Selling on Marketplaces: What You Need to Know

The digital realm is a wide world, and it’s only getting wider, with 4.9 billion users and 4.2 million searches every minute. 

All this is to say, if you’re running a business, online is the place to be, which is where online marketplaces come in.

These increasingly popular sites allow you to expand your customer base through selling on marketplaces that are already established. Sounds simple, but there’s a lot to learn. So we’ll be guiding you through it.

What Is an Online Marketplace?

Starting with the most obvious question, what is an online marketplace?

An online marketplace is a kind of eCommerce site. The difference being, the product information is provided through third parties. For this reason, it’s also sometimes known as a 3p marketplace.

The most obvious example of an online marketplace is Amazon. This juggernaut of the industry is valued at a whopping $1.4 trillion, with over 9.7 million sellers selling over 4000 products a minute.

If those statistics alone haven’t whet your whistle enough to want to start selling on marketplaces, there are plenty of other reasons too.

Benefits of Selling On Marketplaces

There’s plenty of reasons sellers are metaphorically queuing up at the door to sell on marketplaces. But the most obvious reason is to increase sales.

Increase Sales

Because of the wider reach that marketplaces like Amazon and more have, there is potential for much higher sales. Many marketplaces have a better presence in both the organic search results and paid positions. When users search for keywords related to your products, they’re often more likely to end up on a marketplace than clicking through to your eCommerce store.

As well as this, every marketplace has its own audience. Instead of searching on Google, many shoppers will begin their search for the desired product on the marketplace site instead. So if your products aren’t there, you’re missing out on sales.

Brand Awareness

Even if we ignore the sales benefit altogether, there are other benefits. Having your products on online marketplaces can help build and increase awareness of your brand or product.

The more familiar consumers become with your brand and product, the more trust you build with them. While it’s difficult to quantify exactly how much brand awareness could be increased through online marketplace presence, you can attempt to through overall site traffic or branded searches.

Loyal Customer Base

If there were a prize for customer retention rate, Amazon would win it hands down. But they’re not the only marketplace with a loyal customer base.

Another great example would be Etsy. Etsy has a dedicated customer base of consumers looking for items made ethically and locally.

While they’re two examples, there are plenty more. Each online marketplace will have its own loyal customer base. While there will often be some overlap, appearing on different marketplaces opens you up to new audiences.

Affiliate Marketing

Marketplaces also present new marketing opportunities in the form of affiliate marketing. A huge amount of influencers are now only working with sellers on specific marketplaces. The most well-known affiliate program is Amazon.

Selling on Amazon can present new opportunities to build brand awareness and increase traffic and conversions through affiliate marketing. You can use these opportunities to create great networking opportunities for your brand and build long-term relationships with affiliates.

Long-Term Growth

Once you’re set-up and running and the product reviews are coming in, you should start to gain traction. Once this traction is gained, your product shoots up in the Amazon rankings, and it’s a steady income stream to ensure long-term growth.

You can (and should!) continue to optimize your listings, website and conduct other marketing online. But beyond customer service and shipping, there’s little work needed to put into successful Amazon listings.

Selling on Marketplaces vs. eCommerce

You might be thinking, “so what, have I been wasting my time running an eCommerce site?”

Absolutely not!

While selling on marketplaces has its distinct advantages, as we discussed above, so does having an eCommerce site of your own.

For starters, you get complete control over your customer’s user experience. While most marketplaces have put a lot of work into creating great, user-friendly platforms, it’s not the case for all of them. For example, Wish is focused on pricing only, with a fairly poor user experience, which can frustrate.

If you sell on a marketplace like this, you get minimal control of user experience, affecting brand perception.

Another obvious benefit is you don’t have to pay extra fees to sell direct-to-consumer. Meanwhile, fees vary a lot from marketplace to marketplace, so you need to be on top of your profit margins to be successful.

One of the best benefits of selling on your own eCommerce site is that you gain valuable information about your customer. This can be used for a whole host of marketing activities.

You can use it for retargeting customers later on through email or even physical marketing activities. Similar to this, the analytical information you gather about your customer can give you valuable insights.

It can reveal demographic information to help you better target future campaigns. It can also reveal valuable acquisition data to show you how users found you to target those channels further.

Marketplaces generally don’t give out this much information about customers, so you lose out on these new opportunities. They also have unique rules and guidelines, which may be confusing, especially for those new to the practice.

As you can see, both DTC and marketplaces have their unique pros and cons. So the best strategy for most businesses is to sell on both platforms.

Strategies for Selling on Marketplaces

As we’ve mentioned a few times (and we’ll cover in much more depth below), there are a vast amount of marketplaces to pick from. Each will need its own unique strategy to a certain extent. This said, there are some broader marketplace strategies for selling across the various platforms.

Optimize Your Product Listings

You should know all about optimization from your SEO strategies for your own eCommerce site. Much of the same on-page optimization applies to your product listings.

This means making sure you research your keywords and include them in your headers and throughout the copy on the page. You should also have high-quality, optimized images, tags, and detailed product descriptions.

While you should optimize for SEO, you should always write for the customer. This means including helpful information and not keyword stuffing.

Optimizing your listings gives them a better chance of appearing high up within the marketplace’s own search results, but within the wider search engine results in pages like Google’s.

Larger marketplaces even have their own SEO tools to help you optimize listings, so there’s no excuse not to!

The Price Is Right

Jokes aside, getting your pricing right is so important for marketplaces.

We touched on this briefly before, but every single marketplace will have a slightly different fee structure. So your products should vary in price on each marketplace to reflect these different fee structures. This helps ensure you’re still getting the profit margin you need to.

To further complicate things, some marketplaces, like Overstock, are only about the lowest prices. It’s a specific example, but they require sellers to have the lowest prices available online. This entirely rules out some marketplaces based on price alone.

You also need to be careful about pricing things differently on Amazon and on your site, or anywhere else, for that matter. A study revealed around 90% of shoppers compare prices on Amazon, even if they find a product they want on another retailer’s page.

Most companies manage the challenges of pricing as a marketplace seller with a pricing automation tool. This allows you to keep track of pricing across all your marketplace products from one central hub instead of flitting between them and trying to keep on top of competitors.

Outstanding Customer Service

Again, you should know how important customer service is for any online business already. But as it is for your eCommerce site, customer service should remain a top priority for your marketplace presence.

Every marketplace has different, unique customer expectations. Amazon prides itself on being able to get things to a customer’s door the fastest. Wish is the cheapest, but it might take months to show up. Etsy customers expect personalized and thoughtful communications.

What you need to do is match those expectations. There’s no point in being the fastest delivery option on Wish because those customers don’t prioritize that. So prioritize what customers want to see on each specific marketplace.

This means coming up with strong communication and customer service strategy for each platform. Implement automated messaging, priority shipping, discounts, and so on for the best chance of success.

This gives you the best chance to get those all-important product reviews and appear at the top of the rankings on each marketplace once you’re established as a top seller.

Paid Ads

Many marketplaces, particularly the larger ones, offer their own paid advertising solutions for sellers. As usual, Amazon is the most prominent example of this.

These work in the same way as the more familiar Google Ads does for your eCommerce site. They’re paid for listings that appear at the top of the search results. They just appear within the marketplace’s own search results as opposed to within a search engine.

Even the more niche marketplaces such as Etsy offer paid ad spots. They don’t offer the same levels of customization and reporting as the juggernauts. But they can offer sharp increases in clicks, impressions, and sales in both the short and long-term.

All this is to say, especially when establishing your products and brand on a marketplace, paid ads are an excellent strategy to get eyes on your products and sales for your business.

Many marketplaces also offer promotions, which we’ll cover more specifically later on. But these can be another great strategy for promoting your brand and increasing sales fast.

Shipping

Just like getting your pricing right, getting your shipping right is just as important. There are two things to consider regarding shipping — price, and speed.

We’ll start with price because free shipping has become a bit of a global phenomenon. In fact, research from the National Retail Federation shows that 75% of consumers expect free shipping now.

Amazon is responsible for this phenomenon. They set the standard to which all other retailers are held. They offer free shipping on the vast majority of purchases on their site.

Sellers are aware of this. While “free shipping” is advertised, and there won’t be an additional fee, most are simply increasing their pricing to include the shipping costs.

The need for free shipping will vary depending on the marketplace. eBay has less focus on free shipping, and consumers aren’t as expectant to see this. While others like Wish and Etsy reward sellers who offer free shipping with smaller fees and increased impressions.

You also need to consider the speed of your deliveries. Again, this varies per platform. On Wish, it isn’t uncommon for items to take over a month to be delivered. Whereas on Amazon, consumers expect the fastest delivery possible, with updates on the shipping progress.

All this is to say; you need to strategize your shipping for each platform. Prioritize price where needed on some platforms and speed where needed on other platforms.

Which Marketplaces Should You Use?

We’ve mentioned a few marketplaces now. As well as highlighted some of the many differences between the platforms. But how do you go about choosing the right marketplace for your business?

Easy. Follow these tips:

Location

First up and most obvious is your location. By this we mean, choose a marketplace with a presence in your location. If you’re US-based, look for the most popular marketplaces there, such as Amazon.

Like this, if you’re expanding to a new region, you can gain an immediate presence in that region by picking the right marketplace. Say you’re US-based, but expanding into Europe, eBay is the second most popular marketplace in Europe. So it would be well-worth listing your products on here.

Your Product

Once you’ve narrowed down the list of marketplaces based on location, it’s time to think about how your product fits into that marketplace. There are two ways to approach this.

First, look at your niche and see how well it fits into those marketplaces. Some marketplaces such as Wayfair focus specifically on home products. So if you’re selling bikes, it’s probably not right for you.

At other times, it’s pronounced when your product meshes well with a marketplace. For example, if you’re selling hand-crafted, ethically-sourced decorations at a higher price point, chances are Etsy is the best marketplace for your product.

The second approach is to look at how popular products like yours are on a specific marketplace. You want to find the sweet spot here.

You don’t want to be the only one selling your product as it suggests it doesn’t fit into what consumers are looking for. But you also don’t want to be selling a product with thousands of other competing products.

The sweet spot is where there’s still opportunity. Products like yours exist on the marketplace, but not too many, and yours is at a similar or lower price point.

With this latter approach, it might surprise you where you end up picking as an opportunity. For example, “macrame” has more than 590,000 results on Etsy, while it’s only got 3000 on Amazon. The former marketplace might be the right in terms of consumer wants, but it’s oversaturated.

So in the above instance, you may see more success in listing on Amazon.

The best news from all of this is you don’t have to pick just one marketplace. In fact, a multi-channel marketplace approach has become common for large online retailers.

Integration

Integration shouldn’t be your only consideration for choosing a marketplace — but it certainly helps make the process easier!

Native integration with your eCommerce platform makes the process of setting up marketplaces much faster and less time-consuming. As the most popular eCommerce platform, Shopify is the best example of this.

Shopify offers native integration with around 140 different marketplaces, including Google, Facebook, Amazon, Etsy, and eBay, to name a few.

As you’ll likely be listing on many marketplaces, this means you can prioritize the marketplaces which are easy to implement first. Once you’ve done this, if there are still niche marketplaces without native integration available, you can move onto those.

Unless you’re using a centralized eCommerce solution, you’ll have to upload product listings manually. It can be very time-consuming, depending on the marketplace. This is why we recommend prioritizing marketplaces with native integration first so you can start selling faster.

Fee Structures

While every marketplace has its unique fee structure, many of them are similar in terms of commission. You can expect around 10-15% commission fees.

This said, there are some outliers to this rule. Overstock, who we mentioned as prioritizing low pricing above, requires you to offer a 50% discount off the bat. This is fine if your profit margins allow for it, but it’s well worth keeping in mind as you pick a marketplace.

Some marketplaces allow you to list products for free and only charge when the item is sold. At the same time, others charge a lower monthly fee to appear on their marketplace in the first instance.

There are no clear rules of which fee structure is best. It will all depend on your unique business and product as to which works best for you.

The Top Online Marketplaces

As promised, we’re finally getting into the nitty-gritty of each marketplace. It’s worth noting, we by no means have an exhaustive list here, or you’d be reading for weeks. But we’re covering the most popular marketplaces.

Amazon

It should come as no surprise that Amazon is top of the list. As the market leader, Amazon comes with many unique perks that other marketplaces are yet to catch up on.

One of which being FBA or Fulfilled By Amazon. If you choose to use FBA, you ship your goods to an Amazon warehouse, and then they disperse them and deliver to ensure fast shipping to consumers.

Amazon is also established worldwide. They have a presence in more than 200 countries and territories. For global retailers, it’s tough to beat.

Their conversion rates within the platform are also impressive, at 13% for non-prime members and a staggering 74% for prime members. It’s the kind of conversion rate many eCommerce businesses could only dream of. But it goes to highlight how important it is to make your products available on prime wherever possible.

SEO is essential for sellers on Amazon. It’s well worth investing a lot of time researching your keywords and analyzing competitor listings. This allows you to really optimize your product names and listings for better visibility.

You should maintain outstanding customer service on Amazon. A general rule of thumb is a 24-hour response rate for every customer contact, whether positive or negative.

To really drive your product sales while setting up, you should invest in Amazon ads. These can be an incredible source of revenue for many businesses. You should have a dedicated team member or agency running your paid ads.

eBay

At one point, eBay used to be the market leader, particularly in Europe. But just because it isn’t the top dog anymore doesn’t mean it hasn’t got some bite left in it.

In fact, eBay is still more popular than Amazon for specific product categories such as sporting goods.

This marketplace also has lower fees compared to the market leader. At around a 10% commission on each sale compared to Amazon’s flat 15% commission rate.

eBay also values its sellers and shows it. They give sellers, new and old, 50 listings with zero insertion fees every month.

Like Amazon, if you want to see quick increases to your impressions and sales, it’s well worth investing in eBay ads. If you’ve got the budget for it, it’s also worth using eBay’s store plan feature.

This feature comes with a monthly fee but allows you to create great promotions advertised across the platform.

Allegro

Allegro is Europe’s 5th largest marketplace. It’s especially popular in Eastern Europe and Poland.

One of the big benefits of Allergo is its simplicity. It’s very easy to sell on and product listings take no time at all to create.

For most product categories, you only pay a fee if you sell a product. They also have a built PPC platform to help you run offers, promotions, and ads.

There’s a huge mix of quality and prices on Allergo, much like on Amazon. So it suits a variety of businesses and products, as well as offering individual and wholesale sales.

Aliexpress

Aliexpress is based in China, though it’s popular worldwide with more than 60 million users. It’s part of the same group as Alibaba. Though the latter is focused on wholesale sales. So which you use will depend on whether you’d rather sell to individual customers or wholesale.

Registering on Aliexpress isn’t free. It’s an initial fee of $1500, which will occur again annually after. Though, they do offer discounts of up to 50% off this annual fee if you hit a certain quantity of sales.

When registering, choose the name of your shop wisely because you can only change it once. You’ll have to attach all your relevant tax and banking information and approval normally takes around 2 to 3 working days.

Aliexpress has a huge amount of categories you can sell within. But you’ll need to price your items to compete. In general, the product quality is low to medium. So if you’re selling high-end goods, it might not be the best option for you.

It’s also worth noting you’ll need special authorization to sell certain goods like beauty products, food, and hair extensions.

One of the big benefits of Aliexpress is the low commission. They charge between 5% to 8% commission on sales.

When you receive payment, the money is paid into your Aliexpress account. You can send it to the account of your choice, but withdrawal comes with a small fee every time, so it’s worth doing this strategically.

Zalando

Zalando is the marketplace to be if your business is in the fashion industry.

The site is very active in Europe with more than 20 million active buyers, all there to find the best fashion bargains.

One of the great things about Zalando is that it works with a huge mix of brands. You’ll find everything from top-of-the-line designers to well-known sports brands. Because of this sellers will see far less of the competitive price slashing that marketplaces are often famed for.

The paid ad options on Zalando are excellent. The personalization feature helps them put great, relevant ads in front of customers who have previously bought something similar.

To sell on Zalando you must have your own online shop, selling some kind of fashion items. You’ll also have to offer free delivery and returns and be willing to allow a 100-day return policy.

Wish

Wish is a bit of an outlier to the previous three marketplaces. It doesn’t care about branding, shipping, or any of the things we’ve discussed extensively throughout this article. They only care about price.

But whatever it is they’re doing is working for them. Because in the decade since its launch, it’s become one of the most popular marketplaces.

It’s worth noting Wish will not work for every seller. You must be able to price your products very low and be able to ship worldwide. If you can’t do either, move on to another platform.

If you can achieve both those things, Wish may be a profitable marketplace for your business.

As we said, you should offer global shipping as standard, but you should also try and get your products on Wish Express. This is focused on US-based consumers and is their fast shipping program. Being able to offer 2-day shipping on a product will significantly boost your rankings within the platform.

Like the other marketplaces, Wish offers paid ads. It’s a very easy-to-use platform, as you’d expect from the inventors. You can bid on keywords as well as run promotions for your products.

Walmart

When we think of Walmart, we might think of the large warehouse-style stores that lie on towns’ outskirts. But we shouldn’t.

The retail giant expanded into the 3p marketplace industry almost a decade ago. They began heavily investing in the space around 2017, and it’s paid off for them.

One of the unique advantages of selling on the Walmart marketplace is that you can ship your product to their stores for collection. For many US consumers, this makes the convenience of the brand unmatched.

Marketplace Management

As you can see, selling on marketplaces is a worth-while and profitable endeavor for many businesses. But multi-channel marketplace selling can be time-consuming and difficult at times.

Fortunately, we can help. We specialize in helping eCommerce businesses sell across a wide variety of marketplaces with our unique software and tools. Get in touch to find out more.