Marketplace and aggregator are terms that are often heard together in the world of online business. Both are popular business models used by companies looking to connect consumers to sellers or service providers. Yet for all their similarities and overlaps, they are distinct from one another in the way they impact consumers. To better understand how, for better and worse, they impact consumers, they should first be examined separately in order to establish how, when and why these models are used.
A marketplace is a simple and practical concept that dates back long before recorded history. Often centrally located, vendors line up to sell their goods and give buyers a large selection to choose from.
Fast forward to today, marketplaces still exist in their traditional form, but they have also gone digital– particularly in the e-commerce space. A marketplace houses various products and services and sells them on its website. The best example of a modern-day marketplace is Amazon, as thousands of companies and sellers use the platform to reach potential buyers. Individual sellers control every aspect of their business, from determining selling price to handling the shipping. Buyers flock to Amazon because of its ease of use and reputation. Marketplaces at Amazon’s level succeed because they house a wide variety of the best goods and services from a wide pool of merchants. In other words, scalability is the key.
Aggregators are more of a recent development. While similar to a marketplace in that it gathers information together in one place, aggregators aim to organize crowded sectors, like transportation services or the media. The objective of an aggregator is to collect information such as various vendor and provider listings and services–and use that as a selling point to attract people and create monetization strategies.
The first aggregators were news aggregators like RSS (Research Description Framework Site Summary, or later Really Simply Syndication) back in 1999 which provided users a means to access online news content in a standardized, digitally-readable format. This concept became popular and branched out across different industries. We now see news aggregators that compile news from a variety of sources, and review aggregators that collect product and service reviews. This new wave of gathering information was made possible by the leap in data processing and dispersing technologies of the internet.
Today, Google and Facebook are among the biggest aggregators, collecting just about every type of content out there and presenting it to people in an easy-to-read format. Then, using various strategies, Google and Facebook monetize their services based on the number of people consuming their content.
Aggregators are the front-facing brand and the product or service are sold under the name of the aggregator. Often, individual services are rebranded under the aggregator’s brand, and pricing is set by the aggregator rather than individual service providers like in a marketplace. There is a level of quality control that ensures a certain standard of quality for the entire experience. When engaging with an aggregator, users simply choose the service that they need, and the aggregator fulfills the demand for them.
Are Marketplaces and Aggregators Mutually Exclusive?
Aggregators usually come into an industry that already has a sizable number of disorganized providers and pools them together under one brand. The opportunity comes from finding existing providers and compiling them, offering more value and a smoother experience to consumers by reducing the time and effort needed. Whereas in a marketplace the opportunity typically comes from consumer demand and providing a platform that can offer those services with a wide variety of prices and choices. Often, we see businesses that are either a marketplace or an aggregator, but what about a business that is both?
For businesses this boils down to if they view their industry as a zero-sum game or not. If gains are only a result of another’s loss, they will strive to close their ecosystem as much as possible and keep consumers within their aggregation service. Most aggregators assumed zero-sum game positions and attempted to dominate their industry, but their respective industries have remained fragmented and new incumbents are still successfully entering the market, indicating that while consumers value the streamlining and simplicity of aggregators, they are not willing to forgo the choices supplied by marketplaces.
2018 was a big year for transportation and mobility and 2019 will be even bigger. The State of Mobility 2019 will explore how both consumers and businesses are using transportation, and what they expect out of the mobility solutions of the future.
HERE Mobility: A Marketplace and an Aggregator
HERE Mobility is both a marketplace and an aggregator. The HERE Mobility Marketplace serves as a central hub for supplying and requesting mobility services. For transportation suppliers, the Marketplace is an opportunity to reach more riders, while consumers get more choice and accessibility. These options are aggregated for consumers–compiling all mobility options in one place, giving the user freedom to choose how they move from A to B. By being both an aggregator and a marketplace, HERE Mobility provides the best possible experience for businesses and consumers.
While the lines between a marketplace and an aggregator tend to blur, both approaches are necessary in today’s business landscape. Marketplaces provide a flexible setup for businesses and opens the door to more exposure, while aggregators streamline information and drive traffic, benefiting both the business and the consumer. Creating a platform for businesses to offer their services and managing information to maximize the efficiency of the platform is the way to satisfy both buyer and seller needs.