Read more about online deal marketplaces and how they work.
Many businesses use online deal marketplaces to promote their business and to increase their customer base. It’s an alternative method of distribution and an extra channel for business.
What are online deal marketplaces?
Online deal marketplaces are described as when a business sells the products or services of other businesses and make a commission based on sales. They tend to be used where businesses have over capacity and need to fill seats, rooms or move slow selling products.
It is a successful business model for many companies and it allows the online deal marketplaces to sell and make money, without having to create or stock their own product or service. It is often used as part of an overall online digital marketing strategy and is a tool for businesses promoting their products or services, without significant investment, other than registering, listing the products and adding some detail.
Who were the original online marketplaces?
The original marketplaces were
- Amazon known for books initially but now covers nearly every category of product
- Ebay has also evolved into a recognised secondary outlet for many well known brands
- Etsy is known for craft items
- Alibaba is known for business bulk sales
In addition to these marketplaces, there are others which focus on services more than products.
Fulfilment within online deal marketplaces
Where physical goods are involved, it depends on the marketplace. For some, the seller creates their own store (Amazon, eBay) and for others their name is not shown. In some cases the goods are shipped direct to the online deal marketplace who subsequently send or despatch each offer direct. Where there are no goods, they issues the vouchers from their own email system.
Where physical products are involved, it can be the responsibility of the original business to despatch the goods to the customer.
Examples of online deal marketplaces
These are three of the successful companies who make use of online deal marketplaces in the UK.
Online deal marketplace – example 1: Groupon
Although they are an American company, Groupon also have a website which is dedicated to the UK market. Groupon is a global organisation who sell the products and services of a wide range of companies. Businesses can list deals on products or services, such as beauty treats and spa days and things to do. Groupon is one of the most well-known online deal marketplaces.
Downsides include the length of time they apparently take to pay the original business. If you are considering for your own organisation, it’s worth assessing what percentage of your inventory or capacity you want to share via a marketplace. This decision can be easier when you assess the monetary value and how much cash flow delay you can sustain.
Online deal marketplace – example 2: Secret Escapes
The luxury holiday and break market is fairly saturated. Secret Escapes send ‘daily offers’ (like Groupon and limits the number of deals available for a specific place.
It is positioned as being more of a luxury and exclusive space, rather than one open to all. This can be reflected in its pricing.
Online deal marketplace – example 3: 5pm.co.uk
Another online deal marketplace is 5pm.co.uk, who offer an online booking service, which promotes restaurants, health and beauty salons, and pubs. It is used by customers who are looking for the best deal to suit their needs, but saves the hassle of searching for each one individually.
With 5pm.co.uk, customers have a one-stop shop for these services and can filter their selection based on the location and date. Businesses looking to advertise on 5pm.co.uk pay an annual subscription and commission on sales. It has enabled many businesses to fill seats which would otherwise be unoccupied and is usually part of a digital marketing strategy. 5pm.co.uk have picked up several awards, including the National Business Award, and they have deals throughout the UK.