Niche Online Marketplaces

Last week, IronPlanet, the operator of an online auction site for used construction equipment reveals its plans to raise up to $92 million in an IPO later this year. This is just the latest of recent news on niche online marketplaces raising expansion capital or getting venture funding such as Artfact’s or Plastic Jungle’s among others. With long time market leader Ebay seeming flustered by competition, we have witnessed the fantastic growth of competing online marketplaces such as Alibaba.com and Etsy.com, and IronPlanet will soon join them as a major player in this expanding market. Apparently, Fidelity Ventures, a Fidelity Investment’s affiliated venture capital fund also sees a lot of opportunities in this space, as evidenced by their commitment to investing in niche online marketplaces, documented by the New York Times a few years ago.

I see this as part of a long overdue trend towards more transparent and automated platforms supporting global ecommerce. I have discussed this earlier in a post at another blog of mine. E-commerce has grown out of simple online collectible auctions or consumer oriented online shopping cart/checkout. It is now become more and more legitimate and acceptable for businesses in certain industries to conduct trade almost exclusively online, and these niche marketplaces are helping to make inroads for this mode of commerce into other markets, from old style used construction equipment (IronPlanet) to gourmet artisanal food (Foodzie/Foodguru). Eventually, I hope that online marketplaces will become the norm, not the exception for conducting business across the world, across borders, across languages and cultures. Businesses will communicate using standards-driven communications protocols, negotiate deals using automated agents, and have software to track and control the delivery of the goods across the world.

The future is bright for the new Alibaba.coms of the world.