Editor’s Note: Today’s blog is a guest blog from our friend Max Lock, President and Founder of Fleet Logistics. In this blog, Max discusses everything you need to know about the marketplace model and why shippers should adopt it.
The Marketplace Model: A Proven Model for Success & Why the Shipping Industry Should Adopt It
Marketplace, a means by which the exchange of goods and services takes place as a result of buyers and sellers being in contact with one another, either directly or through mediating agents or institutions. With origins that date back thousands of years, marketplaces have been incessantly reinvented, but its core concepts have consistently proven to be a highly efficient and effective model for doing business. When applied the right way, marketplace’s are highly profitable, scalable, defensible and vastly valued with substantial benefits for both buyers and sellers.
A History of Success
History and anthropology provide many examples of marketplaces throughout time. The expansion of the marketplace system is important for business history because it has created numerous new opportunities for business growth.
One of the earliest known marketplace concepts was Trajan’s Market. Built around the year 110 AD, it consisted of a large complex of warehouses, shops, and offices where Romans would gather to purchase goods and conduct business.
In their earliest forms, marketplaces primarily emerged as a natural process of social coordination (not entirely unlike language). As they evolved, however, they would provide a forum for both buyers and sellers to interact and trade goods; it allowed them to control their resources. Participants in these ancient marketplaces were free to decide how their resources were used and free to make decisions that reflect their preferences.
The evolution of marketplaces is one of constant, uninterrupted progress. Even with the modernization of today’s business economy, we still see the marketplace’s principles and concepts being used in present-day business.
Modern Day Success Stories
From Roman marketplaces of 110 AD to farmer’s markets of today, people still enjoy bartering and getting the best deals possible. Marketplaces nowadays, offline or online, are places where sellers and buyers meet, talk, haggle and come to an agreement that works for both sides. A seller can choose whether or not to accept an offer, and a buyer can haggle until he is certain he has gotten what he wants for a price he can afford.
Uber, Airbnb, and Amazon, for instance, are all well-known examples of companies that have adopted and effectively utilized the marketplace model to achieve wild success. In the case of Airbnb, did you think using the Internet to rent strange people’s rooms was creepy when you first heard the idea? However, now look at the explosive growth they have achieved since launching, and now have persuaded over 20 million strangers to rent rooms from one another!
Marketplaces are unique; they don’t just serve one base of customers, but they connect buyers and sellers, service providers and consumers. As the benefits of using this model continue to prove themselves, we continue to see more and more startups adopt and utilize the marketplace approach for their businesses. Companies like Upwork (talent marketplace), Lawn Love (lawn care marketplace) and Soothe (message marketplace), have all adopted this model. At Fleet, we also employ this model to provide an efficient platform for both shippers and freight forwarders to connect with one another.
Benefits for Consumers
So what makes this model so successful for let’s say, consumers? Beyond the obvious benefits correlated with convenience and having everything in one place, there are a plethora of reasons. For one, it gives the customer added product choices, as well as the ability to see aggregated options on a single platform. This allows them to see the most reasonably priced or highest quality products easily and in the process, feel more in control when making purchasing decisions.
Marketplaces also permit consumers to compare quotes from various providers and enjoy both greater trust and greater transparency in the form of reviews and ratings, which in turn leads to superior service and more competitive pricing from sellers.
Benefits for Sellers
The beauty of the marketplace is that it is extremely beneficial for all parties involved. Not only does it help consumers, but also the advantages for sellers are equally as notable.
Building a loyal customer base can be a time-consuming process, but with marketplaces, there’s already an existing network of consumers ready to make a purchase. Especially for small business owners, who don’t have the resources to establish their own eCommerce business or website, a marketplace allows them to build a reputation and gain visibility without expending a significant amount of cash.
As technology and automation continue to advance, marketplaces also make it less expensive for service providers to process transactions and fulfill orders. Companies like Amazon provide extremely efficient fulfillment services that can save a lot of time and resources and in turn, lower costs.
A Win-Win-Win Situation for the Shipping Industry
Navigating the complicated world of international shipping can often prove to be complex and sometimes frustrating. A successful marketplace model must consistently be a win-win model: third party sellers have a lucrative new sales channel; and then there’s the operator, who enjoys increased traffic, sales, and profits. This is a major motivator behind why the marketplace model is being utilized more and more in the logistics industry; it can prove to be beneficial for both the shippers as well as the freight forwarders.
There are more than 17,000 freight forwarders in the world. So how do you find the right one for you? A logistics company utilizing the marketplace approach can connect shippers and freight forwarders quickly as well as allow them to choose a partner that fits best with their goals. This provides forwarders with the opportunity to maximize their productivity and asset utilization, and as a result lowered costs for shippers.
The marketplace approach in logistics also ensures added transparency, as the same set of rules is applied to all participants, not to mention it provides buyers and sellers with peace of mind by letting them know whom they are doing business with. Fundamentally, it allows service providers that are listed on the platform to obtain superior leads, reach more small businesses and manage all of their transactions in one place.
Fleet: Making the Shipping Industry a Little Less Complicated
It’s pretty amazing to think about how much progress we’ve already lived through when it comes to the type of visibility and collaborative activities that buyers and sellers have been able to build together through the use of the marketplace model in business.
With today’s advanced technology, there’s no reason for international shipping to be so complicated. Which is why at Fleet, our goal is to make the complex world of international shipping more transparent and much easier to maneuver. Offering a simple platform where users can obtain up to five quotes at one time and then make an informed decision, we strive to make the world a little bit smaller, and trade that much simpler.
About Max Lock: Max Lock is the Founder and CEO of Fleet. Fleet revolutionizes the international commercial shipping industry by providing an easy-to-use platform, reliable shipments, fair pricing, and an unparalleled customer experience for shippers of any size. Fleet tackles the industry-wide inability to adequately serve small to medium-sized companies by bringing a steady stream of business to freight forwarders and competitive rates and superior service to under-served importers.