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Imagine generating a single year of revenue of $37 billion and $683 million. Conventional wisdom suggests that you’d have to have massive amounts of inventory on hand to sell that much. When Uber and Grubhub reported those numbers for 2017, though, they did so without owning a restaurant or car. They are just two examples of companies that have upended conventional wisdom by pioneering the online marketplace business model.
An online marketplace is a place where two sides of a transaction -- buyer and seller, service provider and client, etc. -- are connected via technology. The owner of the online marketplace does not own any inventory. Instead, its job is to facilitate the transaction. With this in mind, it is safe to say that business is booming. The world’s largest 75 online marketplaces grew by 30% and generated $1.5 trillion in 2017 (or nearly half of all global online shopping).
While others make predictions about what online marketplaces will look like in 2019, we’ve taken it one step further. We asked our resident expert, Chief Product Officer Eric Prugh, for his predictions on what online marketplaces will look like in 2020.
Online marketplaces will function as the starting point for nearly every interaction businesses and consumers have with goods and services. Consumers have proven they will buy and purchase anything online, and marketplaces are rushing to bring them even more choices and flexibility.
“Is there an app for that?” will no longer be a question; it will be a basic assumption. The marketplaces that thrive will have speed and mobility baked into their DNA.
Online marketplaces will be even more verticalized and hyper-focused than they are today. While it’s a safe bet to say marketplaces will continue to grow, sustaining that growth will require them to focus on providing an amazing customer experience and deliver value on each and every transaction.
Traditional businesses will adapt and leverage online marketplaces to bring their goods and services to market. More and more will come to see marketplaces as a quicker avenue to new revenue streams and/or expansion of their existing distribution model.
Online marketplaces will continue to adopt clickthrough agreements because there’s no other way to mitigate legal risk without impacting conversion. Marketplaces are onboarding new consumers and providers at an accelerated rate, and clickthrough offers a scalable, standardized, and frictionless experience that reduces their risk and liability exposure.
The last prediction about legal risk is not really a prediction because it’s already happening. After all, marketplaces face liability in each and every transaction they facilitate. PactSafe helps online marketplaces manage risk by creating transparent interactions that define the start and stop points of these transactions, thus helping marketplaces better protect themselves against risk and liability.