The marketplaces are in continuous growth. These are channels that make it easier to grab the attention of future customers and increase your eCommerce sales. Selling your own products through a marketplace, be it Amazon, eBay, or a specialised website, favours the growth of newly created online stores. In addition, there are tools that help eCommerce businesses to increase their profitability on these websites, such as software that monitors Amazon’s prices. Despite this, it’s not all good news. eCommerce businesses can also face disadvantages when it comes to selling in a marketplace. Below, we’ll explain the pros and cons so that you can make the best decision for your business.
The advantages of selling in a marketplace
1. More visibility and better positioning
Through marketplaces, eCommerce businesses can advertise their products to a much larger volume of potential customers. For example, Amazon Prime has more than 100 million subscribed users. It’s more complicated to achieve this reach from an eCommerce store, which would involve constant investment in online advertising, marketing campaigns, and positioning.
On the other hand, the marketplace that you choose should always have good positioning in search engines since it’s in their interest to be attractive to both sellers and the end customers. In this way, it will be easier for your products to appear on the first page of Google thanks to your keywords and the positioning work that they carry out.
2. Reduction of eCommerce costs
To sell on a Marketplace, all you have to do is meet their requirements, fill out the product pages, and pay the monthly fees or sales commissions for each platform. Businesses will save the cost of creating any infrastructure. The same applies to logistics since there are marketplaces that offer to take care of logistics for you, such as Amazon’s FBA system or drop shipping services. So, the brand can increase its profits by not having to pay the shipping and distribution costs for its products.
At the same time, you can also save on banking costs because the marketplace takes care of payment management. On most platforms, the customers pay the marketplace directly and the marketplace makes the payment to the eCommerce business later on.
3. Contact with your target audience
You shouldn’t only think about those big general marketplaces. There are also industry-specific or specialised portals available for a variety of topics where it’s easier to reach your buyer persona. Some examples of this include Treatwell, for beauty and body care services, or Etsy, for the sale of handmade or decorative items.
The disadvantages of starting to sell in a marketplace
1. There is increased competition
The marketplaces place your competitors closer to you. Within these websites, users can look at the products from multiple sellers before making their final purchase decision. In the case of Amazon, the marketplace itself forms part of the competition.
At the same time, this more competitive market implies highly changeable prices. eCommerce businesses play with dynamic prices to attract users’ attention and continuously adapt to changes in demand and competitors’ prices. Therefore, you must continually review and readjust your prices if you want to be a viable option for customers.
2. The brand image suffers
A high percentage of users don’t realise what company they’re buying the product from since they trust the marketplace. They’re simply looking for an item with the price and characteristics that meet their needs, which damages the eCommerce brand image and the traffic to their own online store. In addition, in those marketplaces where you cede control of the logistics, the shipment will be made using the marketplace’s packaging rather than your own.
3. You must respect the rules of the marketplace
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.
In this scenario, for those eCommerce businesses that want to sell on a marketplace, there are automated tools that allow you to resolve those problems and increase the profitability of your investment. With automatic repricing software, you can adjust your prices based on demand and the prices of your competition to boost your sales.