A decade ago, the prospects of e-commerce were questioned only by the biggest skeptics, but today even they have begun to buy goods online. This became possible thanks to marketplaces – trading platforms that place goods from different sellers. The reason for their popularity is obvious: they are extremely convenient for both sellers and buyers, especially during a pandemic.
Some small and medium-sized businesses, that have their online store or still work only live, look at marketplaces with caution – they select sales. Others use them and earn extra sales, sacrificing their interests.
What Are the Advantages of Marketplaces?
Trading platforms have a bunch of benefits for sellers. However, some of them are more successful than others. So, if you decided to sell on Magento at first and then changed your mind – migrate from Magento to WooCommerce easily. In three words:
- it’s fast;
- and cheap.
Quick Contact with the Buyer
The sellers do not need to create and promote their online store: they get guaranteed traffic and quick access to the audience. This allows you to get insight and gain the trust of buyers who did not even know about the existence of this product.
Increase in Sales
Even for those who have an offline store or online store, the marketplace is business scaling. Wide coverage creates better opportunities for the seller – increases visibility, customer confidence, and sales.
What Are Their Disadvantages?
Traditional retail and owning an online store are costs. No need to promote your product on your own, saves money on staff, traffic, and data analytics. Marketplaces already know their consumers well and will help businesses with targeting.
Everything would be perfect, if not for the disadvantages of marketplaces. The main advantages of trading platforms often turn into their disadvantages.
the simplicity of working with marketplaces is of interest to many sellers and brands – perhaps your competitors. It is difficult to stand out among thousands of such products, and therefore it will be necessary to spend additional costs and efforts to attract attention.
Lack of Communication
Working on the trading floor is a minimum of contact with the buyer. This can lead to misunderstandings and negative feedback due to the marketplace. It also eliminates the possibility of creating a circle of regular customers using a loyalty program.
There may be a high commission for placing on the marketplace. Whether the costs of the commission will cover the possible costs of your online store – can be individual. Goods with low margins should bypass the trading platforms – they will not make a profit.
Who Should Go to the Marketplaces?
Today, it is difficult for businesses to win alone in the fight against marketplaces. For small sellers, this battle is a priori lost. So the saying goes, “If you can’t beat them, join them.”
Those who are confident in their product should go to the marketplaces. Even promoting a well-known product takes money and time. The marketplace is suitable as a platform for mass marketing if the product is popular and liquid. High margins of goods will cover the commission for the services of the trading floor and make a profit.
Those who need to start sales quickly. This can be beneficial to a new seller who wants to start selling immediately, or even to regular sellers – to get into the season.
Those who want to scale the business or not “steam” with logistics. This can be useful for companies that want to expand the geography of their sales. Also, the business can only deal with production and quality improvement, not sales – this will be done by the marketplace company.
Who Should Think About Selling on the Marketplace?
We offer to answer the main question: “Will the buyer return to your online store for future purchases?”. If the business is sure that the buyer will return for 2-3-4-5-6 purchases, if he is ready to create a service, range, or circle of “his” customers, if there is demand and will be constant – then it is worth opening an online store.
Even though access to marketplaces is cheaper and faster, there are categories of products that are better to stay on your site. Cooperation with trading platforms is not suitable for those who saw the risks to their business in the disadvantages of cooperation, which were discussed earlier.
Those who sell low-margin goods. The site commission, subscription, or advertising of the product can “eat” all the profits from it. Marketplaces are a convenient, but not the cheapest sales channel.
Those who want to maintain the exclusivity of their product. Elitism today makes big profits for sellers. Quality service, communication, and advice may disappear during sales on the market – this will affect the mood of demanding customers.
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