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Elevate Your eCommerce MultiChannel Success: The Benefits and Challenges of Selling on a Marketplace

We often advise our clients to consider implementing a MultiChannel strategy as part of their overall eCommerce strategy. A major aspect of a MultiChannel strategy is selling on marketplaces, in addition to having a standalone eCommerce website.


But why are marketplaces so valuable for eCommerce businesses?


First, let's define what a marketplace is. Simply put, a marketplace is a platform that allows multiple third-party sellers to sell their products to a shared customer base. Some examples of well-known marketplaces include Amazon, eBay, and Etsy.


According to a study by Digital Commerce 360, in 2020, almost half of all eCommerce sales worldwide took place on a marketplace. This is a significant increase from just a few years ago, when marketplaces accounted for a smaller percentage of total eCommerce sales. In the same year, marketplaces accounted for 95% of Amazon's total net sales. Marketplaces have consistently seen strong growth in recent years. This trend is expected to continue in the coming years, with marketplaces projected to continue driving a significant portion of eCommerce sales.


It's worth noting that consumers may not realise just how many of their favourite eCommerce experiences are actually delivered through marketplaces. In fact, marketplaces now account for two-thirds of eCommerce sales. The success of marketplaces is evident in the numbers - for two consecutive years, enterprise marketplaces have grown at twice the overall rate of eCommerce. This shows the significant impact that marketplaces can have on the eCommerce industry.



So, what are the benefits of selling on a marketplace for a business with a MultiChannel strategy?


Increased Visibility

Marketplaces have a large customer base, which means that by selling on a marketplace, your products have the potential to be seen by a much wider audience than if you were only selling on your own standalone eCommerce website. This increased visibility can lead to more sales and revenue for your business.


Access to a Ready-Made Customer Base

As mentioned, marketplaces already have a built-in customer base, which means that you don't have to start from scratch in terms of attracting customers to your products. This can save time and resources that would otherwise be spent on marketing and advertising efforts.


Ease of Set-Up

Setting up a shop on a marketplace is typically much easier than setting up and maintaining a standalone eCommerce website. Marketplaces usually have streamlined processes for onboarding new sellers and provide tools and resources to help you get started.


Increased Trust

Customers are often more trusting of marketplaces because they are well-known and established brands. This can lead to increased sales as customers may be more likely to make a purchase from a trusted source.


Lower Start-Up Costs

Setting up a shop on a marketplace typically has lower start-up costs compared to setting up a standalone eCommerce website. This is because you don't have to worry about website design and development costs, hosting fees, and other expenses associated with maintaining a standalone website.


Potential for Increased Sales

By selling on a marketplace in addition to your own standalone website, you are potentially increasing the number of channels through which customers can purchase your products. This can lead to increased sales and revenue for your business.


Ability to Test New Markets

Marketplaces can also be a good way to test out selling in new markets without a significant investment of time and resources. This can be particularly useful for businesses that are looking to expand internationally.



While there are certainly benefits to selling on a marketplace, it's important to note that it also comes with its own set of challenges. These challenges can be complex and require careful consideration before deciding to sell on a marketplace.


Competition

Marketplaces can be highly competitive, with many sellers offering similar products. This can make it harder for your products to stand out and can lead to decreased sales. To mitigate this challenge, it's important to carefully research the market and identify ways to differentiate your products from those of your competitors. This could include offering unique features, exceptional customer service, or competitive pricing.


Fees

Most marketplaces charge fees for the use of their platform, including listing fees, transaction fees, and referral fees. These fees can cut into your profits and need to be taken into consideration when pricing your products. It's important to carefully research the fees associated with selling on a particular marketplace and to factor these fees into your pricing strategy to ensure that you are still able to turn a profit.


Loss of Control

When you sell on a marketplace, you are subject to the rules and policies of the marketplace. This can mean that you have less control over things like pricing, shipping, and returns. It's important to carefully review the policies of a marketplace before committing to selling on it, and to be prepared to adapt your business practices to comply with these policies.


Difficulties with Returns and Customer Service

Handling returns and customer service inquiries can be more challenging when selling on a marketplace, as you are relying on the marketplace's policies and procedures. It's important to be familiar with these policies and to have a plan in place for handling customer service inquiries and returns efficiently and effectively.


Complexity of Multichannel Strategy

Implementing a multichannel strategy, including selling on a marketplace, can be complex and requires careful planning and management. This can include coordinating inventory, managing multiple sales channels, and tracking and analysing data across multiple platforms. It's important to have a clear plan in place for managing a multichannel strategy and to be prepared for the extra time and resources that may be required to successfully implement and manage this type of strategy.


While selling on a marketplace can be a valuable addition to an eCommerce business's sales strategy, it's important to carefully consider the challenges and complexities involved before making the decision to sell on a marketplace. By understanding the potential drawbacks and developing a well-thought-out strategy, businesses can effectively navigate the challenges of selling on a marketplace and reap the rewards of this valuable sales channel. The increased visibility, access to a ready-made customer base, ease of set-up, increased trust, and lower start-up costs are all compelling reasons to consider selling on a marketplace.


Need help with your MultiChannel strategy? Get in touch today!

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