the relevant third party, i.e. the merchant selling the product or service. Instantly splitting out commission, listing, referral or affiliate fees not only improves cash flow, but it also greatly reduces tedious admin work and makes doing business on a platform that much more enjoyable and rewarding.