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How to choose the right marketplace

It used to be hard to reach customers as a small business, but times have changed. As the internet and e-commerce have grown, there are more and more places to list and sell your products. Major retail chains like Walmart and BestBuy allow third-party sellers, as do online giants like Amazon. There are specialist marketplaces like Etsy, and countless others for nearly every type of product.

Even Facebook, the world’s favorite social network, has got in on the game.

In fact, today, there are over 100 online marketplaces in nearly every niche you can imagine [1]. But with so many options out there, it can be hard to figure out which one is best for you. So, we’ve put together a list of things you should consider when deciding the right marketplace for your products.

What Is an Online Marketplace?

A marketplace is an e-commerce platform that connects sellers with buyers. Marketplaces sell their own items and allow third-party sellers to offer products to customers as well. A marketplace becomes attractive to sell on when it has good traffic flow, specifically recurring traffic.

Selling through online marketplaces represents less financial investment and is less arduous than building your own e-commerce site. [2] You may have designed a beautiful Shopify site but pushing traffic to it, and keeping it up to date, will take up a significant portion of your time, for comparatively little ROI if this is your only sales outlet. 

Many businesses with their own successful sites choose to sell through marketplaces as well, taking advantage of the established traffic flow of the marketplace, and keeping the boutique site for specific promotions and marketing opportunities.

With an established marketplace, the challenges you’ll face are competitively marketing and pricing your products.  However, consumers trust the process of browsing and buying on an established e-commerce platform.  Studies have also shown that shoppers prefer marketplaces, finding them more reliable and trustworthy while providing better values [2].

Some of the biggest and best-known US marketplaces are:

  • Wayfair
  • Home Depot
  • Walmart
  • Lowes
  • Hayneedle
  • Overstock
  • Amazon

Interested in the top marketplaces in the Netherlands? Read this article about the top 18 marketplaces in the Netherlands. 

Marketplaces can differ significantly in their products and customer demographics. For example, Amazon focuses on a wide spectrum of customers, whereas Wayfair specializes in one type of product.

All marketplaces charge a percentage fee, based upon your sales.  When you’re selecting your marketplace, you’ll want to run the numbers on anticipated sales volume, fees, and fulfillment costs, to ensure you’re getting good value from your choice.

Who Is Your Customer?

Much will depend upon whether you are selling to other businesses, or directly to the public. B2B and B2C marketplaces require different approaches. They attract different types of customers, with differing priorities. Identifying your customer base will help you whittle down the list of potential marketplaces and connect with the right people.

You might have heard of “buyer personas”. These are fictional representations of your ideal customer, [3] including demographics such as gender, age, socioeconomic class, likes, and dislikes. It can be helpful to define your ideal target market, in order to decide how best to reach them.

A Forbes article describes how Gap had a misalignment between who they assumed their customers were (trendy, young, fashion-forward buyers) and the reality (people seeking budget basics who didn’t care about trends). Had they correctly defined their buyer persona, Gap would have seen greater growth sooner, the writer concludes. [3]

No business is all things to all people. You need to identify your niche; buyer personas provide a great way of defining your unique customer base, then deciding how to reach those individuals.

New or Used?

Marketplaces that focus on new items attract people who are looking for warrantied products and are willing to pay higher prices. Resale marketplaces tend to attract bargain hunters. 

Although eBay sells both new and used goods, if you’re selling a high-end product, eBay may not be the best fit, since the site specializes in hard-to-find second-hand items.  Buyers won’t tend to head to eBay when seeking the luxuries that you are selling. 

Focus on selling in places where there are more products like yours, and where people are looking to buy those kinds of items.  Put yourself in the shoes of someone looking for your product online – where would they head first?  Alternatively, perform a Google search for items like your own and see what pops up – it’s an obvious trick that can easily be overlooked.

Commercial Production or Artisan?

The kind of person who buys handcrafted products on a site like Etsy probably won’t be interested in a similar item made in a commercial factory. Likewise, someone who is looking for a brand-name product probably won’t want a handcrafted alternative.

If you are selling brand-name items, you probably won’t get much business on a marketplace that focuses on hyper-local shopping. Ditto if you sell one-of-a-kind artworks, you won’t be competitive on a site that is all about finding the best deal.

Where Do Your Customers Shop?

Once you’ve identified your target market (your buyer personas) you next need to find out which e-commerce sites they visit.

Use market research or customer data to analyze who your customers are, and where they are likely to shop. Third-party companies that collect and sell customer data could prove useful. Some collect general information, while others conduct surveys to determine exactly who the users of various marketplaces are.

You can also conduct your own bespoke research, using mailing lists and online survey services like SurveyMonkey, perhaps offering the incentive of a discount code or free gift for survey respondents.

Once you know the age of your ideal customer, what matters most to them (value, brand names, price etcetera), and where they hang out online and in the real world, it’s easier to figure out where they are likely to shop.

With all this information at your fingertips, you can better match your product range and descriptions to your target market too.

What Do Your Competitors Do?

Another important stage in evaluating and choosing a marketplace is understanding your competition.

We’d all like to think that our business and products are unique, but the truth is, everyone has competition. Sometimes, it’s direct competition with a comparable product. But you should also consider adjacent products that solve the same “problem” as yours do.

For example, if you’re selling sports tapes for strapping up injured limbs, you’d also want to consider sellers offering alternative muscle salving products. You’re in the same market, even though you’re selling affiliated but not identical products.

If you offer a superior product at a better price, it might be a good idea to compete directly with your rivals on the same marketplaces. If their products are better known or cheaper, you might want to avoid those options.

By doing this, you’ll also identify gaps in the market – items that too few sellers are providing. Make sure you check out the product reviews for your competitors’ offerings. This can provide significant insight into what consumers want as well as ideas for how to achieve better market penetration.

Pricing, Features, and Reach

Once you’ve whittled down your options, it’s time to start comparing pricing, features, and reach. These can vary dramatically from one site to another. [4]

It’s useful to create a table that lists the features that matter most, then check off which ones each platform offers. You might consider things like:

  • Zijn er abonnementskosten?
  • Wat zijn de aanbiedingskosten?
  • Hoeveel commissie wordt er in rekening gebracht?
  • Welke betaalmogelijkheden worden aangeboden, en hoe word je betaald?
  • Is er een limiet aan het aantal producten dat je kunt verkopen?
  • Hoe gemakkelijk is het om het platform te gebruiken?
  • Hoeveel gebruikers heeft de marktplaats?

Depending on the nature of your products, there may be other considerations including fulfillment options, returns policies, geographic spread, and language reach.

If you are a new business or selling a new product, it’s a good idea to focus your search on bigger, well-known marketplaces. This will get your brand and product in front of more people and help to grow your sales faster.

Review and Revise

You need to review your results frequently and revise your strategy accordingly.  This will be much easier if you have chosen several marketplaces through which to sell your wares.

Perhaps one platform is outperforming the others in terms of sales. Is there an obvious reason for this, such as it has more users or a simpler checkout process? Can you emulate that elsewhere, or is it platform-dependent?

If you can make changes to your poorer-performing platforms, do that, then measure results for a while. If the changes affect your sales, give the platform more time. If they don’t, it may be time to consider focusing your attention elsewhere.

Sell More on Marketplaces

Even with the right marketplace, it can take time to find the right sales strategy. You will probably have to adjust pricing and shipping costs, try different photos and descriptions, and make other changes. Try to change one thing at a time, so that you can identify exactly which changes promote higher sales.

You might also want to differentiate yourself from vendors selling similar products. Free shipping is one of the most-searched-for options. In fact, 90% of online shoppers rank free shipping as their number one criterion when buying online. [5]

A generous warranty and sympathetic returns policy are other significant factors for buyers, particularly with big-ticket items. Shoppers want to know that if something goes wrong with an expensive item, they have options for replacement or reimbursement.

Manage Your Marketplaces

Many businesses get the best results selling on more than one marketplace. However, as you can imagine, managing all those platforms at once can be challenging.

Make sure you carefully track all the marketplaces you sell on and keep up-to-date records of the products listed on each one. If possible, try to standardize your offering across all the platforms. Some sites will allow you to upload products in bulk. If yours offer CSV uploads, you might be able to use the same file for each of them, saving time on listing creation.

Another option is to use a platform like E-Tailize, that allows you to connect and manage all your marketplaces through one site. This could save you a significant amount of admin time.

Whatever you choose to do, there’s no denying that online marketplaces are a great boon for small businesses. The best platforms are quick and easy to use, and they offer visibility you won’t get from a standalone e-commerce site.

Sources

  1. Selling on Online Marketplaces: Best Platforms for Selling Your Products – https://www.bigcommerce.com/blog/online-marketplaces/#what-is-an-online-marketplace
  2. Shoppers Prefer Online Marketplaces for Repeat Purchases – https://www.forbes.com/sites/kirimasters/2018/08/21/shoppers-prefer-online-marketplaces-over-retailers-repeat-purchases/?sh=59eca92279f4
  3. Finding Your Audience – The Importance of Developing a Buyer Persona – https://www.forbes.com/sites/forbesagencycouncil/2017/05/16/finding-your-audience-the-importance-of-developing-a-buyer-persona
  4. Compare Fees & Pricing – https://wheretosellonline.com/compare-fees-and-pricing/
  5. How Free Shipping Influence Online Buying Decisions – https://www.invespcro.com/blog/free-shipping/

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