14.09.21

Marketplace vs. Aggregator: The Difference Between Business Models

Online commerce is one of those industries that have benefited from the restrictions during the pandemic. With increased self-isolation and social distancing measures, millions of people have moved online, consumers looking for safer ways to shop, sellers looking for lucrative points of sale. Marketplaces and aggregators are especially popular on both sides — platforms that combine hundreds of offers from different suppliers. What are these business models, and how are they different?
A marketplace is an online platform that brings sellers and buyers together. As an example: Aliexpress, Tmall, Amazon. This method of distance selling is beneficial to all parties: the seller demonstrates his product to a broad audience, the consumer gets access to hundreds of products with different prices. The marketplace owner earns on the fact that trading is carried out on its territory and its terms.

The marketplace can charge suppliers for operations with goods (storage, delivery, acceptance, return), for additional services (publishing announcements, contacting the customer, placing goods in the top positions), or take a commission from each transaction or a membership fee. The marketplace platform can have strict rules for merchants: delivery in a specific package or to specified distribution centers.

In return, the marketplace provides the supplier with a place on a vast "showcase". It assumes all responsibilities for technical support and website promotion, storage and delivery of goods, online payments, and organization of loyalty programs. The marketplace invests vast amounts of money in traffic generation, which means that the products posted on the site constantly capture a multimillion audience.
The scale and specifics of the marketplace depend on who sells goods and to whom:
C2C (consumer sells to consumer) — trade between individuals interacting equally and having common interests.
B2C (business sells to consumer) — trade between an entrepreneur and an individual.
C2C + B2C is a combination of trade offers from individuals and entrepreneurs, including those who opened a business in the process of cooperation with the marketplace.
B2B (business sells to business) is a trade between entrepreneurs.
So, a marketplace is a company that controls all trade processes, placement of goods from different suppliers; a simple algorithm that allows sellers to start trading; understandable terms of cooperation with suppliers (commission, service requirements, content). Then who is an aggregator?
An aggregator model
An aggregator is an online trading platform that establishes agreements with various suppliers of goods and services, for example, Uber. The aggregator collects offers from suppliers from multiple sources and consists of many catalogs. The user gets the opportunity to find everything in one place, comparing products by prices, benefits, reviews, and giving preference to the best deals.

Anyone can place an offer in an ad aggregator like Avito, including those not registered as individual entrepreneurs or self-employed. This is beneficial for sellers who want to check the demand for a product or service before moving to other sales channels (social network, online store, marketplace). These opportunities also eliminate the need to spend money on promotion — aggregators often get into the TOP of search engines. However, many aggregators, for example, taxis, work only with legal entities and individual entrepreneurs, making high demands on them.
The aggregators' operating conditions depend on the type of placed offers:
Commodity (without selling on the site). The aggregator posts minimal information about the offer and redirects the buyer to the seller's resource. Earnings — on commissions and advertising.
Affiliate. The aggregator creates conditions for secure transactions between the company and the client. It protects against unscrupulous customers. The latter returns money in case of poor quality of goods/services. Earnings — on a high commission.
Thematic. The aggregator places offer sorted by subject. Earnings — on commission and advertising.
Classified. An aggregator from a separate category that allows users to create their ads.
A digital intermediary — an aggregator company — posts information about products and services to help sell them. A merchandise aggregator may charge suppliers a commission (typically around 30%) and offer shipping assistance. But not everyone needs this service: according to statistics, 70% of online shoppers consider pickup the most convenient way to receive goods. In addition, aggregators do not store goods and do not have their distribution centers. The primary profit is obtained from the sale of goods and services of companies placed on the resource.

So, a site that collects and sorts offers from various sources can be called an aggregator. What exactly makes it different from the marketplace?
Marketplace vs. Aggregator: Key Difference
Many sellers and manufacturers who are first faced with choosing between the aggregator and the marketplace models assume they are the same thing. This is only at first glance: both sites create space for goods from different suppliers, charging a certain fee. But the whole point is that they do it in different ways and under other conditions.

Marketplace — provides access to work on the platform for different sellers. The buyer places an order directly in the marketplace, without going to other sites, immediately pays, and chooses the delivery method.

An aggregator is an analog of a catalog that combines disparate offers from suppliers. In the commodity aggregator, purchase and sale transactions occur off-site: buyers can find out a minimum of information about the product and compare prices, but to purchase it, they must follow the link to the supplier's website.

Online trading will always be at the peak of its popularity. According to forecasts by Forrester Research, by 2022, about 50% of all online purchases will be made on marketplaces. This model has advantages in the long term because it has many alternative ways to monetize. In contrast, the aggregator makes money mainly from advertising. In addition, the marketplace model allows you to quickly adapt to changing market requirements and compete with other industry players, attracting suppliers with more pleasant conditions.

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