Horizontal Marketplace vs Vertical Marketplace
The eCommerce industry is continuously flourishing the way of online businesses. Whether it’s an online store or a marketplace, being a merchant you need to resist the competition across the globe for your eCommerce business. This doesn’t mean that you only have to be completely focused on your competitors but to withstand the competition by focussing what your customers want.
“If you’re competitor focused, you have to wait until there is a competitor doing something. Being customer-focused allows you to be more pioneering.”
–Jeff Bezos, CEO of Amazon
This is the reason it’s worth focussing on one niche to run an online business. And for that, you need to opt for a business model that utterly pinpoint your business requirements.
eCommerce business models play a crucial role in providing a strategic approach to get profit in an eCommerce business. So, before getting started, first & the foremost thing is to determine what are these models, what model to choose & why?
eCommerce Business Models
In order to get stick to any business idea, you must choose a specific business models either horizontal or vertical marketing system. Typically if we talk about the eCommerce business model for online marketplaces, you will have the two options Horizontal Marketplace and Vertical Marketplace.
e-Marketplaces have their own terms to sell products online. You need to register multiple vendors who showcase a variety of items on your website & sell them to a wide range of customers across the world. So, better stick to a specific model & proceed to start your online business. But the question is how to recognize which model fits for the business needs? Let’s proceed to understand the same.
Horizontal Marketplace
Horizontal marketplace facilitates the need for a wide range of customers across a different sector of the economy. It is not mainly focussed on a specific category of items to sell but sells almost everything thus, reach a broader audience.
Horizontal Marketplace follows the concept of “One-stop Shop”
What’s that? 💭
The one-stop shops let the buyers purchase everything under one roof. Customers don’t need to move to different online websites to purchase different categories of products but can buy everything in one place.
One standard example is Amazon.
Undoubtedly, what made them famous is the Books they sell, Amazon still maintains its position to be on the top in the list of the world’s largest eCommerce company & possibly the world’s largest online conglomerate!
The reason is simple they believe that they will sell everything followed by the horizontal marketplace strategy but the customers must be satisfied at each point of selling. This is what their logo shows..!!!
What Amazon Logo says? 💭
An arrow pointed from a to z defines the concept of horizontal marketing i.e. it sells everything right from the product name starts with the very first alphabet a to the last alphabet z. And the arrow pointed in such a way that it forms a smile:) that shows customer satisfaction i.e. customers must be happy with the product they purchase from Amazon.com.
Thus, the Horizontal Marketplace comes with exceptional features. Few of them are listed below:-
▶️ Customers belong to diverse industries resulting in lower the risk of market fluctuation & demand shortage.
▶️ Quite easy to identify the areas where the improvement is needed thus, product quality can be improved with the times.
▶️Multiple companies can share their resources with each other & thus, can promote their brand at the same advertising cost.
▶️ Being a larger firm, you will have more power over your suppliers or distributors.
There are a lot more advantages one can find out once implement this strategy in real-time.
That is what the Horizontal Marketplace is all about. You can achieve greater coverage with the combination of different market segments. This is possible when you sell everything with a promise to satisfy customer needs.
One con of this extended marketing strategy is that you may not get a chance to dominate any specific eCommerce market as you will be spending all your time in different market segments instead of focussing on one.
Let’s proceed to understand the vertical marketplace & how it is different from the horizontal marketplace.
Vertical Marketplace
“Sell a niche product or service to your valuable customers”
Unlike the horizontal marketplace model, vertical marketplaces aimed at a single market sector to serve some specific category of products to the targeted audience. Thus, becomes master in it.
Well! Vertical marketplaces do not offer a wide variety of products & services but focus on a niche to offer a specific product category. Thus, in order to become a master in a specific eCommerce sector, you need to integrate your eCommerce business vertically.
Let me tell you how you have exceptional benefits of having a vertical marketplace. Take a look:-
▶️ You have just one industry to focus on.
▶️ Minimal target audience to fulfill needs.
Moreover,
▶️ You have all the time to prepare marketing strategies by focussing in just one direction.
▶️ Showcase your products in the best possible way.
Become a master of a specific eCommerce market sector.
and much more.
One Live Example of Vertical Marketplace is Etsy, an imaginative Marketplace
Etsy is one rich example that follows the vertical marketplace concept of the eCommerce business model. This Brooklyn-based online artisanal marketplace typically focusses on art & crafts to sell. Thus, it now becomes one of the leading marketplaces for handcrafts & vintage items.
Undoubtedly, vertical marketplaces have to focus on a specific market, you will have a small customer base that may limit the potential customers who are actually interested in your brand. So, if you are sure that the market you choose has much scope of its growth in the future, you can go for it.
Wrapping Up
Between the horizontal marketplace and vertical marketplace, there is no such point that determines which one is perfect for your business. It’s all depends on your requirements & your research in understanding the market segments.
If you have enough knowledge of a particular market sector & have the scope in it, you can integrate your business vertically. Else, if you want to reach a broader audience to showcase different categories of products on your marketplace, the horizontal marketplace can be the right choice for you.
Think of converting your store into a marketplace? Here you go..!!!
Do share your thoughts in the comment section below.