3 Ways to Differentiate Marketplace Versus Dropship
It's not every week, but it sure feels like every week I get asked by someone who is thinking about creating a new marketplace.
Usually, in about 3 minutes you can figure out if you really want a new marketplace. Here are the questions I use.
Who will have control of setting the item price?"
Which party is booking the revenue from the sale of the product?
How many suppliers are we talking about here?
If the answer to 1 is "absolutely we need control over the item price, why do you ask?", this is not a marketplace."
If the answer to 2 is "We need to book the entire revenue amount to show a higher top-line", this is not a marketplace.
If the answer to 3 is only a handful of suppliers, this is not a marketplace.
If it's not a marketplace, that's OK. It's not like only marketplaces are valid models.
But what is it then?
It's generally either:
some kind of consignment or vendor-managed inventory program, or
a straight vanilla dropship program, or
some kind of licensee arrangement.
The core point behind the ask is generally -- "we don't want to own the assets".
