Are you considering selling online on a marketplace?
Confused about where to start?
Here’s a handy guide that explains why an online marketplace works and compares eBay vs Amazon vs Etsy for your specific needs.
What is an online marketplace?
Unlike an independent website, an online marketplace offers space for multiple vendors to sell their products. Usually, an online marketplace has better visibility, more streamlined processes and is thus preferred by customers who don’t know about a brand but need the product.
Some examples of an online marketplace include
eBay
Amazon
Etsy
AliExpress
Walmart
More recently, with the addition of the Instagram Shop feature, Instagram is coming close to becoming an online marketplace as well.
Benefits of Selling on an Online Marketplace
- If you are a small retailer just starting out online, selling through an online marketplace may be a better model than hedging your bets on yielding, maintaining and operating an e-commerce website. For one, you can set up shop in a marketplace in much less time.
- Also, marketplaces have one distinct advantage that a new website doesn’t- a dedicated audience.
- Models like Amazon FBA allow you to set up and start selling in almost no time at all, while also allowing you to outsource order fulfillment.
- In general, marketplaces are a great option for buying and selling products that have some price competition. Customers can compare and choose which vendor to buy from. If that is you, you have a lot to gain.
However, marketplaces come with their own pitfalls including brand dilution and never really being in control of your inventory. Before you choose one, consider what each platform has to offer, and the pros and cons.
eBay
In operation for over two decades now and with traffic running into billions of users, eBay is undoubtedly an online marketplace worth considering. eBay also has a markedly high presence around the globe, making it an ideal platform if you wish to build brand presence.
Pros
Easy to use: The interface used to list products and view inventory on eBay is very intuitive and easy to use. Many retailers feel that eBay is the best example of a plug-and-play marketplace that can be set up in a matter of hours.
PayPal Integration: A good integration with PayPal means that you don’t need to look beyond this platform to accept payments easily and in real-time. PayPal’s seller protection is also an added advantage.
Global Reach: eBay has a portfolio of customers from around the globe who swear by its products and service quality. You instantly have access to millions of customers around the globe when you list your products.
Cons
Varying Fees: Depending on the add-ons to your product and the means you choose to sell them, eBay’s fees can go up to a whopping $250 in some cases! If you are unaware of this, you may end up paying all of your profits away.
Payment Problems: Non-paying customers are a very real problem on eBay. You may think you have made a sale, but end up not actually making money, or shipping the product out.
Seller Favoritism: eBay has a 180-day return policy, something that most other marketplaces do not. While sellers love the feature, keeping track of products over a quarter of a year can be quite painful for buyers.
Five Quick Questions
Ask yourself these five questions before choosing to sell on eBay. If you answer yes to four or more, eBay is the best online marketplace for you.
- Does your product have high-profit margins?
- Do you sell rare products that can garner global interest?
- Will you be listing 50 products or less per month?
- Do you want to showcase your product through a video/ video tutorial?
- Would you want to set up your own store within a marketplace?
Amazon
No preamble needed- Amazon has consistently ranked #1 amongst all online marketplaces. Buyers flock to it, and therefore the sellers. Competition is high on the site, but if you can stand out one way or another, you might just never need another sales channel to keep growing.
Pros
Extra Large Visitor Base: Amazon has nearly twice as many monthly visitors as eBay. This means more attention, more visibility and therefore, more chances of a successful sale.
Amazon Trust: Over the years, Amazon has become a word synonymous with ordering online. “Check on Amazon” seems to be every buyer’s first instinct when making a purchase decision. Thus, there is immense trust in Amazon as a brand.
Product Recommendations: Your products can organically show up under recommended purchases if someone comes looking for a similar product. This adds to your visibility as long as you tag your products correctly.
Fulfillment By Amazon:
Amazon’s FBA is considered a revolutionary move in retail. By storing products at Amazon’s warehouse, you save up on leasing space. FBA orders are also shipped and fulfilled faster, giving their sellers an added advantage.
Cons
High Fees: Amazon charges a fee for practically every product listed, and every product sold. FBA fees can run very high too, making it a losing venture for some retailers.
No Brand Visibility: On Amazon, Amazon is the brand. If you want to build your own seller profile while being a reseller, the endeavor can be quite tricky. While eBay and Etsy also have this problem, both these platforms provide options to build your seller page which makes them more appealing to Brands from a visibility perspective.
Competition From Amazon: If Amazon chooses to sell your product through its own network, you have virtually nowhere else to turn. In a price war between sellers and Amazon, sellers often lose. This has happened in the past – an inherent conflict of interest that doesn’t exist in Etsy or eBay.
No Direct Interaction With Buyers: Amazon does not provide you with a buyer database in any form whatsoever. Your customers today will forever continue to buy from Amazon, whether it is from you or a different seller.
Poor Visibility: On Amazon, when several sellers sell products with the same ASIN, you may be lost among other sellers who can compete on price, or have better ratings.
Five Quick Questions
Thinking of taking a leap of faith and selling through Amazon? Use these five questions to decide if Amazon is the best online marketplace for you.
- Does your product have enough margins to be sold through FBA?
- Do you wish to continue selling only through marketplaces for an indefinite time period?
- Is selling and making a profit immediately more important to you than building a brand?
- Can you afford to reduce prices to an extent to compete with other sellers?
- Are you able to fulfill an order within relatively short timelines?
Etsy
A handmade haven, if there was one, Etsy offers the distinct benefit of attracting only those customers who look for handmade goods from around the world. As a result, your audience is already moving through the conversion funnel with the right intent.
Pros
Targeted Buyer Base: People who come to Etsy know what to expect. As a result, you don’t have to make the effort to stand out in a sea of products. If your products are largely targeted toward Women, then Etsy is definitely a key marketplace to list on.
Cheaper Than FBA: Etsy’s listing and selling fees are comparable to eBay. However, if you don’t need warehousing to be taken care of by Amazon, Etsy is definitely cheaper than FBA. Depending on your profit margins ( which can range from 30%-50% in the case of handmade goods), Etsy may work out cheaper for you than FBA.
Cons
Heavy Competition: There are many sellers selling similar products like yours. Some instances of shops looking like identical twins have also been reported, making a buyer’s decision harder.
No Customization: On Etsy, every shop looks like the one next to it. Standing out and building a brand can be extremely hard when selling on Etsy.
Five Quick Questions
Here are five questions you can use to decide if Etsy is the best online marketplace for you. Answer ‘yes’ to four or more, and you are well on the way to becoming an Etsy seller.
- Do you sell handmade products only?
- Do you have listings that change over time or products that stay on the shelves for less than four months before new ones come in?
- Do you have the resources needed to upload your products individually, and manually?
- Do you eventually have plans to build your own web store?
- Are you willing to forego some sales due to high competition?
Should I sell on all 3?
Several thousand sellers sell on all three. It is always a good idea to maximize your returns. You can sell better using software like Primaseller to synchronize sales and inventory across all platforms.
However, it should be noted that the customer profiles across these platforms vary and inevitably 70% of your sales will come from one of these platforms.
Have you already tried listing products on any of these marketplaces? Share your stories with us.
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Armed with a degree and a pen, loves to tell stories. When not telling stories, she also works. Hard to decide which one she likes more.
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