As an online retailer, you may be looking at ways to grow and expand the reach of your business, and increase sales. One of the ways to do that is to increase the number of channels you sell on which is sometimes referred to as multi-channel selling or omnichannel selling and can include ecommerce marketplaces.
In the article, we’ll explore what ecommerce marketplaces are, how they can help grow an online ecommerce business, and the cost to your business of using them.
What is an ecommerce marketplace?
An ecommerce marketplace, also referred to as an online marketplace, is an online ecommerce website that allows multiple third-party sellers to list and sell their products. Some examples of the most popular ecommerce marketplaces in 2023 are:
- eBay
- Amazon
- Wayfair
- Not on The High Street
How ecommerce marketplaces can grow your business in 2023
There has been a rise in ecommerce in 2023 with ecommerce sales growth worldwide expected to be 9.4% in 2024. For online sellers to make the most of the continued ecommerce growth in the future, they should take advantage of all sales channels, including ecommerce marketplaces.
Here are the 4 main ways online sellers can use online marketplaces to help grow their business:
1. Take advantage of an existing online customer base
Online marketplaces have an existing customer base that already buys through them. By listing your products on new online marketplaces, you’ll introduce your items to a whole new market and expand your own customer base with minimal investment and effort.
2. Learn from competitors already using online marketplaces
Of course, some online marketplaces will be more competitive than others, for example, Amazon has over 1.9 billion sellers worldwide and this may seem daunting. However, you can use competition to your advantage by learning from those who are performing well.
From competitors you can learn best practices for what to include in your product listings, how to photograph your items to make them more appealing to customers, the shipping options customers want and even how to price your products to be competitive in the market.
3. Expand to new regions
By expanding across online marketplaces, you could also grow your business by introducing your products into new geographic regions.
Cross-border selling could seem like too large a jump to make, however, there are fulfilment methods available to online sellers to help mitigate the risk – using a third-party logistics (3PL) partner or Fulfilled by Amazon can help you by holding your stock in particular locations i.e. overseas and you can simply send them relevant orders to fulfil on your behalf.
4. Build brand awareness online
Brand awareness is a key part of building your customer base. By growing your sales channels to new ecommerce marketplaces, your opportunity to build brand awareness expands to a larger audience.
As a result of offering your products in the places customers already shop, this will likely lead to extra sales. For example, a customer may want to try your product/s, but doesn’t want to pay your ecommerce shop shipping price for a single item; however offering it on an online marketplace, such as Amazon, where they can group the purchase with other items and pay a single shipping fee, could secure the purchase.
The cost of using ecommerce marketplaces
While there are multiple ways that online marketplaces can grow an online seller’s business, there are also some less favourable considerations to make, when deciding whether these ecommerce channels are the right way to make sales. These include:
Ecommerce marketplace fees
Unfortunately, selling on marketplaces is not free. Most ecommerce marketplaces will take fees on products sold and some may even charge you for listing on there. It’s important for online retailers to weigh up the cost of selling on the platform vs. the potential profit you could make, before committing.
Sales on your own website
By selling on other ecommerce marketplaces, you could see a drop in sales on your own website, especially if your prices are significantly cheaper on other online marketplaces to keep up with the competition. It’s important for online retailers to try and align pricing across all selling platforms the best they can, while also ensuring channels such as your social media and advertising are driving traffic to your own ecommerce site.
Customer relationships
Unlike your own ecommerce site, online marketplaces offer fewer opportunities for you to build relationships and brand loyalty with your customers. You will have less communication with them directly and therefore less personalisation and no mailing list opportunities which minimise the chance of cross-selling, upselling and repeat custom; therefore to ensure a satisfied customer, the emphasis is on the experience your customers have post-sale – including shipping, delivery and unboxing your product.
Should you sell on ecommerce marketplaces?
It’s clear to see that ecommerce marketplaces can definitely expand an online seller’s opportunity for increased market share and sales, but there are risks to weigh up when deciding which marketplaces to sell products on.
To help with your decision-making on which marketplaces to sell on, you may also be interested in reading our blog which explores the 5 best marketplaces for UK ecommerce businesses.
Mintsoft offers order management software that can help you manage orders from your ecommerce website and marketplaces. If you’d like to learn more, please visit mintsoft.com
Original source: https://www.mintsoft.com/resources/blog/the-rise-of-ecommerce-marketplaces-growing-your-business-in-2023/
Ian is Head of Supply Chain Products at The Access Group, looking after a host of ERP products, including Mintsoft. He has extensive experience in software products, which he uses to sculpt Mintsoft into the industry’s go-to platform for all its order management and warehouse management needs. Ian is always looking ahead to drive Mintsoft forward for its customers and create a stand-out solution.
