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Logistics Marketplaces: Types, Functionality, And Implementation Challenges

Over the past years, the marketplace business model has proven successful in retail, education, travel, and real estate.

As developers of logistics software solutions, we at Itransition believe that the marketplace model can be just as viable for the logistics industry, and the real-life examples of Trella, Freightera, and Lobb prove this.

By building logistics marketplaces, business owners can connect logistics service providers with their customers and make profits based on commissions, subscriptions, or listing fees. This article covers the types of logistics marketplaces, highlights their essential functionality, and describes the main challenges of adoption of logistics marketplace.

Logistics marketplace definition and types

A logistics marketplace provides online brokerage between the providers of logistics services and customers. There are various types of logistics marketplaces depending on specific services they cover:

Freight shipping marketplaces

These marketplaces allow customers to identify the best carriers, find the most cost-effective transportation options, and book transportation means to deliver goods by road, rail, air, or sea transport.

Real-life examples:

  • Freightos
  • SeaRates
  • ParcelParcel

Warehousing marketplaces

These platforms allow companies to rent warehouse space and facilities, saving money on building and managing their warehouses.

Real-life examples:

  •       Warehouse Exchange
  •       SpaceOut
  •       Kartonado

Logistics car rental marketplaces

Here, a customer can find third-party vehicles to add to its fleet and gain the additional capacity to cover seasonal demand peaks.

Real-life examples:

  • GoShare
  • Pegbo
  • Free2move

Essential functionality for a logistics marketplace

Logistics marketplaces have three primary user groups – admins, clients (shippers and renters), and suppliers (carriers and lessors). Here are some key features for each of these user groups.

Features for admins

  • Account management

Clients and suppliers typically need an account to interact with the marketplace. With account management functionality, logistics marketplace admins can audit these accounts, change data access permissions for different account types, or even block suspicious accounts.

  • Content management

Robust content management functionality allows admins to create, modify, or structure marketplace content, including service descriptions, landing pages, and self-help materials. Developers can also equip logistics marketplaces with generative artificial intelligence to simplify content creation and automate categorization and updating.

  • SEO tools

With the help of SEO Agencies, logistics marketplace content can be optimized for search engines to improve a website’s ranking and increase organic traffic. This SEO-related functionality can include tools for creating canonical tags, adding breadcrumbs, or editing meta descriptions.

  • Marketplace analytics

Built-in analytics tools allow companies to understand their marketplace operations better and make more intelligent business decisions. For example, owners can analyze metrics such as bounce rate and time spent on the site to identify and fix usability problems.

Features for customers

  • On-site search

Robust search features are critical for marketplaces, as they help customers find services and products they need faster. Recent developments in the AI field allow companies to equip their marketplaces with intelligent search to provide even more relevant and tailored results to user queries. 

Intelligent search systems are typically empowered with natural language processing and machine learning technologies. While NLP enables a search system to better understand and interpret text inputs, ML allows it to identify and analyze patterns in user queries, contributing to the accuracy of search results.

  • Ratings and reviews

The reviews and ratings system is also essential since it helps customers make more informed decisions when choosing a transportation supplier. Also, positive and negative feedback helps suppliers improve their products and services. Marketplace owners can enable users to sort reviews by newness, relevance, and rating to help find the relevant ones faster.

  • Order tracking

After placing a shipping order, a client wants to know its location and delivery time, so an order tracking feature is required. According to the B2B Future Shopper Report 2023 by Wunderman Thompson, 21% of B2B customers rate order tracking capabilities as critical to their online purchasing experience.

Features for service providers

  • Service information management

With information management functionality, suppliers can easily add and change descriptions of their services on the marketplace. Modern logistics marketplaces allow suppliers to manage different service offer versions and set dynamic prices that automatically adjust to external market conditions.

  • Order management

Built-in order management tools allow suppliers to track and manage all their orders in one place. With the robust order management feature, suppliers can streamline order approvals and cancellations and track order histories and related financial documentation to predict future demand.

  • Marketing

Suppliers need marketing features to drive sales to launch promotional emails and generate discounts. A more advanced marketplace can be equipped with an AI-powered email marketing tool that automates copy creation and recommends optimizing content for different customer groups.

Common challenges with logistics marketplace development

Developing a logistics marketplace website can be challenging, especially from scratch. Here are some challenges that can arise and how to address them:

Protecting marketplace data

Logistics marketplaces process and accumulate vast amounts of customer and supplier data, from names and addresses to invoice data and transaction histories. Cybersecurity should be a top priority throughout platform development and implementation since even a single data leak can bring financial and reputational damage.

To ensure the safety of their marketplaces, business owners should consider security measures such as two-factor or token-based authentication, data backup, and real-time traffic monitoring. Marketplace owners should also initiate regular security audits to protect their platforms from the most common cyber threats.

Ensuring customer engagement

Marketplace owners should continuously improve the user experience to keep engagement high. To gain insights into site users’ behavior and map out areas for improvement, marketplace owners can rely on on-site analytics. In particular, analytics help determine how much time users spend on a website and when they leave it, which allows UX designers to improve marketplace navigation.

Handling demand spikes

An unexpected and rapid increase in traffic can slow down a marketplace or even bring it down, resulting in revenue loss. Migrating the market to one of the cloud platforms, such as AWS, Azure, or Google Cloud, can guarantee its uninterrupted performance. For example, AWS proprietary tools, such as Elastic Load Balancing, allow marketplace administrators to scale workloads automatically depending on user demand, which helps ensure the platform’s availability at any time.

Final thoughts

Logistics marketplace owners can capitalize on connecting customers and logistics service providers globally. However, developing and monetizing a marketplace can be daunting, especially if you’re building one from scratch.

Cybersecurity, network capacity planning, and customer engagement are among the most challenging aspects of custom marketplace development. Involving experienced marketplace developers in the project early on can help you avoid some of these challenges, as such specialists can determine a more robust, flexible, and scalable platform architecture, create compelling UX design, and equip a marketplace with proper security mechanisms.

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