Pros and Cons of Selling on Marketplaces

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When sellers have products ready to put out into the marketplace for sale, they have many approaches to consider. Once the marketing plan is baked, the social media strategy is buttoned up and social channels are claimed and ready to go, and the inventory has been produced, there really is only one decision left to make. Where will you sell the product?

Sites like Shopify make it so that merchants can create a store in just a few hours or less. But, it’s still only one part of the puzzle which is why utilizing another online marketplace infrastructure can be so appealing. Not only is it exceptionally convenient and offers streamlined logistics, it also provides fast access to a larger pool of potential customers.

The Pros of Selling on Marketplaces

With a marketplace, you are able to leverage an existing traffic machine rather than trying to find these customers on your own. This means that you can save money in your marketing strategy to draw customers to your own eCommerce site, and through social media strategies, and benefit at the same time with added brand awareness and traffic gained through the larger marketplace.

Amazon continues to be the largest online retail platform in North America. As of December 2018, 206.1 million users visited Amazon’s websites per month. Though Wal-Mart is the second-ranked online retailer with 131.9 million users per month, eBay is not far behind at 109.4 million per month. That is a lot of monthly traffic. In fact, monthly traffic to Amazon and eBay together is almost equal to the combined monthly visitors to Target, Apple, Kohl’s, Etsy, and Best Buy.

With your own store, no matter how buttoned up you are on the day your site launches, you won’t draw nearly the same traffic as these world-renowned marketplaces. However, perhaps the greatest upside to using a marketplace such as eBay and Amazon is the fact that they have already established a user base that you can tap in to. Users already trust these platforms, and this means that your work is much less in getting eyeballs to view your products.

If you are a new business and a new product, one of your biggest challenges will be in building credibility. If people have never heard of you, and no one has ever purchased your product before, it is going to be hard to get that first sale on your own site. It will happen, but it may take some time and some marketing effort and spend. That said, consumers tend to shop on marketplaces because they are well-known and are perceived to be safer than other smaller online stores.

The Cons of Selling on Marketplaces

Marketplaces don’t come for free either though. If you decide to partner with a marketplace or any other seller, you need to pay to play. This also means you need to follow their rules, which can hinder the flexibility that you might have on your own site.

When we say that you need to pay to play, we mean it. You literally pay rent to have your products featured on Amazon, and then you are charged a fee for every sale, which is largely dependent on the product category and the selling price. The same is true for eBay in that sellers will often pay a listing fee to host their products, and then a selling fee with each sale. This will eat into your profits which means that you need to ensure your pricing strategy and delivery fees are rock solid. If not, you may find that you are losing money on your products, or not profiting enough per sale to stay afloat.

With both Amazon and eBay, while you are getting more eyeballs on your products, those same eyeballs are seeing products available from your competitors. Most likely, some of those competitors have been in business longer and have more customer reviews, and better brand awareness, simply because they have been playing in the space for a while.

The other challenge with Amazon and eBay is that when customers purchase your product, they rarely notice who you are as a seller. Think of how often you ask someone where they purchased a product, and they simply respond that they bought it on Amazon. You probably say the same thing when someone asks you, even though you know that there is a real merchant trying to gain their livelihood behind the face of that massive marketplace. So this means that your brand equity can really erode over time. Thus, it is critical that you continue your marketing efforts on your own eCommerce site and study both SEO and site optimization tactics to ensure that you can start building a name for yourself separate from the marketplaces.

You also need to make sure that you can find a way to reach those marketplace buyers on your own. When someone makes a purchase on Amazon, it rarely will mean that they will become your customer. This means that you may not have access to their customer information, which will make remarketing a challenge.

Setting Up Your Own eCommerce Site is a Must

Having your own eCommerce site is definitely a must-do. You have far more control in how you manage your own site than you will have with one of the big marketplace sites. But, note that you can connect your Shopify site to Amazon. When you install the Amazon channel in your Shopify store, you can link existing Amazon listings with your products in Shopify.

You also experience the following benefits:

  • Ability to create new listings tied to supported product categories
  • Sync your inventory tracked by Shopify with Amazon listings
  • Set unique prices and reserve inventory for items only sold on Amazon
  • Fulfill your Amazon orders through Shopify
  • Reconcile revenue from Amazon using the reports available to you in Shopify

Know, however, that you don’t have to go at this all alone. By working with a Shopify partner such as Shop Style Design, you can gain additional insight to create an effective eCommerce strategy that will result in excellent customer experience. And perhaps even better, your revenue streams will grow because you will be able to offer the right products at the right prices on the right platform. Contact Shop Style Design for your free consultation today.

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