Noticed the irony that Amazon, a marketplace named after the earth’s biggest rainforest and green lung, pumps 71 million tonnes of carbon dioxide into our atmosphere annually? That number is equivalent to the emissions that 18 coal plants would create in a year. Add to that an estimated one million tonnes of packaging waste discarded annually, and it’s really no surprise that Amazon’s impact score is nothing to brag about – yet not as bad as you might imagine. On a scale of -5 to 5, Amazon has a ranking of -0.94, which is fairly middle of the road for large multinationals.
The reason that Amazon’s score isn’t deeper in the negatives is that a lot its negative impact on the environment is outweighed by its positive social and economic impact. After all, this is the brand that revolutionised online shopping. Amazon’s e-commerce platform serves over 9.7 million sellers, who in turn connect with and serve more than 300 million customers. Thanks to Amazon, about 2 million SMEs can offer their products in over 100 countries. That’s a lot of job creation coming out of just one company!
The job opportunities extend beyond the entrepreneurs that use the platform. Amazon is the second largest employer in the world, employing an estimated 1.5 million people. And while the working conditions of these employees (particularly warehouse workers) have been under scrutiny in recent years, the jobs provided by Amazon play a big part in cultivating economic growth and social stability. Between 2020 and 2022, Amazon paid a cumulative $4.4 billion in corporate taxes, which would have chipped in towards government-funded healthcare, infrastructure and education.
What’s the takeaway here? In business, as in life, things are rarely black and white. While marketplaces like Amazon and AirBnb drum up their fair (and often well-deserved) share of negative publicity, they also hold significant potential to drive social responsibility. Which leads us to the question: can the marketplace model contribute to a more equitable, sustainable, and transparent society?
Opportunities: Adoption & Accessibility
As society and technology evolve, so do marketplaces. In fact, there’s a clear correlation between the broader shifts in consumer behaviour and technological capabilities and marketplace demand over the past two decades.
Marketplace Growth and Technological Advances
In 2023, B2C marketplaces generated $3.5 trillion in revenue, capturing an impressive 67% of total B2C e-commerce sales. This marks a significant increase from their 56% share in 2021, highlighting the accelerated shift toward marketplace-driven transactions.
According to the Dealroom database, the number of active ecommerce startups (including marketplace platforms) founded since 1990 have grown to almost 200,000, with a combined enterprise value of $13 trillion.
The first generation of online marketplaces began with platforms like eBay and Craigslist, which strove to expand the traditional concept of a town square or bulletin board into the digital realm. These early marketplaces were predominantly horizontally focused and supply-driven.
The 2010s saw the emergence of on-demand and location-based platforms like Uber. This was the first generation of marketplaces to be fully managed by operators to ensure a seamless user experience. The result? Sleeker platforms that offered greater customer-centricity and operational efficiency.
The Covid-driven VC boom between 2020 and 2021 saw a new wave of marketplace innovation, fueled by abundant capital, increasing e-commerce adoption and the rise of millions of untapped consumers in emerging markets like South America and Africa. This new generation of marketplaces go beyond basic transactions by adding additional financial services like credit options and even insurance to their ecosystems.
MercadoLibre, a gigantic Latin American marketplace, is an alumnus of this phenomenon. In addition to MercadoPago (a secure payment system that handled approximately 9.5 billion transactions in 2023), MercadoLibre has introduced innovative payment applications such as a credit card reader for processing payments via QR codes on tablets or smartphones.
Today, fintech- and SaaS-enabled marketplaces are becoming the norm, with AI-enabled platforms now entering the scene, further enhancing personalisation and operational efficiency.
B2B marketplaces might be the next online gold rush. In 2023, they attracted a record 20% share of funding allocated to marketplaces, underscoring their growing appeal to investors. B2B marketplaces have proven to be more resilient to economic uncertainties than their B2C counterparts and are less affected by oscillatory consumer spending, due to the increased digitisation of supply chains.
The breakneck pace of technological innovation has significantly lowered the barriers to entry for launching online marketplaces. Off-the-shelf marketplace builders have increased accessibility, offering advantages that make it much easier for budding startup entrepreneurs to test their marketplace concept.
These solutions are notably budget-friendly, requiring minimal upfront investment compared to custom-built platforms. Their intuitive plug-and-play designs require a low skills threshold, enabling individuals without advanced technical expertise to bring their ideas to life. Quick implementation timelines allow users to go from concept to market in record time: a critical advantage in today’s fast-moving digital economy.
Consumer Adoption and Familiarity
Shoppers are increasingly gravitating towards the marketplace model, and who can blame them? They offer an unbeatable combo of convenience, product variety, and competitive pricing. With just a few clicks, consumers can browse through countless sellers all in one place, saving both time and effort.
A 2023 Statista survey showed that 80% of global consumers made purchases from an online marketplace in the past year, with 65% preferring marketplaces over traditional e-commerce sites.
Trust, driven by reviews and secure payments are at the heart of marketplace success. Since shopping online usually means buying products sight unseen it’s no surprise that 72% of consumers say reviews significantly influence their online buying decisions. Reviews create a more competitive and customer-centric marketplace, encouraging sellers to prioritise quality and satisfaction, since positive feedback drives sales and builds reputations.
But it’s not all smooth sailing. The rise of fake reviews poses a real threat to marketplace integrity. Fraudulent reviews can deceive consumers, skew competition, and, worst of all, erode trust.
To retain users’ trust, platforms have had to implement a range of counter-measures:
- Machine Learning Algorithms: Sophisticated algorithms analyse review patterns, language, and user behaviour to detect inconsistencies and flag suspicious reviews. Specialised third-party applications like Fingerprint can expedite this approach.
- Verification Systems: Many platforms require users to verify their purchases or provide proof of ownership before submitting reviews.
- Review Monitoring Teams: Dedicated teams manually review flagged reviews and investigate potential fraud.
- User Reporting Mechanisms: Encouraging users to report suspicious reviews empowers the community to help identify and remove fake content.
The Rise of ESG in Corporate Responsibility
Environmental, Social, and Governance (ESG) principles have gone from nice-to-haves to must-haves for modern businesses. As investors and consumers grow increasingly discerning, companies are being held accountable for their environmental footprints, social impact, and governance practices.
As far as consumers are concerned, businesses need to create value for society and the planet. Companies that neglect ESG risk dwindling consumer trust, eroding market share, and diminished access to capital. The message is clear, and businesses are responding – in 2023, a McKinsey report found that 61% of global corporations had already woven ESG metrics into their core business strategies.
The motivation goes beyond the purely financial. Incorporating ESG principles allows businesses to demonstrate accountability to their stakeholders – employees, communities, and customers – allowing them to strengthen their brand and fortify trust. Companies with strong ESG commitments often report better long-term financial performance, attract purpose-driven investors, and stand out in crowded markets.
It’s not just hype either. According to a 2023 Nielsen study, 73% of consumers are willing to pay more for products and services from companies that prioritise sustainability and social responsibility. Ethical practices, once a bonus, are now a baseline expectation. This rise in conscious consumerism goes beyond reusable packaging and ethical sourcing. Today’s shoppers want to see tangible action: fair wages, waste reduction, and corporate activism on societal issues. They’re looking for brands that don’t just minimise harm but actively do good.
Areas of Application for the Marketplace Model
The marketplace model has proven to be remarkably versatile, adapting to a wide range of industries and consumer needs. Over the years, its applications have expanded in tandem with evolving market demands and technological advancements, creating opportunities across both traditional and emerging sectors.
Government Procurement: Enhancing Transparency and Efficiency
You’ve heard of B2C and B2B, but what about B2G? Governments worldwide are taking a page from the private sector playbook, using marketplace models to transform public procurement. Opaque, often paper-based processes riddled with inefficiencies and open to corruption are giving way to a new era of transparency, efficiency, and innovation in public service delivery.
Online procurement platforms are introducing new levels of transparency by making every step of the process – from bids to contracts and supplier performance – visible to the public. Beyond deterring corruption, this kind of visibility goes a long way towards building a culture of accountability. Take supplier requirements, for instance. Online marketplaces can ensure that only qualified, credible vendors participate by enforcing rigorous criteria and documentation.
And since governments are constantly under pressure to stretch every tax dollar, marketplace models are proving to be game-changers. By fostering competition, these platforms drive vendors to offer better quality at lower prices. This competitive dynamic directly benefits taxpayers by ensuring that governments get maximum value for their spend.
The advantages don’t stop there. Automated workflows and centralised data systems mean procurement decisions are made faster, delays are minimised, and processes are standardised. The result? Reduced administrative costs, real-time expenditure tracking, and a procurement system that is as efficient as it is cost-effective.
India’s government e-marketplace (GeM) is a textbook example of how marketplace models can revolutionise public procurement. By 2023, it had processed over $20 billion in transactions, saving the government up to 20% on procurement costs. GeM also levels the playing field, allowing SMEs to bid for government contracts and drive inclusive economic growth. Then there’s ChileCompra, Chile’s electronic procurement system, which is saving the Chilean government around $400 million annually.
But it’s not just about saving money. The right marketplace model can cut through government inefficiencies and get slow-moving or stalled projects moving along at an improved pace.
This multi-tier project management dashboard built for a public sector service marketplace is a good example. Designed to streamline complex procurement and project workflows across a sprawling French government organisation it allows government officials and suppliers to collaborate with greater transparency and efficiency.
Key features included the ability to associate potential service providers or contracts with specific projects, schedule and track meetings, and add amendments as projects evolved. By centralising data, enhancing communication, and integrating adaptive project tools, Atos’s dashboard transformed how a major public sector marketplace managed its procurement and service delivery.
Environmental Protection: Driving Sustainability
We’ve already established that marketplaces are synonymous with convenience. But does that convenience have to come at an environmental cost (remember Amazon’s mountains of packaging waste?) or can these same marketplaces be reimagined as platforms for sustainability?
The concept of a circular economy hinges on reducing waste, reusing resources, and keeping products in circulation for as long as possible. Marketplaces are perfectly positioned to drive this transformation by facilitating the buying and selling of second-hand goods.
Take ThredUp, for example. As one of the world’s largest fashion resale platforms, it has made a tangible impact on reducing textile waste. By 2023, ThredUp enabled over 2 million tons of clothing to find new owners instead of ending up in landfills.
Marketplaces are also well-equipped to support carbon offsetting, whether through supporting reforestation projects, investing in renewable energy, or funding carbon capture initiatives.
Switch2Zero, for instance, offers carbon credits to individuals seeking to reduce their personal carbon footprints, as well as companies that need to mitigate their environmental impact through emission calculations, reductions, and offsets. Switch2Zero also integrates with e-commerce platforms like BigCommerce and Shopify, allowing businesses to automate sustainability actions, such as planting trees for every customer transaction.
The power of this model lies in its accessibility: even consumers who are unfamiliar with carbon offsets can make eco-friendly choices as part of their shopping journey, turning small, individual actions into a collective movement.
Another compelling example is Ecosia, a browser and search engine that operates as a multi-sided platform. On one side are the browser users, who perform searches and generate ad revenue; on the other are project partners, who implement reforestation and other environmental initiatives funded by Ecosia’s earnings. This model highlights the versatility of marketplaces, demonstrating how they can connect diverse stakeholders to drive scalable, impactful environmental solutions.
“Where did this product come from?” is a question that conscious consumers are asking more often. By offering supply chain transparency, marketplaces empower buyers to make informed, ethical decisions. Gone are the days when consumers were satisfied with businesses just listing ingredients or materials – for today’s conscious consumers, real transparency means revealing whether resources were responsibly sourced, fair labour practices upheld, or sustainable energy used in production.
Fish With A Story does this really well. This South African marketplace connects consumers with seafood that is traceable and ethically sourced. Every fish sold is harvested by artisinal fishers using low-impact methods. By buying through this platform, customers directly support fishing communities while promoting sustainable practices.
Social Benefits: Expanding Access and Improving Quality
Online marketplaces have redefined access to goods and services, often delivering better prices and higher quality along the way. At the heart of this shift is price competition. When multiple sellers vie for attention, prices drop, but quality doesn’t. Layer in user reviews (see above), and suddenly consumers have the power to separate the diamonds from the duds.
Take Etsy, for example. More than just an online store, this marketplace was designed to act as a global stage for artisans and small business owners to shine. In 2023, 91% of Etsy sellers credited the platform with helping them reach new markets, connecting their handmade treasures to buyers who value craftsmanship over mass production.
Platforms like Fiverr and Upwork have been game-changers in the services sector. These marketplaces gained particular relevance during the pandemic, providing a lifeline for professionals who lost traditional employment. By making freelancing accessible, they opened the door for countless individuals to generate income, build portfolios, and connect with clients worldwide.
The future of commerce is about connection. It’s about bridging gaps between buyers and sellers from all corners of the globe, creating opportunities for businesses of all sizes to thrive. Marketplaces have the potential to amplify voices that might otherwise go unheard and give consumers the power to make choices that resonate with the communities and causes they want to support.
The Dark Side of the Marketplace Model
As the famous Spiderman quote goes: with great power comes great responsibility. Turns out this warning is relevant to both superheroes and marketplaces. These platforms have the power to revolutionise industries, connect communities, and drive economic growth, but that same power can be wielded in ways that cause significant societal harm.
Whether through malicious intent or sheer ignorance, misuse of the marketplace model can enable illegal activities, foster unfair practices, or exacerbate inequality. The challenge lies in harnessing this power responsibly, ensuring that marketplaces don’t just operate efficiently but also ethically.
Dark Web Marketplaces
Take Silk Road, for example – a notorious dark web marketplace that facilitated everything from drug trafficking to weapons sales. Operating in the murky corners of the internet, it allowed illegal transactions to flourish unchecked. By the time it was shut down in 2013, Silk Road had processed over $1.2 billion in illegal transactions. A salient reminder of how a powerful tool like the marketplace model can be weaponised when left unregulated.
Monopolistic Practices
Then there’s the issue of monopolies. Amazon, for all its innovation, has come under fire for practices that edge dangerously close to anti-competitive. Small sellers often find themselves squeezed out by Amazon’s aggressive pricing strategies, not to mention its ability to mine seller data to launch competing products.
The result? A marketplace that’s less about fair competition and more about domination. Case in point: Amazon is currently facing a £2.7 billion lawsuit in the UK, with over 200,000 small sellers alleging unfair treatment. That’s a heavy price to pay for “convenience.”
Combating Misuse
Thankfully, there are ways to course-correct. Here’s how we can ensure marketplaces stay on the right side of history:
Smart regulation: Governments can step in with proactive policies to keep marketplaces accountable without stifling innovation. Clear guidelines on anti-competitive behavior and stronger oversight of digital transactions are a good start.
Ethical frameworks: Platforms should set the tone by adopting strict ethical guidelines, ensuring no room for harmful products or practices to slip through.
Tech to the rescue: Advanced tools like fraud detection algorithms, AI-powered identity verification, and blockchain-based systems can add layers of security and trust. A well-designed marketplaces should outsmart criminal activity rather than enable it.
Decentralisation: Blockchain-based marketplaces could be the next frontier, offering transparency and reducing the risks associated with centralised control or abuse of power.
Marketplaces for good
Does the marketplace model hold the potential to help create a more equitable, sustainable, and transparent society? Absolutely – but this won’t happen on its own. To unlock this potential, we need to prioritise ethical design, transparency, and inclusivity in everything we do. Technology can help level the playing field, but it’s up to all of us – governments, businesses, and consumers – to ensure it’s used for good.
Governments need to set clear rules to prevent exploitation and monopolistic behavior. Businesses must go beyond ticking boxes and truly embed sustainability and fairness into their operations. And as consumers, we have the power to drive change by supporting platforms that align with our values.