Online marketplaces at the border: between challenges and disruption

Jeremy Gottschalk, Marketplace Risk: As marketplaces continue to disrupt traditional business models, we can expect to see a push back by traditional businesses and government agencies and officials as well, who may see marketplaces as a threat

Could you please provide several insights into the current size and growth of the online marketplaces?

Online marketplaces continue to proliferate as the horizontal marketplaces are disrupted by the vertical ones. If you think of the original marketplaces, such as eBay or  Craigslist, and the broad variety of goods and services that were transacted through those marketplaces, you get an idea for the potential for verticalized, online marketplaces. In other words, the broad variety of goods and services available through those horizontal marketplaces are being individualized into very specific marketplaces focusing on a specific good or service. And, now that marketplaces have become so ubiquitous, that is, just about everyone with a smartphone is familiar with them or has used them, the possibilities are endless. As an example, we are starting to see tremendous growth with professional marketplaces like accountants, doctors and lawyers. 

What are the main drivers of marketplaces’ development?

First and foremost, the technology and the availability of smartphones. It seems that everyone has a smartphone and is connected to the internet. The second driver is the sheer size of the millennial population and those who are 'digital natives' or otherwise comfortable with technology. The combination of technology and adoption has led to the expectation that any good or service should be available wherever and whenever. This creates the unique opportunity to develop marketplaces around just about any good or service. Combined with this, marketplaces are making strides with trust and safety, which is the ultimate barrier to adoption. So, when people trust that a transaction for a good or service will be 'safe' and that good or service is actually delivered, the sky becomes the limit and we are only limited by our own imagination. 

Marketplaces bring a lot of opportunities for both businesses and consumers, yet risk and regulatory challenges still lie ahead. What are the best practices to face these challenges?

There is no silver 'risk management bullet.' That is, every marketplace has its own, distinct risks and regulatory challenges and must be evaluated differently. In terms of risks, the way that I approach managing those risks is to think through the business model and the product design against ways that the marketplace can be misused or misappropriated (for nefarious purposes), as well as what laws, rules and regulations govern the ultimate good or service being transacted. In some cases, it could be payment fraud. In other cases, it could be physical harm from one person by another. And, of course, everything in between. So, for each marketplace, you must think through how it can be leveraged for the wrong reason as well as the types of issues and accidents that can arise from proper use but unforeseen circumstances. 

When it comes to regulatory challenges, this, of course, differs for each type of transaction (good or service) according to each jurisdiction. So, understanding the laws, rules and regulations is key at the outset. But, because so many of these marketplaces are disrupting traditional business models and industries, it can be hard to know what applies where.

In most cases, the laws, rules and regulations have not kept up with innovation. Depending on the perspective of the governments/agencies responsible for regulating, these innovations will be seen as welcome evolutions or violations of current regulatory structures. Understanding what regulations may apply and designing the business model and product with those in mind is a good first step. Beyond that, working with government agencies and officials is very helpful to pave the way for the marketplace - this includes education and demonstrating the opportunities and benefits that come along. 

How do you see this industry evolving throughout 2020? Do you see any disruption trends emerging that are likely to significantly impact the ecommerce industry?

Growth and regulation. I am convinced that we are un an upward trend and the peak of marketplaces is far away. There is a ton of opportunity remaining. Like I said, we are limited by our own imagination and the sky is the limit. That said, as marketplaces continue to disrupt traditional business models and industries, we can expect to see a push back by those traditional businesses and  government agencies and officials as well, who may see marketplaces as a threat. So, participating in the process, educating people and collaborating will go a long way to improving the prospects of marketplace-friendly regulations and, ultimately, continued growth. 

On the 5th of February 2020, the 2020 Sharing Economy Global Summit will take place in London. Could you please offer our readers a short preview in terms of key speakers and topics addressed?  

The 2020 Sharing Economy Global Summit is hosted by Lloyd's, the original insurance marketplace dating back to 1686, and presented by Aon and Checkr. It will feature nearly 100 speakers and offer over 50 sessions covering a wide variety of topics for the global sharing economy including trust and safety, digital identity and screening, managing and insuring risks, preventing fraud, marketing and advertising risks, leveraging industry groups for growth, and so much more.

The agenda covers topics that are crucial for marketplaces and sharing economy startups to launch, grow and succeed, especially those in short-term accommodations, mobility and transportation, goods transactions, services, and the gig economy. We have speakers from dozens of marketplaces and sharing economy startups including AddyCar, Airbnb, AnyGood?, AppJobs, beep, Bolt, Booking.com, Buymie, ChoreRelief, Deliveroo, EvEzy, Expedia, GigZoo, HeadBox, Hiyacar, HomeAway, KERB, Onefinestay, Sharetribe, Sofar, Stasher, TaskRabbit, UnderTheDoormat, VRBO, and many more.

About Jeremy Gottschalk 

Jeremy Gottschalk is an expert in risk management for marketplaces. He founded the Marketplace Risk platform as an industry networking and knowledge-sharing platform.

About Marketplace Risk