Is There Value in Marketplace Selling?

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You probably shop on Amazon, but have you considered selling? Many ecommerce business owners think of Amazon as a swear word. But a growing number of retailers stopped viewing Amazon as competition and embraced marketplace selling. 

Most online retailers can sell products in marketplaces like Amazon, eBay, and Walmart. How do you know if it’s right for your business? In this post, we’ll look at how marketplace selling works, the benefits and limitations, and how to integrate marketplace selling with your existing ecommerce platform

What is Marketplace Selling? 

When you’re scrolling through 15 Amazon listings to pick the best tube socks or, early in 2020, any available toilet paper, have you ever noticed the small text beneath the add to cart button that says “sold by?” In many cases, it won’t read “sold by Amazon.” It lists a different company name. In fact, most products for sale on Amazon are from third-party sellers using the Amazon marketplace. 

Online marketplaces offer products from various sellers. The marketplace typically charges a commission for each sale. Some marketplaces also charge sellers a signup fee and/or a recurring fee to participate in the marketplace program. 

Examples of online marketplaces include:

  • Amazon
  • Walmart
  • Alibaba.com
  • eBay
  • Etsy

Is Marketplace Selling a Good Fit for My Business?

To understand if marketplaces are a good fit for your business, you must understand the benefits and limitations of using these channels. 

Marketplace selling benefits include:

  • Better Traffic. Generating sufficient web traffic takes money and time for most internet retailers. Online marketplaces already have significant traffic, so you can reach a larger audience by listing your products there. Even if buyers don’t purchase on a marketplace, they’re still searching them. Nearly 28% of US consumers say they used Amazon to research a recent product purchase. 
  • Increased Sales. Marketplace shoppers can be easier to convert to a sale. Think about the way you shop on Amazon. Do you do a lot of virtual window shopping? In most cases, you start with a search for the exact product you need. Online store owners can increase their sales volume rapidly by using marketplace channels. 
  • Easy Expansion. Marketplaces allow retailers to expand to a new channel without the expense associated with traditional retail expansion. Retail expansion used to require building or leasing a new brick-and-mortar store. Now retailers can expand to a virtual marketplace with a couple of clicks and minimal fees. 
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Marketplace selling limitations include:

  • Lack of Control. Unfortunately, with marketplace selling, you don’t control most of the buying process. If buyers have problems, they may have to go through the marketplace’s customer support before reaching you. You’re also giving up control of your customer data as the purchase and shipping information will pass through the marketplace’s system. 
  • Fees. You have to pay to be a part of the marketplace. The increased sales are worth the cost for many retailers, but you do need to plan for a lower margin on marketplace sales. 
  • Competition. Marketplace sellers face fierce competition. You’ll have to compete on price and quality. When you gain significant traction in a marketplace, you can expect another business to start selling a cheaper knock-off product. The intense competition also impacts your success. If you’re selling in a popular category, you may struggle with beating the algorithm to get your product higher in search results. 

Deciding on Marketplace Selling

So, is there value in marketplace selling? After looking at the benefits and limitations, the answer depends on your unique business. Can you cover the fees associated with joining and selling on the marketplace and still turn a profit? What’s the competition like for your product categories? Some retailers experience rapid growth after they start selling on Amazon. Others languish on the 14th page of search results and rarely get any sales. Individual results may vary, but you’ll probably want to at least try, given the low cost. 

Setting Up Marketplace Selling

Integrating marketplaces with your existing ecommerce platform takes the hassle out of updating and managing your product listings. Shopify, BigCommerce, and WooCommerce all offer integrations or plugins that work with Amazon and other marketplaces. Check out our post on how to integrate BigCommerce with Amazon. This step-by-step guide illustrates how easily you can start selling on Amazon. The process looks similar for other ecommerce platforms and marketplaces. 

Finding Success With Marketplace Selling

Success in marketplaces requires a little time and effort. You’ll need to optimize your strategy. What works on your website might not work on Amazon or another platform. 

Tips for successful marketplace selling:

  • Adjust Your Pricing. Most marketplace shoppers sort results from lowest to highest price. Therefore, you’ll need to monitor and regularly reevaluate your pricing to stay competitive. 
  • Stand Out From the Crowd. Your product listings need to catch buyers’ eyes. Quality product photographs and well-written product descriptions can help increase sales. 
  • Experiment with Advertising. If you sell in a crowded category, paid product listings can help you get in front of buyers. Most marketplaces offer advertising to insert your products near the top of search results. 

Getting Help with Marketplace Selling

At Mindsize, we specialize in helping ecommerce businesses scale. We want to make sure your technology aligns with and supports your growth plans. Marketplace selling offers tremendous growth opportunities for online retailers. If you need help configuring your ecommerce platform to work with Amazon or another marketplace, our team can help. Contact us today to learn more about our WooCommerce, BigCommerce, or Shopify development services.