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The basics of online marketplaces

By Bobby Buys

Republish: EasyPublish™ Published: 08Jul2009 Word count: 552 Viewed: 452 time(s) Get Free Content For Your Site

Everyone with a computer and internet connection can become a seller or a buyer on an online auction site and marketplace. You need to be over 18 years old and to register as a user, which takes several minutes in case of buyers and a little longer for sellers.

The online trading platform set-up consists of three closely interwoven elements: the company that offers the platform; the sellers who populate it with merchandise; and the buyers who come to purchase that merchandise. The cohesive fabric that binds them together are mutual interest - and trust.

The interest component is easy to analyse. The advantages for both the buyers and sellers are convenience and ease of transaction. Users can trade with each other even if they are geographically distant and they can do it whenever they want, from the comfort of their homes. The sellers get a ready-made online selling outlet that requires very little or no investment and only basic know-how. The buyers get access to a great variety of products, which may be either unique or difficult to find collectibles or discounted commodities at discounted prices. The company that makes the transactions possible generates revenue from the fees the sellers pay to it.

The trust component is just as important, but more difficult to quantify. Online consumer-to-consumer trading places install trust among strangers by means of a rating or feedback system that allows users to rate each and every transaction. While it is impossible to measure exactly the economic impact of ratings, experience shows that sellers with good track record are more likely to sell their items and to achieve better prices on their auctions.

At first sight, a business like that may seem easy to set up and maintain. After all, the company that makes it all possible does not engage in land-based activities like stocking inventory or shipping; it never touches the products it sells. However, setting up and maintaining an online consumer-to-consumer marketplace requires good technological solutions. The software that enables such a site to run is sophisticated and needs constant updating. Then, the site needs an enormous amount of bandwidth in order to accommodate heavy internet traffic. It also needs to devote years to building a community of users.

Once all these requirements are met and constantly cultivated and upgraded, it must be said that, as a business, an established online market place can display great vitality, even in the times of economic gloom. Up to a point, consumer-to-consumer online trading platforms thrive on recession, because that is when people come to the site to sell in order to improve their finances and to buy bargains in order to make their money stretch further.

Fist time on an auction site? Follow this advice:

- Whether you are a buyer or a seller, read the auction site's terms of use.

- Once you register, do not disclose your password to anyone.

- Never reply to "phishing" emails. Messages that look like they have been sent by the auction website and ask for your password or other personal information are always scams.

- Join the auction site's forum. You will find many useful hints there and help from more experienced users.

- Treat your trading partners and other members of the community as you would like them to treat you.

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