If you are interested in selling via Amazon or other online marketplaces, you’re in the right place. In the following paragraphs, you will learn about how these platforms work and what to watch out for.
What is an online marketplace?
An online marketplace is a digital platform that facilitates the purchase and sale of products or services between multiple sellers and buyers. Online marketplaces deliver a wide range of products, ranging from consumer goods to services.
Visitors love them because the range of products far exceeds the possibilities of a regular online store, and sellers appreciate the low entry costs when starting up. In addition, online marketplaces often guarantee a safe purchase and quality service for buyers.
The owner of the marketplace receives a commission from the sale, which the seller deducts from each completed transaction.
Aggressive increase in sales via online marketplaces
Online marketplace sales have grown by 500% worldwide since 2007, and forecasts remain favourable. In the next five years, online marketplaces could be the fastest growing sales channel.
This has been true across the world for a long time. For example, in China, more than 80% of all purchases are made through online marketplaces.
Europe is lagging behind, but growing steadily
On the contrary, in Europe these numbers are lower. The most developed online marketplaces can be found in Great Britain and Germany, where marketplaces account for roughly 50% of online purchases.
The strength of online marketplaces in the German and British markets mainly affects expanding online stores. Anyone who wants to do business here must include marketplaces in their strategy.
First place goes to Amazon
Amazon has the strongest position in Europe with almost one billion visitors per month. eBay is a distant second. Other online marketplaces grow more regionally and do not have cross-European reach.
Strong regional online marketplaces include, for example, Otto, Bol, Allegro, Zalando and, in Slovakia and the Czech Republic in particular, Alza and Mall Group.
Why sell products through an online marketplace?
Would you like to offer products to millions of customers around the world without owning an online store or warehouse? When it comes to online marketplaces, this can be a reality.
Selling through an online marketplace has a number of advantages:
- A large and diverse customer base: Online marketplaces are used by millions of users.
- Increased customer confidence: In a popular marketplace with a good reputation, it is easier for a lesser-known seller to gain ground. The marketplace itself guarantees the quality of services and a safe shopping experience.
- Logistical support: Many marketplaces provide storage, packaging and delivery of goods for a fee, which facilitates logistics and speeds up transport.
- Reliable payment solutions: Online marketplaces have verified and secure payment gateways that provide customers with a sense of security.
You do not need your own online store
Creating your own online store costs time and money. Entering the marketplace does not require any initial investment. This model usually works in such a way where you only pay commission on the goods sold.
With an appropriately set margin the risk of financial loss is minimal. You can start selling practically immediately. Simply register, add your products and wait for them to go through approval.
Easy access to foreign markets
Expansion abroad is an expensive matter that usually follows as part of the natural development of a growing online store. It’s made a little easier through an online marketplace.
Buyers consider the marketplace a trustworthy place and often buy even from a seller who is previously unknown to them. In addition, marketplaces use an intuitive website design with well-known payment gateways, all of which makes users feel comfortable.
An online marketplace as a sales channel is also a suitable option for online stores that want to test the purchasing power of a new market (for example, German or British).
Read more on how to succeed on Amazon.
The online marketplace also has its pitfalls
Everything simple, trouble-free and profitable comes with a ‘but’. In the case of online marketplaces, it is:
- huge competition,
- longer waiting times for the money generated from sales (you will have to wait a few days before it actually lands in your account, in the case of Amazon it’s as long as 7 to 14 days),
- the commission for the online marketplace eats up a large part of your margin (it ranges anywhere between 20% and 40% depending on the marketplace and the type of product),
- you are still responsible for any resulting returns.
Once you’ve mastered one marketplace, move on to the next
Did you manage to succeed in one of the online marketplaces? Maximise your exposure and add another relevant online marketplace to your range.
Setting up sales on the first marketplace is usually the most difficult part, entering the next one is much easier.
Please note that each marketplace has its own general principles and requirements for product data input. Always make sure you tailor it to the relevant marketplace.
Online marketplace: The road to success
Choose a suitable online marketplace
Start by analysing the product and your potential customers. Ask yourself a few questions which will automatically point you in the right direction:
- Where do your customers shop?
- How do they search for products?
- Is the product suitable for a platform with mass competition or will it fit better within a more narrowly profiled market?
For example, for fashion, consider a specialised online marketplace. There are also marketplaces that focus on selling eco-friendly products or handmade products (Sashe, Etsy).
Reseller or own brand?
If you sell a product as a reseller (it is not your original product, but goods that are also sold by someone else), make sure to map the amount of competition, as well as their prices and delivery times, carefully.
For owners of their own brands, it is equally important to monitor the competition. By being present on the online marketplace, you will also support direct sales, marketing, and the brand itself.
Get positive feedback
Positive feedback from customers with a rating or photo of delivered goods increases credibility and sales. Motivate as many customers as possible to leave feedback, especially at the beginning.
You can reward them with a small gift or free shipping for their next purchase. Don’t forget about quality customer service and try to answer any questions via chat, which is usually part of the online marketplace, quickly .
Optimise product data
Adjust the text in the product data to best match the keywords customers use when searching.
With well-laid out data, your products will appear in relevant searches and in the right categories. By doing so, you will increase the chance that a potential customer will notice the product and click on it.
We deal with data for price comparators or online marketplaces in more detail in this article on XML feeds.
Want to sell on Amazon?
Are you considering entering a foreign market through an online marketplace? Amazon is a great choice.
You can sell all over the world, increase your turnover and complete the start-up of your business on Amazon within a matter of days and with minimal entry costs.
Get in touch and we will help you with:
- analysing the product portfolio and selecting those products that have the greatest potential
- editing the feed and setting up PPC advertising on Amazon
- regular control and account management.
