How to increase profitability in the global marketplace? Online purchases after the introduction of online platforms using the internet have become the widely accepted mode of business transaction. Moreover, 2023 will be the year of online shopping as one-third of the world will make online purchases, adding 700 million more people than in the last five years, according to the reports. The stats are incredible and reflect how much online businesses or marketplaces will be profitable in the future.
In an online marketplace, all the buying and selling are done online without creating a physical store because sellers and customers are linked through the platforms. With the advent of the internet, most customers and businesses are online; therefore, it has become the right option for companies or store owners to connect with those customers.
The Internet provided them with the opportunity to reach those people. By listing the products on an online marketplace and targeting a global audience, the sellers can make more money than the traditional way of earning with products.
How to Increase Profitability in the Global Marketplace?
Although the global marketplace has a lot of potentials, with billions of revenues generated every year, it is not suitable for some if you have some knowledge of increased profitability in the market. The competition has risen within the market, so it has become essential to upgrade yourself with time. Here are some suggestions for increasing profit in the global marketplaces.
The subscription model is one of the most recommended models for marketplace owners to boost their revenue and profit to a large extent. As these subscriptions are handled digitally, the overheads and expenses are covered nicely with this model.
Every marketplace offers different subscription models, and the customers can enjoy different benefits depending on the subscription level. Marketplace owners can lock customers for a longer period of time and generate recurring and steady revenue.
Every online marketplace uses a commission model where customers have to pay a fixed small percentage of the amount on all the product sold through the marketplace. The rate of the commission depends on the value it provides to customers.
The more sales, the higher the profit and both merchants. Interestingly, the marketplace doesn’t have to pay anything before getting some value from using the platform. Introducing a commission-based model is one of the best suggestions for improving profitability in the global marketplace.
Talking about suggestions for improving profitability in the global marketplace, the listing fee model is another excellent addition to it. In the listing fee model, the seller pays based on the products or services listed on the website. Marketplaces have nothing to do with the popularity and the number of sales of the products, as they are charged a fixed listing fee. So, it will be a consistent source of income for the marketplace.
Some digital services-based marketplaces l don’t charge for the listing of the services. In this model, the marketplace profitability is not dependent on the sales but on the number of products/services listed.
Although there are many suggestions for improving profitability in the global marketplace and freemium model is one of the most used practices by renowned marketplaces. Although every user has access to essential tools and options, some unique options require an additional fee to pay to get access.
The use of these features helps sellers’ profiles stand out from the rest. Therefore, sellers use those features to make their mark in the competitive world. The term ‘Freemium’ was coined in 2006; however, the model was used for the first time in the 1980s.
Marketplace profitability for some of the well-known marketplaces is based on promotions. All eCommerce websites have used this method to boost their revenue to a large extent. Even freelancing websites like Upwork offer promotions to sellers to get reliable freelancers.
In this model, the sellers can run ads and promotions on the marketplace to promote their page or store. When you ask for suggestions for improving profitability in the global marketplace, they will ask for paid ads and promotions. The sellers run ads, promote products on the first pages of the marketplace, and achieve the desired goals.
- As a marketplace owner, if your business has some flaws or negative points, try fixing everything to increase sellers and customers. Make sure you are offering great services to your customers. Make use of KPIs and get to know your weaknesses and strengths. This will help in increasing marketplace profitability even in the worse conditions.
- If you are offering great services, you can increase the prices of products by 5 to 10 percent. This will be fine with overall sales. Similarly, factors like inflation could be the reason for an increase in prices.
- There are always new options for business owners, and finding those businesses could increase your overall profit. With previous knowledge, only the first step is difficult, and market analysis will assist you greatly. Explore new marketplaces and learn how you can add value to them.
- Increase your trust among sellers; if you succeed, they will bring more investors and sellers to make an online store on your marketplace. There are many ways to build trust, such as making a welcome page for new sellers, sharing the marketplace’s story and achievements, and making online payments and transactions transparent.
How to Increase Profitability in the Global Marketplace: Wrapping Up the Things
E-commerce is undoubtedly the future, and we have seen an increase in online selling and purchasing in the last few years. CoVID-19 further enhanced its value when the whole world made purchases online. Considering the future potential of online shopping, marketplace owners need to know different models to increase revenue.
We have explained how subscription, listing fee, Freemium, commission, and promotion models can take your business to the next level. Moreover, there are specific tips you should follow as a marketplace owner to increase trust, awareness, transparency, and ultimately marketplace profitability, which is the primary purpose of building the marketplace.