Why Online Vertical Marketplaces Gain More Popularity Over Horizontal Marketplaces?
The horizontal marketplaces, which range from Walmart to Target, make great sense in the real world. Additionally, there are horizontal giants that dominate the industry in the internet sector.
For instance, the retail behemoth Amazon, which operates a global eCommerce business, has thrived and become the leading online marketplace practically everywhere globally. According to the CEO, this achievement is solely attributable to the company’s customer-centric strategy rather than its competitive emphasis.
There is still an opportunity for niche-specific markets to grow, even while the horizontal marketplace models of industry giants like eBay and Amazon control the eCommerce sector. For example, once-startup companies like Airbnb and Uber are now success stories for businesses and startups trying to expand their eCommerce operations in a certain vertical marketplaces.
Understanding Horizontal and Vertical Marketplace
Online Horizontal Marketplace
In a market with diverse industries, the horizontal marketplace meets its demands. Businesses in this area often provide high-demand items or services and are utilized widely. For example, a company that sells office equipment will target all businesses that have offices and require office furniture.
The bulk of enterprises categorized by demographic characteristics often falls within the horizontal market. Unlike vertical markets, these marketplaces are typically more expansive and cooperative.
Online Vertical Marketplace
The vertical marketplace approach targets a specific market. Here, suppliers cater to a specified market sector with a predetermined target market by offering products and services.
For instance, solar panel equipment producers frequently trade with solar installers and builders. Vertical markets concentrate their marketing efforts on narrow demography of customers.
Top Reasons why the vertical marketplace is gaining high popularity
1. It is low-investment marketing
A niche-specific market with very few categories bodes well for a company’s ability to plan and concentrate. The company doesn’t require hundreds of vendors to launch its multi-vendor marketplace.
At first, a few registered vendors with a wide selection of high-quality items would suffice. As a result, the first marketing expenditures are kept to a minimum.
Vertical markets are a favored option for planners as a single, unified advertising campaign can be implemented globally.
2. Well determined audience
Vertical markets have a well-determined focused audience compared to horizontal marketplaces, which rely on a large consumer base to distribute products and services.
Additionally, the vertical marketplace model offers considerable potential for enterprises providing specialized goods and services to a particular clientele to develop and perhaps even dominate their market.
Additionally, a specialized niche-specific marketplace makes buying easier from the client’s standpoint.
3. Less arduous Competition
New startups looking to expand in the Alibaba universe search for breathing room. The same is provided through vertical eCommerce marketplaces.
Even if well-known marketplace juggernauts like Airbnb have grown, there are still a number of specialized sectors without a dominant leader. Therefore, companies that provide remedies for a certain market’s problems may quickly take the lead in their field.
For instance, Drizzly dominates the online liquor industry with its alcohol delivery services.
4. They have a specialization..
Vertical markets are experts at serving a certain sector and clientele. Since it’s simple to provide specialized solutions, superior customer service, and clear regulations focused on a certain sector, specialization bodes well for firms.
Furthermore, the good or service may be readily improved when a business is permitted to specialize. They have the chance to control the market as a result.
5. They are known for their centralized policy
Vertical markets can establish a centralized policy for all sales requirements, whereas horizontal marketplaces create broader standards to cover a variety of product categories.
Therefore, the administrator may focus more of his time on marketplace development and growth instead of spending more time advising vendors on ensuring product quality or general selling.
The company can easily concentrate on providing customer-centric solutions and flourish instead of competing with well-funded rivals in a horizontal economy.
The Bottom Line
Vertical marketplaces allow companies to sell into specific niches. There are several reasons why you should adopt a vertical marketplace model. One reason is that it allows you to focus on only the things that matter within your niche. Another reason is that it helps you save time and resources.
Lastly, vertical marketplaces give you access to new markets without spending much on marketing. In addition, these platforms tend to attract more buyers to your brand.
