During the pandemic crisis marketplaces help new eCommerce businesses to achieve rapid growth, but as always there are also some downsides.
The pandemic time has shown a very quick growth of marketplaces all over the world. Most customers have moved to online marketplaces and many retailers evolved from just being plain retailers to full-grown marketplaces. Best cases are Amazon, Allegro, G2A, Decathlon and even lately Carrefour. This is a growing trend highlighting that just being an online shop during and after the pandemic crisis is not enough anymore. Marketplaces are channels that make it easier to catch the attention of new customers and increase eCommerce sales.
Selling products via marketplaces like Allegro, Decathlon, Amazon or eBay enforces rapid growth of just created online stores. Thankfully on the market, we have many solutions that help analyze and monitor the prices of those giants. Sadly, selling products via marketplaces is not all good news. New circumstances related to the pandemic have shown two sides of the marketplaces opportunity story — eCommerce businesses can also face downsides when it comes to selling via a marketplace. Below, we have highlighted the pros and cons of such cooperation so that you can make a well-educated decision.
Pros of selling via marketplaces
- Better positioning and better visibility
When starting selling via a marketplace the first thing which is a great advantage is that you can reach a very large volume of potentially interested clients. Biggest marketplaces like Amazon have over 100 million subscribers to their Amazon Prime solution. For a small or medium eCommerce store, such numbers are for the start out of reach.
Also, the biggest marketplaces are heavily investing in SEM and SEO which helps your store and products to appear very high on different keyword searches. It is in their pure interest to be highly attractive to both sides of the market.
- Cost saving
Starting selling via a Marketplace is quite simple. The one thing to do is to meet their requirements:
- Provide product pages and descriptions;
- Pay the required commission or monthly fee;
Right away you can start selling saving costs on expensive infrastructure and all hidden costs. Many marketplaces also take care of logistics, invoicing and many other costs that for the beginning are quite small but increase exponentially with scale. You can always use additional services like Amazon’s FBA system or drop shipping services. One additional thing which will help you save a lot of hassle, in the long run, are various banking and transactional costs as most marketplaces take on this part as well.
- Reaching your desired target audience
Depending on your business area choosing the biggest marketplaces not always is the best way to go. Often niche or industry-specific marketplaces are the right places to start. As right away from the beginning you are focusing on reaching your target group, maximizing sales and potential. Depending on your business areas the biggest well-targeted marketplaces are those like Etsy or Treatwell.
The disadvantages of starting to sell in marketplaces
- Competition, competition, competition
Due to the ease of starting selling via a marketplace, your competitors are much closer to you. Customers can browse all kinds of products and see right away, which are best for them. The well-known fact is that users focus on the appearance of products, but also on prices. Often marketplaces are also direct competitors of ours, which makes it even more difficult to be the most attractive seller.
For this, it is absolutely crucial to understand pricing and various pricing strategies that are used by different sellers. To be able to conduct a quick analysis Marketplace Monitoring Tools come in handy and help to get a global overview of what is going on.
- Your brand is not the most important
When selling via marketplaces we always lose one big element which is crucial for getting the customer to buy from us – which is our brand. A very high percentage of customers when buying at a marketplace focus much more on the price of the products than on from whom they are buying. Here once again, it is very important to be able to give customers an attractive and well-positioned price.
- Playing by the rules
Within these platforms, your sales tactics are reduced to whatever the rules allow. You’ll have to meet a series of standards when advertising your products in terms of text and images. You also must abide by the terms and conditions that apply to all sellers. This includes dealing with sales fees, which could be very high and reduce your profit margin.
All together starting selling via a marketplace of choice can be an immense boost to our business. We just need to understand all the mechanics of this business and choose wisely how we would like to approach the topic.