An online marketplace is a type of e-commerce site where product or service information is provided by multiple third parties. Online marketplaces are the primary type of multichannel ecommerce and can be a way to streamline the production process. In an online marketplace, consumer transactions are processed by the marketplace operator and then delivered and fulfilled by the participating retailers or wholesalers. Other capabilities might include auctioning, catalogs, ordering, wanted advertisement, trading exchange functionality and capabilities like RFQ, RFI or RFP. These type of sites allow users to register and sell single items to many items for a "post-selling" fee. In general, because marketplaces aggregate products from a wide array of providers, selection is usually more wide, and availability is higher than in vendor-specific online retail stores. Since 2014 online marketplaces have become abundant. Some online market places have a wide variety of general interest products that cater to almost all the needs of the consumers, others are consumer specific and cater to a particular segment
Online marketplaces are information technology companies that act as intermediaries by connecting buyers and sellers. Examples of prevalent online marketplaces for retailing consumer goods and services are Amazon, flipkart and eBay, which cut its "buy-it-now" online auction fee in 2008. On the website of the online marketplace sellers can publish their product offering with a price and information about the product's features and qualities. Potential customers can search and browse goods, compare price and quality, and then purchase the goods directly from the seller. The inventory is held by the sellers, not the company running the online marketplace. Online marketplaces are characterized by a low setup cost for sellers, because they do not have to run a retail store. For consumers, online marketplaces reduce the search cost, but insufficient information on the quality of goods and an overloaded goods offering can make it more difficult for consumers to make purchasing decisions. Consumers' ability to make a purchasing decision is also hampered by the fact that an online marketplace only allows them to examine the quality of a product based on its description, a picture and customer reviews.
In 2004 Yochai Benkler noted that online platforms, alongside free software and wireless networks, allowed households to share idle or underused resources. As the sharing economy inspires itself largely from the open source philosophy, open source projects dedicated to launching a peer to peer marketplace include Cocorico and Sharetribe. In 2010 CouchSurfing was constituted as for-profit corporation and by 2014 online marketplaces that consider themselves part of the sharing economy, such as Uber and Airbnb, organized in the trade association Peers.org. In 2015 Alex Stephany, the founder of online marketplace JustPark, defined the sharing economy as the economic value arising from making underutilized assets available online.
Online intermediaries allow customers and online sellers to maximize the efficiency and effectiveness. In addition, online intermediaries sometimes provide support for online social networks, which create a social community for suppliers and customers and directly connect them. Because of the dramatically increasing trend of e-commerce development, online sites allow suppliers and customers to do business in a digital environment.
Criticism
Many services related online marketplaces have been criticized for taking jobs that would go to local industries that can't compete on price against outsourced providers. Another criticism is that the laws and regulations surrounding online marketplaces are quite underdeveloped. As of consequence, there is a discrepancy between the responsibility, accountability and liability of the marketplace and third parties. Online marketplaces and platforms have faced much criticism in recent years for their lack of consumer protections.
Market economy
In 1997 Yannis Bakos studied online marketplaces and came to regard them as a special type of electronic marketplaces. He argued that they reduce economic inefficiencies, by lowering the cost of acquiring information about the sellers' products. Online marketplace operators are able to adapt their business model because of the data they hold on the platform users. Because online marketplace operators have a unique ability to obtain and use in their economic decision makingpersonal data and transaction data, but also social data and location data, academics have described online marketplaces as new economic actor, or even as a new type of market economy. In 2010 Christian Fuchs argued that online marketplaces operated informational capitalism. The inherent feedback loop allows the operators of online marketplaces to grow their effectiveness as economic intermediaries. In 2016 Nick Srnicek argued that online marketplaces give rise to platform capitalism. In 2016 and 2018 respectively, Frank Pasquale and Shoshana Zuboff cautioned, that the data collection of online marketplace operators result in surveillance capitalism.
