Today’s shopper is more tech savvy and demanding than ever before. As smart phones, social media and online shopping have become critical parts of our day to day lives, they’ve also created new expectations for online stores. Simply put, customers expect a consistent brand experience across all of the channels they use to shop: mobile, online storefront, and third-party marketplaces. If they can’t find you through their preferred shopping channel, then they’ll simply choose another business. 

This kind of consistency is difficult to achieve for even the largest brands, so how can a smaller retailer reasonably expect to keep up?

The easiest and fastest way for smaller retailers to begin offering the omnichannel experience that shoppers expect is to begin selling on third-party marketplaces like Amazon, eBay and Walmart. 

The Benefits of Selling on Marketplaces 

Outside of offering shoppers the buying experience they expect, there are several other reasons why you would want to start selling on marketplaces: 

Sales Growth 

Marketplaces like Amazon and eBay all receive a tremendous amount of traffic from a highly qualified audience that’s ready to buy. In the first half of 2021, Amazon reported revenues of $221.6 billion, with $115.5 billion of that revenue coming from product sales. Even more interestingly for independent merchants, third party sellers now account for 56% of sales on Amazon’s platform. 

By listing your products on Amazon’s marketplace, you’re able to tap into this huge and sales ready audience to drive sales growth for your business. 

Fulfillment Support 

Another big benefit of working with marketplaces, is the support they provide for fulfillment and logistics. This is especially true if you choose to work with Amazon’s FBA program, where you ship your products to Amazon, and then Amazon will handle every part of the order fulfillment process for you. 

Increased Trust 

Amazon, eBay and Walmart are all large and established companies that have invested millions of dollars in marketing, advertising and customer service to build a strong brand. These companies have worked exceptionally hard to make themselves essentially synonymous with online shopping. The trust factor is no longer an issue for them.

For a small online retailer with their own online store, building trust with shoppers that don’t know your brand is likely one of your biggest challenges. By listing your products on Amazon, you can mitigate the impact that lack of trust has on your sales, because you’re piggybacking off the trust that the marketplaces have already created. 

The Challenges of Marketplace Selling 

Despite all of the good that selling on marketplaces can bring to your business, there are a number of challenges you’ll have to consider before taking the leap. 

Marketplace Fees 

Marketplaces generate revenue from fees they collect from sellers that use their platform. These fees are the tax you pay for tapping into the huge audience they attract. Most of the time, these fees are taken as a percentage of the sale price of your product, but depending on how you use the platform, there may be an additional fee structure in place.

This is where you’re going to have to do some math. Depending on your margins, marketplace fees may be too expensive to make selling on these platforms attractive and profitable. 

Marketplace Rules and Terms of Service 

At the end of the day, marketplaces are set up to benefit the marketplace, not the seller. They may have rules preventing you from selling your products, they may restrict how you can communicate with customers and generally dictate how you have to run your business. 

It’s also not unheard of for a marketplace to monitor popular products, “steal” the idea from a seller and then offer the same product at a reduced price. This effectively forces the seller to give up this product and find a new opportunity. 

Price Is Everything 

Marketplaces are highly competitive. The same product may be listed multiple times by multiple sellers with the only real differentiations being richer product descriptions, quality of reviews and perhaps most importantly, price. 

If you’re in a commoditized market or a reseller, this makes marketplace selling effectively a race to the bottom. This is a tough race to win, especially if you’re a smaller retailer that can’t afford to take a loss leader.

Hard to Build a Brand 

As we mentioned above, marketplaces have a vested interested in promoting themselves. Amazon does a lot to ensure that the buying experience is very clearly an Amazon branded experience. This makes it very difficult to build your own brand, which is essential if your goal is to build a sustainable business.  

How to Start Selling on Marketplaces

If you’re convinced that you need to start selling through marketplaces, here are some general tips to help you get started. 

Pick the Right Marketplace 

There are a few different ways you can evaluate marketplaces to pick the right one: 

Does the audience match your product line?

Amazon is great because it’s reaches a very broad audience, but it may not be the best fit for your products. It’s a simple example, but if you sell handmade gifts, then Etsy is likely a much better fit for you than other marketplaces. 

How large is the audience?

One of the major goals with expanding into marketplaces is sales growth. This isn’t going to happen if the marketplace hasn’t built up a sizable audience. 

What is the Fee Structure?

As we mentioned above most marketplaces take a cut of the revenue from each sale and some may charge other fees depending on how you’re participating in the marketpalce. Study your margins and understand if you can afford these fees and still turn a profit.