B2C marketplace for products VS services: what are the differences?

Digital technology has revolutionised the way goods and services are traded, freeing buyers and sellers from geographical location. Now, a company based in Shanghai can sell its products to a French consumer, while a Parisian VTC driver can offer his services to tourists worldwide. Because of their multi-seller typology, marketplaces act as real hubs for virtual contact in this new digital ecosystem. But depending on whether you sell products or services, there are several notable differences to consider for your B2C marketplace. Here are some explanations.

B2C: what are the differences between a product and a service marketplace?

Product marketplaces and service marketplaces are two very different types of platforms. Unlike a product, a service is intangible and inseparable. It is only available at a predefined time and place. It is delivered and consumed simultaneously.

Another notable difference is that service marketplaces require customer involvement. Thus, whereas on product marketplaces, the buying experience will essentially revolve around the shopping basket, on service marketplaces, the buying tunnel will be based on the calendar, and the availability of the service offered. Similarly, while product marketplaces will have to be particularly vigilant about stocks, service marketplaces will have to have a geographical coverage capable of satisfying a maximum number of customers.

B2C Product Marketplace: definition

E-commerce sites have had their day: consumers are now mainly using the marketplace model for their product purchases. Competitive prices, fast delivery, variety of products offered… The reasons for this craze are numerous and demonstrate the vitality of this model in all sectors of activity. Of course, competition is tough, and B2C product marketplaces need to meet several challenges by relying on the appropriate functionalities.

The 3 challenges of a B2C product marketplace

1. Build the largest possible catalogue: whatever the user is looking for, they should find it!
2. Define the right price positioning in a context of strong price competition
3. Maximise logistics (stock, shipping, etc.) to ensure the shortest possible delivery times

The essential features of a B2C product marketplace

• A practical shopping cart that maximises conversion
• Short delivery times to meet consumers’ expectations of immediacy
• Faceted navigation to propose product choice filters to the buyer
• A Product Information Manager (PIM), designed as a catalogue with various variations
• The Buy box functionality allows the Internet user to be directed to the best offer, thus distinguishing the best seller for a given product

B2C Services Marketplace: definition

Service marketplaces are often created from scratch because traditional e-commerce solutions do not meet their needs. While the B2C marketplace landscape is already well developed on the product side, there are still new markets to be captured on the service side. In addition, the barriers to entry are lower, and the margins are higher.

Because a service is generally not standardised and responds to availability constraints (quantity, time, geography…), service marketplaces have very different needs and challenges from product marketplaces.

The 5 challenges of a B2C services marketplace

1. Integrate sellers organically, which is more complex than for a product marketplace
2. Standardise the quality of service, despite a protean offer and diverse practices from one vendor to another
3. Offer good geographical coverage, depending on the size of the market.
4. Structuring a catalogue of services, accompanying vendors towards standardisation of their offer about the orientation of your platform
5. Scaling up, in other words, giving yourself the means to scale up as the marketplace grows

Essential features for a B2C services marketplace

• An efficient buying path, considering the specificities of selling services. Buying services may require checking availability (quantity, time, geography, etc.). Therefore, the buying journey must consider service conditions, timing, geofencing, location…
• Geolocation & catchment area: which sellers should be put forward for a given Internet user, depending on his location and needs?
• Management and synchronisation of calendars offer only sellers who are available on the dates desired by the customer, thus avoiding any deceptive effect.
• A Service Information Manager (SIM). Unlike the PIM, the SIM is designed as a decision tree that discovers users’ needs as they arise to offer them the right option.

B2C marketplace for products and services: what are the payment specifics?

The payment process on a product marketplace is relatively simple:

• The buyer pays when ordering
• The marketplace sequesters its funds until the product is delivered
• The funds are paid back to the seller after delivery

Thus, to execute the sale of a product, the product must be shipped to the customer. However, to complete the sale of a service, the service must be produced. Therefore, the operator of a service marketplace must have a perfect command of how to execute the service because, between the customer’s request and the actual delivery of the service, the execution time depends on several parameters:

• Once the customer’s request has been registered, the supplier has a certain amount of time to respond before giving confirmation. The customer can still cancel the order according to defined refund procedures during this time. On the payment flow side, a pre-authorisation operation must retain the purchase amount without debiting it.
• Between the confirmation and the start of the execution of the service, some time may pass (pre-buffer). The customer can still cancel the order.
• When the service starts, the time taken to complete the service may be longer or shorter. The funds are debited and held on the marketplace’s escrow service during this period.
• The customer has a given time to refuse the service (post-buffer), in which case the marketplace operator will have to authorise a refund.
• Once the service has been provided, the marketplace pays out the funds to the seller if the buyer is satisfied.

To orchestrate these different operations and ensure the smooth running of your platform, you need the services of a PSP, a payment service provider. In addition to managing outgoing and incoming flows, the PSP ensures that your marketplace complies with the various regulations for B2C marketplaces relating to payment.

As a pan-European payment provider, Lemonway manages all your payment processes, so you can focus on your core business and fully embrace the benefits of the B2C marketplace, whether it’s for services or products!