Amit Kumar Head OLX Autos presented to the IIM Lucknow class of 2021. He shared his career journey and spoke about how marketplaces have generated value and evolved. How companies like Uber, OLA, Amazon, OYO have build their businesses. How Inventory and controlled marketplaces differ from open marketplaces.

1. (R)Evolution of Marketplaces
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Amit Kumar
22nd Aug’2020

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What can I talk about?
B.Tech. IIT Bombay 2006; MBA ISB Hyderabad 2010
https://in.linkedin.com/in/execamit
Professional
● Experience in FMCG, Telecom and Marketplaces
● Specialize in building businesses grounds up
● Understand product categories: Fashion, Electronics, Automobiles, Foods &
telecom
Personal
● Avid reader on Evolutionary psychology, Sociobiology
● Like to Swim, play tennis
● Husband, son & Father of 2

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Questions bubbling in your mind?
Lets pen them down.

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Why is this topic relevant?
Marketplaces have revolutionized businesses across categories and expect no less in
future
Top 10 companies in 2019
(market cap)
Top Marketplace startups in 2019
(valuation)
Name Mkt. Cap Name Valuation
Saudi Aramco $1684 Bn Bytedance $75 Bn
Microsoft $1359 Bn Uber $72 Bn
Apple $1286 Bn Didi Chuxing $65 Bn
Amazon $1233 Bn WeWork $47 Bn
Alphabet $919 Bn Airbnb $29 Bn
Facebook $584 Bn Stripe $23 Bn
Alibaba $545 Bn SpaceX $19 Bn
Tencent $510 Bn Epic Games $15 Bn
Berkshire
Hathaway
$455 Bn Grab Taxi $14 Bn
J&J $395 Bn Doordash $13 Bn
Companies operating at least one marketplace business
* Data pertains to Aug 2019; Source: Statista, CB Insights
● More and more companies are adopting the marketplace models
to move to the top by leveraging on the scale brought in by this
model of business
● In future we will see the emergence of more marketplaces in
varied industries
● Technology companies have seen massive growth as we move
towards a more technical era.

5. History of Marketplaces
Barter trade (C2C) - Before the advent of currency,
goods were exchanged
Shops trade (B2C) - With advent of currency, specific
jobs were created to buy and sell
Markets (B2C) - Hotspots for trade became local
markets with many shops
Managed Marketplaces / Malls - 3rd party managed
physical marketplaces / malls
Online Classifieds - Online listings of businesses and
services with address and other details
Online Marketplace (C2C, B2C) - Online marketplace
to sell products
Managed Marketplace (C2C, B2C, C2B2C) - Online
marketplace with strong control on experience
Reducedcostofownership
Increasedstandardizationofexperience
Evolution of product marketplaces
- Initially markets developed on the back of
convenience to shop.
- With larger volumes, ownership costs
increased. This led to the creation of
marketplaces.
- Distributed ownership led to reduction of
capital holding cost and also allowed scaling
of business through shared marketing
- Going online is NOT Marketplace. Both are
different terms.
https://a16z.com/2018/11/27/services-marketplaces-service-economy-evolution-whats-next/
https://marketplacer.com/the-evolution-of-marketplaces/

6. History of Marketplaces...
What Craiglist started as a centre for listing has now evolved into
complex, managed marketplaces for each business vertical within it.
Needs based - To fulfill basic needs of purchase. E.g. Stock
market, Groceries etc.
Shopping Centres - A central location with different shops selling
different products / services. E.g. Chandni Chowk market, Janpath
market etc.
Classified Marketplaces - Initially started with newspapers where
all local businesses were listed. E.g. Justdial, 99acres, Tata Yellow
Pages etc.
Mega marketplaces - The origins of modern ecommerce as we
know it. E.g. Amazon, eBay etc.
Niche Marketplaces - Just as with Craiglist, individual categories
found a niche way of selling. E.g. Myntra, Urban Ladder etc.
Brand Marketplaces - Eventually offline brands started creating
their own online presence with tighter controls. E.g. Disney, Tesla
https://a16z.com/2018/11/27/services-marketplaces-service-economy-evolution-whats-next/
https://marketplacer.com/the-evolution-of-marketplaces/

7. History of Marketplaces...
Own Inventory Gradual shift to a pure marketplace
model
Marketplace model
Pros
● Better control on quality &
customer experience
● Faster delivery
Cons
● High inventory holding cost
● Higher risk of loss due to
unseen situations
Pros
● Distributed cost of ownership
● Larger width of catalogue
Cons
● Customer experience
dependent on sellers and
logistics partners
● Lesser margins

8. Where are we in this journey of Marketplaces
Almost every industry is being disrupted by the marketplace model which brings with the advantages of reduced
cost of ownership and controlled experience to end consumer.
Retail - About 15% of the US and almost 40% of the Chinese retail market is online now with offline players like
Walmart also making great strides into the online marketplace model.
News - With the advent of social media, monopoly of news and media organizations is shaken. Now we have
several aggregators of news. Facebook newsfeed, InShorts, Newshunt etc. are examples of news marketplaces
Mobility - Uber and Ola disrupted the traditional taxi business - from waving a hand on the road to booking via a
smartphone. The business model also saw a movement from fully owned (Meru) to pure marketplace model.
Travel - With a host for travel and hospitality services, several booking aggregators evolved. Form the full
inventory model hotels to the mega marketplaces like MMT, Booking.com or the new age model of Oyo rooms.
Media - Starting with the satellite TV era with proliferation of TV channels to the modern OTT era where content is
created a distributed by Netflix, Amazon or Hotstar.
And many more….
The business model in retail is changing from e-commerce only or offline only to an Omni-channel commerce
model.

9. Consumer seller Consumer buyer
Dealer
C
D
C
Platforms
B
C2D D2C
C2C
C2B
B2D
B2C
Understanding the Used car ecosystem

10. Carvana Car Vending Machine

11. What to expect in this evolution of
marketplaces in future
● Borderless marketplaces - Though trade imbalances say otherwise but the future growth of
marketplaces is tied to B2C marketplaces being opened up for global trade
● Voice based shopping - With proliferation of Alexa, Siri and other voice agents, voice based
search and shopping will take centre stage giving additional leverage to voice search engine
operators.
● Omni-Channel Commerce - This channel will gain prominence as people would prefer
shopping based on situational requirements.
● Consumer direct - More and more consumers will sell directly to the buyer without
intermediaries thereby further lowering cost of operations for a marketplace business
● Smart e-commerce - With automation and Software agents, automated shopping lists will
ease the chore of shopping. Smarter product suggestions and improved search based on
user personality will give an edge compared to offline commerce.
● Services marketplace - With better technology, more services including lending, legal
services and even medical services will start gaining traction online.

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Thank You