Online Marketplace Success – The Quick Guide by DotcomWeavers

We are all familiar with online marketplaces – even if what they are and how they work isn’t 100% clear (but it soon will be). If you’ve shopped on Amazon or browsed eBay auctions, you’ve experienced an online marketplace. For retailers, your experience with online marketplaces may have been positive (and lucrative), negative, or somewhere in between. At DotcomWeavers, we are online marketplace experts, whether it’s creating them from scratch or optimizing content on existing marketplaces.

There are many types of marketplaces out there. To become an expert requires research and practice. With a few key insights, most of us can learn everything we need to know about buying and selling on the online marketplaces. In our online marketplace guide we’ll explore:

  1. What online marketplaces are and how they work (with examples)
  2. The pros of selling on an online marketplace (great for retailers)
  3. The cons of selling on an online marketplace (what to watch out for)
  4. How to start selling on an online marketplace
  5. How to boost sales from your marketplace store

At the end, we will also provide information about setting up your own online marketplace – but before that:

What are online marketplaces?

An online marketplace is a type of eCommerce site where third parties can list and sell products and services. These items usually appear in a vendor-specific web store within the online marketplace. Unlike individual eCommerce sites, the marketplace operator processes the sales transactions. After approval, the marketplace operator alerts the vendor or wholesaler, who fulfills the order (sometimes called drop shipping).

Online marketplaces let users search for and compare a variety of related products from different vendors before buying. Amazon.com is the marketplace that everyone is familiar with, so we’ll use it as an example. The process for buyers is as follows:

Online Marketplaces are the future of eCommerce

Though online marketplaces have been around for almost 20 years, they exploded around 2014 as the primary online sales platform. The best online marketplaces feature highly organized information architecture. This makes it easy for customers to find what they want. The more organized and intuitive a marketplace is, the better the user experience, which means more sales.

Some marketplaces sell general interest products that meet a wide variety of needs, while others are segment specific. Since marketplaces aggregate products, there is usually better selection and availability than in vendor-specific online retail stores. Also, prices may be more competitive.

Here are a few examples of popular online marketplaces (and links to get started selling on them):

  • Amazon – the most recognized online marketplace and the best site for vendors to start selling their products. In 2016, 43% of ALL online sales went through Amazon.
  • eBay – the auction giant with an easy-to-use sales interface, inventory management, and international reach. At the start of 2017, there were 167 million active users and approximately 30 million sellers.
  • Etsy – a segment-specific online marketplace geared toward handmade crafts and goods that are suitable for individuals and small businesses. As of February 2017, 65% of all site visits came from mobile.
  • Craigslist – a text-based marketplace for buying and selling virtually anything. It is much less structured than Amazon (or similar sites), so not the best place for established businesses. Currently, there are more than 700 local Craigslist sites worldwide…talk about market choice!

Vendors and Online Marketplaces

We live in a multichannel sales world. To be competitive today, retailers must be agile in how, when, and where they sell their products. For most, this means selling on an online marketplace in addition to their own website. Online marketplaces increase opportunities for product exposure, and many, such as Amazon, benefit from incredible brand recognition.

Amit Bhaiya, CEO and co-founder of DotcomWeavers says, “successful eCommerce businesses need the capability to sell anywhere, but also the discipline to sell in only the highest ROI channels.”

There are many benefits (and some drawbacks) to each online marketplace. So, if you are considering setting up shop in an online marketplace (or three), you should be aware of pros and cons.

Pros of Selling on an Online Marketplace

New sales channels. Whether you are getting started or are an online sales veteran, marketplaces are a great way to increase your reach. For a fee, you get instant access to a functional sales platform and a new place to sell your products.

Easy setup. Compared to creating your own website, setting up shop in an online marketplace is easy (more on this below). While fees vary from one marketplace to another, the benefits can be worth it.

Reduced marketing costs. Many marketplaces offer marketing or advertising benefits for joining as a vendor. Because marketplaces get (generally) much more traffic than single brand websites, you may find that you don’t have to spend as much on banner ads, PPC, or other marketing endeavors.

Higher traffic. When you sell on a marketplace, you don’t have to worry as much about getting people in front of your product. They will come. Whether they buy is up to how you present it. We’ll explore this in detail, don’t worry!

Streamlined navigation / categories. One of the biggest issues with smaller online stores is that many people have trouble finding what they want. Marketplaces, on the other hand, are usually well organized. They must be to help people find what they want to buy. The easier it is for someone to find something, the happier they’ll be.

Pre-existing sales formula. Building a streamlined sales flow takes time, and many businesses find it more convenient (and cheaper) to use a proven sales formula. All successful online marketplaces have a sales structure that works.

Sales and data reports. If you have an online store, you must track and analyze sales data on top of everything else. Even if you know how the process takes a lot of time. Most online marketplaces do this already and generate a sales report for each vendor to monitor performance.

Credibility. The major online marketplaces – Amazon, eBay, Etsy, etc. – are household names and therefore credible. Millions (or more) people shop on them daily, which means your brand gets a certain level of trust by selling your products there.

Online Marketplaces connect your products with the world
There are many benefits to selling your product on an online marketplace – but make sure you are optimizing your content, otherwise, your competitors will have an edge.

Cons of Selling on a Marketplace

Seller fees. On an online marketplace, you may experience increased sales, but be ready for fees. These are usually a percentage of each sale, though the specifics vary by the marketplace. Do your research and make sure the fees are in line with your profit goals. Also, keep in mind that pricing on marketplaces can be extremely competitive and you may find yourself selling for less than you might elsewhere online.

Reduced customer data. When you make a sale from your website, you gain user data to use in future marketing efforts. With most online marketplaces, you cannot export your customer database because you don’t own it.

Wes Rangel, Director of Business Development at DotcomWeavers says, “marketplaces build customer databases at sellers’ expense – so make sure the sales you earn there are worth it.”

One caveat: marketplaces can be a good way to test your products and learn who your real market is.

Strict requirements. The bigger and more credible the marketplace, the more requirements sellers must meet. This means meeting basic (and sometimes tough) delivery periods, content quality, and even customer service quality.

Limited flexibility. One of the prices you pay for an established sales platform is limited control. You must operate within the content constraints of the marketplace, and you can’t take the catalog you built with you.

Competitors are highlighted. In your personal marketplace web store, your competitors – and their similar products – will have a presence. You must compete in quality and price, as well as product details and images. Make sure yours are the best.

Inventory issues. Make sure your business website or inventory management system can synchronize with the online marketplace. Without the ability to connect separate points of sale, your inventory levels can become confused.

Understanding the pros and cons of marketplace commerce is the first step toward building a strong – and profitable – marketplace strategy. It may seem like an easy solution for eCommerce businesses, but certain factors such as product type, competition, fees, and restrictions are important determining factors. For businesses interested or ready to get started selling on an online marketplace, this next section is for you.

How to Start Selling on an Online Marketplace

Get started selling on an online marketplace today.

So, you want to start selling your products on an online marketplace. Great! Though there are a lot of considerations to make before setting up shop, getting started on an online marketplace is easy.

Step 1: Register your business to sell online. If you’ve already done this, proceed to step 2. If not, it’s time to decide what type of business registration is right for you. You’ll need this information when registering with a marketplace. We’ve included a few common forms of registration below, but depending on what you do and how you do it, others may apply.

  • Sole proprietorship (selling on the marketplace as an individual)
  • Partnership (2 or more people collaborate to start a company)
  • Limited Liability Partnership (a different legal entity from a standard partnership)
  • Private Limited Company (a company that has its own identity)

Don’t forget your tax registrations, either! For more information about business and tax registrations, click here.

Step 2: Register as a seller on your marketplace of choice.

Once you’re registered and have all documents in place, it’s time to pick your marketplace and register on it as a seller. Most marketplaces will have a section devoted to sellers and an FAQ for how to get started. You’ll need the following information:

  • Contact details (name, email, phone number)
  • Business Address
  • Industry and/or product category
  • Business and Tax registration documents (PAN card, TIN #, TAN, Bank Account name/number/IFSC code)

Once you input this information and confirm your registration, you’re ready to move to the final step and start selling!

Step 3: List your product

Once you’re registered, you should have your own vendor account page accessible from the seller portal. From there, you can start adding your products for listing on the marketplace. All online marketplaces will have a template where you can create a new product entry, enter product information (size, color, model, etc.), upload images, and publish. You can always do this manually, one at a time. Depending on the marketplace, you might also be able to upload product listings in bulk via spreadsheets.

Remember, competition can be fierce on marketplaces, so you need to make sure your products stand out and engage customers. In the final section of our online marketplace guide, we’ll show you how to create product listings that earn sales.

Stand Out in Online Marketplaces with a Good Story

Before you optimize your products, remember to take advantage of the to create a company landing page within the marketplace. Most marketplaces have this feature. Brand identity is critical for earning customer trust, and you do this by creating an enjoyable user experience through a good story. You’ll likely be able to post brand information, photos, and videos on your company page. This is where your story should start. Talk about the brand mission and values, what the owner’s inspiration was, and why the brand makes a difference.

Next, you should continue the brand story with your products. In an article on Improving Website Performance for More Conversions, we discussed optimizing product content. The same rules apply to your product listings on marketplaces, though you will have to follow the marketplace content guidelines.

7 Ways to Make an Impact on an Online Marketplace

  1. Make the story compelling. When there are dozens of competing products, it’s important that yours makes a connection with the customer. Avoid direct sales copy in favor of a conversation that describes product benefits, uses, and value. Make it interesting and use language your customer can relate to.
  1. Give them the information they want. Start with the basics such as size, color, model, and features. Then, try to anticipate other customer questions. For example, if you are selling a shirt, additional information such as whether the product is pre-shrunk, or the height of the model in your sample images, are little details that customers might appreciate.
  1. Post good, relevant photos. A single product photo is likely to send users to your competitors. Multiple images that show the product at different angles, up close, and in-use by a real person, however, are excellent ways help customers imagine owning your product. Image quality is also important. Many experts recommend professional photography to help sellers stand out in online marketplaces.
  1. Surprise your customers. Adding small tokens to an order, such as brand logo stickers or free guitar picks (if you happen to sell guitars), can do wonders for customer satisfaction.
  1. Add some after-sale flavor. You may have noticed that some vendors on Amazon (as an example) will send a follow-up email after your purchase. They’ll ask how you like the product, if you have any questions, and if you’re willing to write a review. This is a great tactic to earn customer loyalty, especially if you add a little ‘bonus’ such as 10% off their next order – from you.
  1. Be a community member. Do your best to respond to every customer question and comment (if allowed by the marketplace). Engage with customers on social media, even if it’s a quick tweet. Active engagement is key to earning lasting loyalty.
  1. Be clear about your policies. Your returns process is not exciting, but telling people about it shows that you are a reputable company and that shopping with you will not be a hassle. The presence of quality customer service, even if customers don’t use it, is an essential part of building trust.

Selling on Online Marketplaces – Critical Point

Selling on a marketplace makes it easy to assess your competition. You are also in an environment where you can make instant improvements to your content and see how it impacts your performance among competitors. If your product content reads and looks better than anyone else’s, there’s a good chance that customers will opt to buy yours. However, you also need to work hard to maintain your competitive edge. Of course, if the competition has better content, it’s easy to see what you need to change. The challenge is doing it. To reap success in an online marketplace, you must make constant, gradual improvements.

How Do I Create My Own Online Marketplace?

If you have a great idea to aggregate many diverse or segment-specific vendors and products in one place, you may want to create your own marketplace. At DotcomWeavers we’ve created online marketplaces for clients across a variety of industries from scratch. As you saw above, site architecture and user experience are essential. When developing a marketplace, we do extensive market research before embarking on our project process. For a brief look at the online marketplaces we’ve created, check out the links below.

  • Hot Tub Spa Supplies – a major retailer of more than 20,000 different chemicals, parts, and maintenance supplies for hot tubs and spa facilities.
  • Global Sugar Art – provides a comprehensive source for high-quality cake and confectionary decorating products.
  • Mishimoto – an industry leader for superior cooling products and cooling system upgrades for daily drivers, track cars, trucks, and bikes.
  • Beautyvice – an online hub for beauty supplies and products where leading brands from around the world are sold at affordable prices.

Of course, creating online marketplaces is a big topic g topic that deserves an article all its own, so that’s what exactly what we did. To get complete information about setting up your own online marketplace and how we’ve done this for some of our clients, check out our latest White Paper.

A Last Word About Online Marketplaces

In conclusion, online marketplaces can be great options for businesses that want to test new products or add an additional sales channel. Unlike personal web stores, marketplaces require you to play by the rules – their rules – but the rewards can often be worth it. If you found this article helpful, or you’ve had a positive or negative experience with online marketplaces, please tell us about it in the comments section.

For more information about online marketplaces, eCommerce websites, or to get your project started, please contact us today.

Posted in: eCommerce Applications, eCommerce Integration

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