Weighing the Pros and Cons of Selling on an Online Marketplace

Online marketplaces have quickly become a popular channel for ecommerce businesses, giving them the opportunity to increase product exposure.

But while creating an online marketplace strategy may seem like an easy solution for ecommerce businesses, it’s important for online sellers to do their research and take certain factors into consideration – such as the type of products they sell, the competition and online marketplace fees and restrictions.

Below are some pros and cons that should factor into your decision when determining whether online marketplaces are right for you.

Pros of Selling on an Online Marketplace

1. Increased Sales

There’s no question that one of the lures of selling on sites like Amazon, eBay and Etsy is the sheer size of their online audiences. With so many frequent visitors, it’s easy for those new views to translate into higher sales volumes. In fact, according to Amazon, new marketplace sellers generally experience a 50 percent increase in overall revenue when they add Amazon to their ecommerce strategy.

That said, marketplaces can be incredibly competitive on both product and price. The best way to ensure your business stands out is by offering unique items that shoppers are unlikely to find elsewhere.

2. New Customers

Shoppers don’t head to Amazon, eBay or Etsy looking for a specific retailer or store; they are looking for the products they need. And your product could be exactly what they’re looking for.

By having your products on an online marketplace, you get customers “in your door” who might not have otherwise discovered your product, or might have purchased the same product from your competitor.

By making sure to provide excellent customer service for these new shoppers, you have the opportunity to make them a repeat customer.

3. Sense of Community

Another selling point of joining an online marketplace is the sense of community it brings to your ecommerce business. Etsy is an excellent example of this as it has over 40 million active members, various sellers’ forums and teams for common interests that lend support which, in turn, leads to increased sales.

Cons of Selling on an Online Marketplace

1. Seller Fees

While offering your products on an online marketplace can certainly increase your sales, it can also introduce some big costs. Marketplace fees can vary drastically from site to category to product and are generally deducted as a percentage of each individual sale. Before making the move to the marketplace, you’ll want to do the math and make sure you have a solid understanding of each marketplace’s fees.

2. Mixed-Up Inventory

It’s important to make sure your business website has the ability to sync up with an online marketplace. Otherwise, it can be very difficult to measure inventory. Without the ability to sync separate points of sale, you could have extremely mixed-up stock levels. Make sure to look into software, such as ShippingEasy or Teapplix, which aggregates orders from multiple selling points. You can find additional software solutions by visiting Endicia’s partner page.

3. Marketplaces Benefit Themselves

In the end, you have to remember that marketplaces are also looking to make a profit. Their commitment is to the end-consumer and, as a result, they may impose restrictions on your branding, communication with customers and which items you can sell. Marketplaces also enforce high standards when it comes to shipping, so it’s pivotal to invest in technology that automatically posts-back tracking information to your online store.

Company websites offer online sellers the greatest control over the pricing and running of their business. But if you can operate within the parameters of the online marketplace, the payoff (in terms of customers and sales) is huge.

Taking your ecommerce business to an online marketplace can certainly prove effective and offer exceptional benefits. Just make sure you do your research and outline an online marketplace strategy. After all, we want your ecommerce business performing the best it possibly can!

For more insight on online marketplaces, check out this infographic: A Step-by-step Guide to Help E-commerce Businesses Sell on marketplaces [Infographic].