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Tour & Activity Industry Terms

What is a marketplace?

A marketplace is the term used to describe an e-commerce platform that consists of many different vendors or providers but where payments, marketing, and branding are controlled by a single retailer or marketplace owner.  Amazon, for example, is a popular and well known marketplace.  OTA or Online travel agencies such as TripAdvisor Experiences, Expedia, Veltra, Klook, and others are also considered experiences marketplaces.

Experiences marketplaces aggregate a lot of products from different providers together into a single shopping experience for the consumer and can provide benefits such as single sign on, payment storage, and negotiated discounts.

Pros

  • Marketing reach (large budget)
  • Access to a large customer base
  • Access to regionally diverse customers (in markets that are unreachable through direct means)
  • Marketplace handles customer service and payment

Cons

  • Expensive (30%+ commissions)
  • Marketplace owns customer (supplier cannot market directly to customer)
  • Marketplace competes with providers in direct markets (cannibalizing direct sales)
  • Marketplace contracts allow them to use provider brands for online marketing
  • Limit pricing control

Experiences Marketplaces (OTA) do not work for the benefit of providers, they work primarily for their benefit.  Caution should be used when contracting with marketplaces.  Specific contract terms should be negotiated if they are overly restrictive or do not benefit the provider.

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