Marketplaces are evolving at a rapid pace as the Internet a.k.a “The Connection Engine” is changing every aspect of what a marketplace is.
Historically a market place has been where buyers and sellers congregated and then exchanged goods and services with accepted currency.
First, there were the physical bazaars and souks and then the malls where the sellers congregated, the buyers came in crowds and service was transacted using either a form of barter or currency or credit.
Then there was the Catalog and Telemarketing addition, to allow for virtual marketplaces which was then further expanded using the first generation of e-commerce.
A significant shift to the nature of marketplaces and their dynamics arose with E-Bay which created not only a new way to buy and sell but expanded the ranks of buyers and sellers. Amazon Marketplaces built on this momentum.
Today mobile phones, social networks, broadband and cheaper technology are so changing every aspect of the market from a) what is the marketplace to b)who are the buyers and sellers and c)what is the nature of the currency used to execute the trade that every aspect of marketing will change.
Today the marketplace is no longer a physical space or an e-commerce site or a catalog but pretty much anyplace where a buyer or a seller decide on a transaction.
There are dozens of new marketplace models of which the following are truly innovative
1. The Sampling Marketplace where you sign up for samples and then buy product or keep the sample. A more sophisticated book of the month club these include Birch Box, Shoe Dazzle and much more.
2. Sudden/Private Marketplaces which provide a just for you or just for now opportunity of which The Gilt Group is a leader
3. Reverse Marketplaces where buyers congregate and then ask seller for prices and deals such as the original version of Groupon
4. Collaborative Consumption and Production Marketplaces where spare capacity whether it be a spare room or a space in your car like Airbnb or Sidecar can now be monetized. Freelance creative talent have platforms built by Victors and Spoils and Jovoto among many others to make their skills available.
5. Exchange Traded & Electronic Marketplaces expand to all sorts of goods including computing power and storage sucha as Amazon Web Services, freelance talent such as Odesk, and data and ad inventory that began initially with Right Media.
6. Place based marketplaces where inventory is created based on the proximity of buyers and sellers such as Uber for cars or Four Square and Groupon place based deals.
7. New Funding Marketplaces such as Second Market which helped provide liquidity for Facebook holders pre-IPO. Then we have the awesome Kickstarter that has raised more money for artistic projects (among others) than the National Endowment for the Arts. In fact, projects on Kickstarter have raised more than a million dollars from the crowds at least on seven occasions. Finally, Prosper enables a marketplace for peer to peer lending.
New Breed Of Buyers & Sellers
These are just a few of the way the Internet has enable completely new marketplaces to come into existence.
But as interestingly these marketplaces have allowed for a completely new breed of seller and buyer since productive capacity as well as consumption capacity that was untapped is now brought to the market.
In the case of sellers we now have every home owner can now not only offer a spare bedroom to the market but also a space in their car or even rent out their ladder!. And if you like designing and making things there is Etsy and if you are a sitter there is Sittercity and the list goes on. Your hobbies and your spare time (now we can all be freelancers) can be monetized (and you can also give your time for charity or to help others).
Similarly a new crowd of buyers surge into a marketplace because either the price is right or the place is right or the offering is right. For instance when a non car owner needs a car for a grocery run there is a Zip and the fact that the store you are near has a special deal that you hear about when you check in on Four Square makes you an additional buyer.
Medium of Exchange
The orginal medium of exchange was barter and in many ways barter is one of the new forms of exchange as people can trade cd’s and home articles and much more due to the ability to create new markets.
But in addition to old fashioned barter we have new currencies including Facebook Credits, Airline and Hotel Miles and Credit Card rebates and much more as companies marry data and the internet to reduce friction and enable transaction.
Implications for Marketing and Marketers.
There are three things every Marketer and their Agency should ensure they are doing.
1. Audit and Understand the New Marketplaces Impacting their Category: How will the new markets create new opportunities as well as potential competitors for you? Are there ways to reduce costs or enhance the ability to gather ideas and input? Will the new markets allow for new products and services you did not think of in a static or existing marketplace
2. Understand the new levers available to your firm due to new Marketplaces.There is a host of new companies that can provide incentives to the right people at the right time due to these new marketplaces. They not only offer ways to target folks but gain insights and potentially bundle your product and service with another. Do you understand the new levers?
3. Participate in or create new marketplaces: After understanding the landscape and determining potential opportunities it is critical that marketers participate in the new market places or create one of their own (this may be as simple as a collaborative sharing marketplace inside their own company), in order to stretch and test their own organizational system and capabilities.
The future of marketing will change as the nature of marketplaces change and leaders will change with it. ‘