PROS
Easy to reach customers
The best online marketplaces attract millions of potential customers on a weekly level. Only Amazon has over 85 million visitors every month – and that translates into an average 50% increase in sales according to Amazon. Selling on online marketplaces is like opening a store in a large shopping mall: most customers don’t come specifically to find your business, but they will bump into your product while wandering around the mall. The differences are that it’s free and you don’t have to sell locally, customers can come from anywhere around the world.
Reduced Marketing Expenditure
Online marketplace sellers don’t have to worry hugely about marketing budgets: it’s done by the marketplace. With millions visiting every month you don’t have to do anything else than list your product and wait. Once the customer has already bought your product you have got the chance to keep them coming back – you just need to provide an excellent service. This is especially true for categories that require frequent, repeated purchases like hobby supplies.
No need to setup your own platform
Online marketplaces are easy to use – you simply register, get approved and upload your product. No need to invest in setting up your own platform which makes selling available for those on a very tight budget. For this reason online marketplaces are good choices to start a business or sell low scale too. Students and stay-at-home moms are able to make some pocket money, but it’s possible to grow into a large company too – it’s up to the sellers how much they would like to invest into their business.
No need to win trust
Online marketplaces have created platforms that make the purchases 100% safe for the customers. This way you don’t have to work hard on winning their trust, it’s already done – you just have to work on keeping it by remaining trustworthy and providing an excellent service.
CONS
High competition”
While it’s true that through an online marketplace you can reach millions of customers, it’s also true that you have to compete with millions of businesses. What’s worse is that you can do nothing on these platforms to build your brand. You will be just one of the millions of businesses selling similar products without any way to distinguish yourself from your competitors. To position your brand you will need to have your own platform.
Potentially high commission
While you don’t have to pay for setting up your online store and listing your product, you will need to pay a transaction fee after making a sale. In low-margin categories you will need to make a calculation if selling on these marketplaces really is worth for you.
No discounts and promotions
Discounts and promotions are effective ways of attracting new and returning customers and differentiating yourself from your competitiors. However on online marketplaces these are not in your hands, even though some websites like Etsy do offer some limited options to give discounts
Foreign Marketplace Sellers & Foreign Currency
Perhaps you are a UK company selling on a German online marketplace. You will sooner or later need to find a way to handle international money transfers. It’s easy to loose money on foreign currency transfers if you rely on the marketplace to conduct the conversion. Explore the possibility of opening an e-Tailer collection account with reputable foreign currency specialist. It pays to use a online platform to make conversions, you’ll get up to 10x better-than-marketplace and bank conversion rates. Ensure the currency supplier has strong regulatory permissions, for example by the FCA (Financial Conduct Authority)
