Selling on a marketplace: advantages and disadvantages

by Brohems
Selling on a marketplace: advantages and disadvantages

Facebook Marketplace, Cdiscount, eBay, Rakuten, Amazon, Vinted: you know these names. You are surely one of the millions of consumers who use these websites to buy online. 

Even the big physical brands are getting into it. For example, Fnac and Leroy Merlin have their own marketplace, linked to their website, to put buyers and sellers in contact. 

These huge digital marketplaces are essential places for transactions: they account for 8% of e-commerce turnover. If we compare sales from 2020 to 2021, they even increased by 44%. The potential seems huge. 

So, would selling on a marketplace be a godsend? This is what we offer you to analyze: discover the advantages and disadvantages of these booming sales channels.

Marketplace: e-commerce definition 

In e-commerce, a market place (or marketplace) is a website that connects buyers and several sellers. It can thus be compared to the e-commerce business model, which is used by a single seller. 

That said, as on an e-commerce site, a seller can offer their products and services for sale. In return, the marketplace takes a commission (fixed or variable) on the amount of the sale. The method of remuneration can also be based on a subscription system, sponsored advertisements or “freemium” content. Let’s take the example of Le Bon Coin: the marketplace is free, but also offers premium services to boost an ad, add more photos, etc.

Marketplaces thus provide complete sales areas, with many services and features: an offer that is as attractive for sellers as it is for buyers. 

The latter can, in fact, access, in a single search, hundreds, even thousands, of offers. It is therefore easier to find the product or service that meets their expectations. The conditions of sale are also often more advantageous. For example, delivery costs are generally inexpensive, if not free, due to the large volumes shipped. 

The most obvious example is of course Amazon, the leading marketplace in France and around the world. This e-commerce giant even offers sellers to store their products in its warehouses to speed up the shipping process. This is a plus for the customer experience, because the user attaches great importance to delivery (cost, time, quality, customer service, etc.). 

3 advantages of selling on a marketplace 

  1. Easy access to thousands of potential buyers

Selling on a marketplace offers easy access to thousands of potential buyers, without (big) effort. Your audience already knows the majority of marketplaces, which, moreover, benefit from excellent visibility on search engines. 

If you type the name of a product on Google, there is a good chance that Cdiscount or Amazon will be among the first search results. Your presence on a digital marketplace can thus speed up the tedious step of customer acquisition.

  1. An accessible and easy-to-use distribution channel 

The more sellers and sales, the richer these platforms become. They therefore have every interest in facilitating their use as much as possible. This is why, very often, selling on a market place turns out to be child’s play.

In addition, you have nothing else to manage than putting your products online. The platform manages the technical aspect, the marketing, the natural referencing: all these key elements which you must absolutely tackle if you create an e-commerce site. We will see later that this advantage can also be a disadvantage in certain aspects.

  1. Many useful tools available to e-merchants

Always with a view to garnering as many sales as possible, the marketplace offers a whole host of tools available to sellers. These features vary by platform, but they generally aim to improve the user experience to incentivize purchase.

So, for example, you can: 

  • Create complete product sheets that meet the expectations of online buyers,
  • Boost your ads to increase your visibility (and get ahead of your competitors),
  • Add photo and video content with high added value (360°, augmented reality, etc.) 
  • Suggest complementary products to increase the shopping cart, 
  • Discuss with your end customer, using e-mailing or messaging solutions integrated into the e-commerce platform, etc. 

Selling on a marketplace: the main disadvantages 

We have seen it: selling on a market place has certain advantages for a merchant who wishes to offer his products or services online. That said, it’s also good to know the downsides, as it affects your strategy and your bottom line. 

  1. Marketplace: direct exposure to competition 

If you have access to a considerable windfall of buyers, you also risk being “drowned” in the product catalog of the marketplace. Selling on a marketplace means taking the risk of exposing yourself directly to the competition. This allows your audience to compare your offer. On similar products, the smallest detail can tip the balance in your favour, or against it.  

If you prioritize creating an online store, you don’t have this problem. You have all the freedom to enhance your products to direct the attention of the Internet user to the desired action: adding to the basket, then buying. 

This approach involves a preliminary step: the development of a relevant digital acquisition strategy for your business. Its goal: to generate sufficiently interesting traffic, both in terms of quantity and quality, to achieve maximum sales.

  1. The absence of your visual identity 

Your visual identity includes all the graphic elements that will allow a buyer to recognize your brand. If you decide to sell on a marketplace, it’s kept to a bare minimum, which is usually your brand name and logo.

Amazon, Cdiscount or even Rakuten have every interest in “erasing” you visually: they want to keep these buyers to themselves! They have no intention of bringing them to you, because they would lose their precious commissions… 

As a result, it is more difficult for a salesperson to impose himself in the “top of mind ” of customers. In your sales tunnel, you minimize the potential for loyalty. However, with an adequate loyalty strategy, it is seven times more profitable to sell to a loyal customer than to attract a new customer. 

  1. A lower margin on the sale of your products and services

Remember that marketplaces get paid on the sales you make. They traditionally charge a percentage or fixed fee, automatically deducted from the turnover you receive. It is therefore a key element to take into account when setting your rates. These must include any commissions, at the risk of undermining your commercial margin. 

However, you must also at the same time stall on the tariff offer of the competition. We mentioned, in the previous point, the increased risk of comparison. A higher price for a similar product could result in a lost sale. You have to find the right balance.

Sell ​​on a marketplace or create an e-commerce site? 

Admittedly, selling on a marketplace requires little initial investment. This is all the more true if we compare to the creation of an e-commerce site, another business model, which involves investing in web development, SEO, the creation of editorial or visual content.

However, since, supposedly, your activity is set to grow, this investment will sooner or later be inevitable. It is therefore in your best interest to devote yourself from the start to the development of your brand image and your own online sales channel. The marketplace is an interesting but complementary channel. In the long term, it cannot replace the creation of an e-commerce site, especially when it is well built.

The same goes for marketing costs. When you sell on a marketplace, you do not bear any direct costs related to the management of the site. This does not mean that your marketing budget will be nil, on the contrary. You can totally develop a digital communication strategy to bring Internet users to your sales area or your product sheets. It would even serve your turnover rather. 

Selling on a marketplace or selling on an e-commerce site: the choice is yours. Both have certain advantages, as well as disadvantages that should not be overlooked. The key is, in either case, to build an appropriate strategy to achieve a common goal: boost your sales. 

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