Consumers have moved online for everything today. In the early days of the 1990s, players like Amazon and Alibaba launched exclusively online retail experiences with convenient delivery. Since then, online shopping has grown into a multi-trillion-dollar global industry, and just about every major retailer now has an e-commerce option.
E-commerce and digital marketplaces have extended the reach of retail into our homes and on our phones, but the online economy has grown well beyond shopping. More recent disruptions in the digital world have targeted the service economy. From the taxi industry to food delivery, services are increasingly available online, shaking up traditional industries and often challenging industry giants or forcing them to play catch up.
However, the growth of both of these platforms has also introduced confusion about the difference between the two.
What Is the Difference Between a Digital Marketplace and E-Commerce?
E-commerce platforms are owned and maintained by a single vendor. Most major retail chains operate their own e-commerce platforms, while companies like Shopify provide small to medium-sized vendors with ready-made online stores to run and grow their businesses.
A digital marketplace is a platform that connects customers and vendors. Multiple vendors use the marketplace and compete for business. The platform itself is independently operated and may provide additional information or tools for either customers or vendors.
Digital Marketplaces: Disrupting the Service Sector
One of the most commonly-used digital marketplaces targeting the service sector is Uber. Uber is a digital platform that connects drivers with riders. But how it operates as a marketplace may not be intuitive to the end-user because the platform controls the price, balancing competitive pricing with incentives for drivers.
Digital marketplaces are moving beyond convenient but relatively small transactions. Innovative startup Nobul now targets service providers involved in what is often a consumer’s largest lifetime financial transaction: real estate.
Nobul turns the business of real estate agents on its head. On the platform, home buyers and sellers provide some basic information about themselves, and agents compete for their business. Consumers see agents’ fees and transaction history, giving them the power to make an informed decision.
In the words of Founder and CEO Regan McGee, the success of Nobul is that it fits the same model laid out by Uber and Amazon, leveraging big data to give consumers more information:
“The great thing about the real estate industry’s recent embrace of Big Data and all things digital is that we’re now able to be so much more current with our customers. That matters tremendously when the market is as hot as it is right now. But, more importantly, customers have come to expect that kind of immediacy. They get it with Uber, which can tell you within minutes when your driver is coming to pick you up. And they get it with Amazon, which can tell you almost exactly when your package is going to arrive.”
Digital marketplaces are leveling the playing field for consumers, placing consumers and service providers on the same platform, alongside a wealth of transparent data that helps consumers make informed decisions.