Business-to-consumer (B2C) marketplaces allow multiple vendors to sell products and services directly to consumers on one platform. They’re the most common type of marketplace, like Amazon, AliExpress, Walmart, and Wayfair. These big, multi-vendor platforms give customers a single location for product selection and comparison shopping, selling trillions of dollars in consumer products annually. AliExpress alone averages over 732 million visits per month.

B2B vs. B2C vs. D2C marketplaces: What’s the difference?

Business-to-business (B2B) and direct-to-consumer (D2C) marketplace strategies differ from B2C in several fundamental ways.

B2B marketplaces facilitate transactions between businesses, such as manufacturers, retailers, and service providers. For example, a restaurant chain might place a large, recurring order for napkins directly from a business that manufactures them through an online marketplace. B2B platforms streamline this type of large-scale procurement process.

D2C marketplaces are platforms owned by individual brands selling their own products directly to customers, without intermediaries like retailers. The brand gets to control the pricing strategy, the presentation of the products, and the entire customer experience. Big fashion brands often go this route, such as Nike and Calvin Klein.

The pros and cons of launching a B2C marketplace

B2C marketplaces continue to rise in popularity, in part due to the COVID pandemic creating enormous demand for online purchasing, paired with expanding internet penetration and rising disposable incomes.

Marketplaces currently account for around 67% of all B2C ecommerce sales worldwide, and their growth isn’t expected to slow. By 2027, third-party sales on digital marketplaces will capture 59% of global ecommerce sales compared to 56% in 2022. The four largest B2C marketplaces — Amazon, Alibaba, Pinduoduo, and JD.com — will bring in $4.3 trillion in global sales.

Pros of a B2C marketplace

A better customer experience

In a recent study Nautical Commerce commissioned with Forrester Consulting, improving the buyer experience was a top outcome expected from launching a marketplace. And they’re right: B2C marketplaces consistently rank highly in customer satisfaction. 51% of consumers cite marketplaces as delivering the best customer experience of any type of purchasing option.

Nicole Smith is the founder and CEO of Flytographer, a services marketplace that connects travelers around the globe with highly vetted local photographers. Her business gets about 40 percent of their bookings every month from repeat customers and referrals, making the customer experience a very high priority.

According to Nicole in a recent interview with Nautical, the trick is to invest in every touchpoint of the experience, “from the first time they hit your website, through your transactional emails, through the in-person experience, to getting their photos.”

More data

B2C marketplaces allow you to offer customers a much greater product assortment, which in turn draws in a large number of consumers. Each transaction generates valuable data on product trends, pricing limits, and regional demand. The larger the volume of consumer data you acquire, the more accurate your resulting insights into the market.

High average order value (AOV)

AOV is the average amount of money a customer spends per transaction on your marketplace. Generally, AOV is higher on a marketplace than a traditional ecommerce store because customers can access more products in one place. B2C marketplaces can also leverage several tricks to increase AOV, including cross-selling through "Frequently Bought Together" prompts. For example, consumers who put a smartphone in their cart might get a prompt to add accessories like cases or chargers.

Offer Convenience

Marketplace experts know that a convenient shopping experience is no longer a nice-to-have, it’s an expectation. B2C marketplaces meet those needs by offering one-stop shopping. Consumers can browse a wide variety of products across multiple categories, consolidating customers’ shipments for fast delivery options, and centralized return policies that make it simple to get refunds from multiple sellers.

Cons of a B2C marketplace

Thinner margins

With a marketplace, you only take a 10-15% commission on sales— meaning you make less money per transaction. High operational costs, including platform maintenance, customer service, and customer acquisition, also eat significantly into these profits without the right system in place.

Balancing supply and demand

Managing supply and demand in a B2C marketplace is difficult, especially in a niche market.

"You’re kind of running two different businesses at once,” says Nicole Murphy, CEO and founder of the B2C marketplace Tall Size. “Let’s get people to the platform so that the suppliers we do have are happy. But then if you ignore the supply side for too long, you've got this demand who's not happy with the options on your platform.”

“It’s like this teeter-totter of trying to balance both sides,” she says.

Less control

In the B2C marketplace model, you don’t own the whole process. You’re the middleman between sellers and buyers. Sellers control the inventory and set their own prices, and you have far less control over your marketplace’s reputation as a result. It’s therefore very important to put guardrails in place to keep your customers safe and improve what elements of their experience you can.

Examples of B2C marketplaces 

Amazon

The ecommerce giant began as an online bookstore and has since diversified into an enormous number of sectors, including cloud computing, video streaming, and artificial intelligence. 

The B2C marketplace model enables Amazon to offer an extensive selection of goods across many categories and at competitive prices. To mitigate some of the drawbacks of B2C’s lack of control, Amazon invests heavily in providing extreme convenience, such as fast shipping and customer support, making that a core part of their brand.

Loop Golf

Loop Golf is a B2C marketplace that connects golfers with the best tee times at busy golf courses.

"It doesn’t cost golf courses any money,” says Matt Holder, Loop Golf’s CEO. “We’re helping generate a full-rate golfer, as opposed to a discounted fare that would take money from their bottom line."

Matt wasn’t sure at first if golfers would be willing to pay an extra 10% fee for the convenience of finding premium tee times on a B2C marketplace. “So we did some of that analysis and found very quickly that it was a resounding yes,” Matt says.

Best Buy

Best Buy leveraged its strong brand reputation, robust website traffic, and predictable profits to expand its traditional product assortment of consumer electronics into a B2C marketplace with a vast array of goods and vendors.

“We were dominant in traffic share in consumer electronics, like upwards of 60%,” says Jason Leung, senior marketplace manager at Best Buy. “So, you know, we knew the customers were going to be coming, and we wanted to know how we could serve them better.”

“The marketplace platform allows us to test and learn without, obviously, inventory risk and the financial investment that would be required otherwise.”

Stock X

StockX is an online marketplace specializing in a variety of high-demand consumer goods, such as sneakers, streetwear, electronics, and collectibles. StockX operates on a "bid/ask" model that suits the smaller-volume, direct-to-consumer B2C marketplace model. It functions similarly to a stock exchange, where sellers list items for sale at specific prices and buyers place bids. 

The platform authenticates products to ensure quality and prevent counterfeits, protecting their brand and providing a trusted environment for transactions.

Wayfair

Wayfair is an American B2C marketplace that specializes in furniture and home goods, with over 14 million items on offer from 11,000 suppliers all over the world. This massive market is a great example of some of the biggest pros of B2C: customers have access to an enormous selection of goods; vendors take on the burden of warehousing and shipping; as the middleman between businesses and customers, Wayfair can gather and then leverage (and sell) vast amounts of consumer data.

How to launch a B2C marketplace 

Launching a marketplace isn’t easy and one size doesn’t fit all. But there are some high-level steps to consider when launching your B2C marketplace, such as:

Define your B2C marketplace vision

Clearly articulate what problem your marketplace will solve and how it will create value for both buyers and sellers. Identify your target audience, the unique value proposition of your platform, and the goals you want to achieve.

🔵 Download Nautical’s marketplace business canvas template to help define your vision 🔵

Start with an MVP

Begin with a minimum viable product (MVP) that focuses on providing a core service with only essential features. Avoid overloading your platform with unnecessary functionalities in the early stages. The marketplace MVP allows you to test your concept in the market and gather feedback while keeping initial development costs low.

Scale your operations slowly, one step at a time. Start small by focusing on a specific customer segment to build traction and learn what works. Once you’ve validated your concept and developed processes that work well, expand systematically to meet growing demand. 

Remember: crawl, walk, run

Choose the right B2C marketplace software

The marketplace software you choose should align with your business needs, scaling plans, and budget, but most of all it must offer key features, such as secure payment processing and inventory management tools for sellers.

Find your marketplace supply

Attract reliable sellers from the get-go. You can make this easier by creating incentives, offering onboarding support, and reducing friction wherever possible. A strong initial supply ensures that buyers find value in your platform from the start and can help you grow an invaluable base of recurring customers.

Generate marketplace demand

Drive traffic to your platform by targeting your ideal buyers through tailored marketing strategies, like SEO, social media, partnerships, and more. Consider offering promotions, discounts, or referral programs to attract early users and encourage repeat engagement.

To learn more about how to create a marketplace, enroll in our free, on-demand, marketplace bootcamp.

A B2C marketplace could be your next business venture

There are many factors to consider when selecting the best type of marketplace for your business. From the consumer perspective, B2C marketplaces offer great convenience, product variety, and competitive pricing, while for marketplace operators they provide a lot of customer data and higher AOVs. On the flip side, you’ll have to consider whether you’re willing to absorb thinner margins, strike the delicate balance between supply and demand, and sacrifice some control over processes.

Learn how Nautical can help you build a B2C marketplace with it’s B2C marketplace platform.