During a pandemic crisis, marketplaces help new e-commerce businesses achieve rapid growth, but, as always, there are downsides.
Table of Contents:
A. Pros of selling via marketplaces
1. Better positioning and better visibility
2. Cost saving
3. Reaching your desired target audience
B. The disadvantages of starting to sell in marketplaces
1. Competition, competition, competition
2. Your brand is not the most important
3. Playing by the rules
The time of the pandemic has shown a remarkable growth of marketplaces around the world. Most customers have moved to online stores, and many retailers have evolved from just being plain retailers to full-grown marketplaces. The examples are Amazon, Allegro, G2A, Decathlon, and even lately Carrefour. This ongoing trend highlights that being an online store during and after the pandemic crisis is no longer enough. Marketplaces are channels that make it easier to reach new customers and increase sales in e-commerce.
Selling goods via e-markets like Allegro, Decathlon, Amazon, or eBay dictates the rapid growth of new online stores. Luckily, there are many solutions on the market that help analyse and track the prices of these giants. Unfortunately, selling products there is not only good news. The new circumstances related to the pandemic have shown two sides of the marketplaces: eCommerce businesses may also face downsides when it comes to selling through the marketplaces. 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 you start selling via a marketplace, the first great advantage is that you can reach a large number of potentially interested customers. The biggest markets like Amazon have more than 100 million Amazon Prime solution subscribers. These numbers are out of reach for small to mid-sized e-commerce stores.
In addition, the leading marketplaces are investing heavily in SEM and SEO, which help your store and products rank high in searches for various keywords. It is in their interest to be very attractive to both sides of the market.
- Cost saving
It’s pretty easy to start selling via e-markets. All you need to do is to meet the requirements:
- Provide product pages and descriptions;
- Pay the required commission or monthly fee;
Now you can start selling while cutting down on expensive infrastructure and all the hidden costs. Many marketplaces also take care of logistics, invoicing, and other costs that are pretty low at first but grow exponentially with scale. You can always take advantage of additional services such as the Amazon’s FBA system or drop shipping services. Another thing that will save you a lot of effort is various banking and transaction costs, as most e-markets will take care of that part as well.
- Reaching your desired target audience
Depending on the scope of your business, choosing the biggest e-market is not always the best option. Niche or industry-specific marketplaces are often the right starting points. From the very beginning, you can focus on reaching your target group and maximizing the sales potential. Depending on the area of your business, the biggest well-targeted are those like Etsy or Treatwell.
The disadvantages of starting to sell in marketplaces
- Competition, competition, competition
The ease with which you can start selling via marketplaces brings your competitors much closer to you. Customers can view all types of products and immediately see which ones are best for them. It is well-known that users pay attention to more than just the appearance of a product, and the “more” are prices. Marketplaces are often our direct competitors, which makes it even harder to be the most attractive seller.
For this, it is absolutely crucial to understand prices and the different pricing strategies used by various sellers. In order to conduct a quick analysis, market monitoring tools are helpful to get a comprehensive overview of what is happening in the market.
- Your brand is not the most important
When you sell via marketplaces, you always lose a key element of your business to convince a customer to buy from you: your brand. A very high percentage of customers who buy in marketplaces pay much more attention to the price of the products than from who they are buying. And in this case, it is very important to offer customers an attractive and favorable price.
- Playing by the rules
On these platforms, your sales tactics are limited by their rules. You will need to meet numerous standards when advertising your products in terms of content and images. You must also comply with the terms and conditions applicable to all sellers. That includes dealing with sales fees, which can be very high and hurt your profit.
Altogether, the start of sales in the chosen marketplace can be a tremendous boost for your business. All you need to do is learn the mechanism of e-platform functioning and choose wisely the most effective approach to the topic.
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