How can marketplaces benefit independent online sellers?
If you’re an online store owner and you don’t sell on multiple channels, ask yourself 2 questions.
- Are you reaching your full sales potential with your current sales figures?
- Do you see any risks involved in offering all of your products via 1 or 2 channels only?
To have complementary (or emergency) sales channels, you could potentially sell on (more) marketplaces. Not only can you choose bigger ones like eBay or Amazon (with unrivalled reach but also high competition), but also smaller and niche platforms.
This post will help you decide why (and if) selling on marketplaces could benefit your online store. We’ll discuss different types of marketplaces, their advantages and potential disadvantages.
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Marketplaces as additional sales channels for online stores
If you’re a successful online seller already, you may wonder whether to diversify your sales channels and sell on marketplaces to expand your brand.
According to Shopify, organizations that sell on websites, marketplaces, social, mobile, and/or physical locations generate 190% more revenue and increased brand awareness than merchants who only sell through a single channel.
Worldwide, more than 58% of ecommerce sales were made through online marketplaces in 2019. That number is forecasted to grow by 66% within 5 years (Digital Commerce).
Above all, the number of shoppers who can find you is way higher than the number of shoppers who would come across your standalone online store. The reality is that consumers are flocking to marketplaces like eBay, Amazon, Walmart or Alibaba to do their shopping.
Selling products on marketplaces can be profitable for brands and online sellers. Ecommerce buyers often start their shopping on marketplaces.
Furthermore, multichannel sales strategy is becoming more and more commonplace in the world of online sales. It provides sellers with more opportunities as well as options in the event of adversities, such as Brexit or coronavirus.
Types of online marketplaces
- Vertical marketplaces that specialize in only one kind of product category, e.g. clothing and accessories. For example, TrueFacet.com only sells jewelry and related products.
- Horizontal marketplaces that offer products from many different types, but all sharing a characteristic, e.g. Dote.com enables women to shop at multiple retailers simultaneously by viewing all products from all retailers at the same time.
- Global marketplaces that sell everything, e.g. Amazon and eBay.
Examples of marketplaces
- Amazon: today’s dominant selling online platform
- eBay: among the 10 most visited websites in the world
- Otto: a generalist German marketplace operating in 30+ countries
- Allegro: the first Polish marketplace and one of the top marketplaces in Europe
- Cdiscount: among the most important French ecommerce websites, embracing many product categories
- Spartoo: a French marketplace that is mainly focused on footwear and clothing
- Walmart: one of the leading marketplaces and main ecommerce players in the USA
- Rakuten: often referred to as “the Amazon of Japan”
- Farfetch: the world’s largest global luxury fashion marketplace
- Privalia (now Veepee): an online fashion and lifestyle outlet offering limited-time promotions
- Tmall: a Chinese marketplace focused on high quality products, such as clothing, personal care, home furnishings and food
- Zalando: a vertical platform focused only on the sale of clothing, shoes and accessories.
Benefits of selling on marketplaces
Check out the benefits of selling on marketplaces below:
- Quick access to vast numbers of potential customers. You can break out of your niche and sell to people who may otherwise never have known you.
- Streamlined processes and protections against the risk of unpaid bills, fraud and disputes.
- Lower costs and/or the possibility to optimize your acquisition costs.
- Benefits from the marketing power of the marketplace: its visibility on search engines, its audience, reputation and brand-building expenses.
- Reputation: people trust established marketplaces so you’ll automatically gain an instant level of trust.
- Customer loyalty: marketplaces tend to draw the same customers back over and over, especially in the case of subscription services, e.g. Amazon Prime or Allegro Smart. Customer loyalty is also motivated by convenience: thanks to marketplaces, shoppers don’t have to sign up to multiple sites with their personal information.
- The possibility to use storage and delivery services offered by some marketplaces, e.g. FBA by Amazon that handles inventory storage and fulfillment.
- Cross-selling opportunities, e.g. on some platforms once a product is added to the basket, complementary products are recommended, which can result in customers purchasing more from you.
- The possibility to study your audience and leverage extensive shopping data, e.g. with Amazon Advertising.
- The possibility to sell internationally so you can expand your reach with minimal effort to other countries.
Additionally, marketplaces are a great testing ground with less risk.
- Do you want to introduce a brand new item?
- Do you want to know what people are willing to spend on a specific product?
- Do you have a product surplus?
You can use a marketplace to find answers to these questions as opposed to making big investments with your online store.
By selling on a marketplace you can dip your toe in the waters of ecommerce without being forced to make huge advance investments.
Marketplaces: benefits of increased credibility and clients’ trust
One of the most common concerns of shoppers buying from independent websites and unknown brands is the lack of trust at the moment of completing the purchase and entering payment details.
Selling on a marketplace, you automatically benefit from the platform’s own brand-building. Shoppers tend to trust established marketplaces, which helps your business have a built-in established level of trust.
The fact is that more people are more likely to buy from you if you look like a legitimate retailer and sell on an established marketplace. Its prestige will help you reduce your customers’ reluctance because of the guarantees offered by the platform.
According to Paulina Bijok, Sales Manager at Webinterpret:
Some buyers may have security concerns about buying products from online stores they don’t know. However, if they see your store on established and generally trusted marketplaces like eBay or Amazon, they’ll probably automatically trust you. This way you can significantly expand your customer reach and promote your own brand at the same time.
Marketplaces: benefits of scale, efficiency & cross-border trade
When you own a bigger ecommerce business, selling on marketplaces can help you with further growth. You could:
- Increase your profit margin by buying larger quantities of stock and getting a better price from suppliers
- Find new sourcing opportunities
- Benefit from more marketing or more efficient stock handling and fulfilling orders.
If your products appeal to a specific audience, such as those with a niche hobby, you could make yourself known to them through marketplaces, then drive repeat sales through your own store.
Finally, big global marketplaces like eBay and Amazon enable their sellers to sell internationally. Other popular marketplaces, for example Allegro in Poland or Cdiscount in France, are also open to foreign sellers. Selling through marketplaces is usually the easiest way to export your products.
Marketplaces: benefits of multichannel sales strategy & lower risk
Selling through one channel only can be risky. Granted:there will always be risks. However, if you diversify your selling channels, you should have a Plan B most of the time.
It’s important to avoid putting all your eggs in one basket and mitigate the risks associated with having all of your products on a single website.
Consider the following examples.
If you rely on advertising products from your online shop via Google Ads and new competitors push costs up high, Google Ads may no longer be affordable for you. Would you have alternative ways to market your products and improve your visibility?
Furthermore, consider this. Amazon managed to surpass Google as the top destination for product searches with more than half (54%) of total searches beginning on its site.
Shoppers are starting their product searches more often on Amazon than on Google.
Such information is useful for independent online store owners who can have a better idea of how to expand their customer reach and/or avoid being pulled down in search results.
The bottom line:
Going for multiple platforms is a good way to diversify and mitigate risks. Different demographics are drawn to different marketplaces so a multichannel sales strategy can help you tap into new customer bases.
Retail is moving toward omnichannel, which helps to build brand trust across multiple touchpoints to nurture sales.
That’s why you should consider different marketplaces, not only the biggest ones like eBay and Amazon. If you sell products from a popular category, there may be a whole marketplace dedicated to that category alone, e.g. Etsy is known for handmade goods.
Monitor the latest ecommerce trends on marketplaces as it should help you pinpoint the rising stars.
Marketplaces: potential disadvantages
When deciding whether to sell on marketplaces, ecommerce sellers should also consider potential disadvantages, for instance:
- Fees: depending on the marketplace, commissions for products sold can range from 5 to 20%
- Rules, e.g. around selling brand names, photo quality, product descriptions or pricing, some of which can feel restrictive
- Competition and the risk of price wars (this shouldn’t be a big problem in the case of unique or niche items)
- A risk of getting suspended or banned from the platform, e.g. when customers are unhappy and/or their concerns are not responded to on time
- Giving up control over your clients’ data, which can make it more difficult for you to launch retargeting or subscription strategies.
Selling on marketplaces may be considered to be redundant by many successful online sellers. This can, however, prevent them from unlocking their true sales potential as well as having options when adversities occur.
There are a lot of marketplaces to choose from and adding the most suitable ones for you should bring you far more benefits than disadvantages.
Webinterpret enables Amazon, eBay, Allegro and other marketplace sellers to sell more effectively in international markets through localized versions of their product listings. For a FREE analysis of your international sales potential, contact our cross border trade experts.
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