There comes a time in every e-commerce business owner’s journey where they’re faced with this great debate: to sell or not to sell on the large marketplaces. While at first glance it may seem like a no-brainer decision, there are some underlying factors that can complicate the issue. There are plenty of mutual benefits to selling on Amazon & eBay, but you’ll need to consider the type of product you sell, the competition in your category, and the marketplace policies.
AMAZON & EBAY: THE PROS
Obviously, these large marketplaces offer some pretty serious benefits for their vendors. There are countless reasons to throw your hat into the ring, and we’ll get into those now!
increased Sales potential from high traffic channels
It’s no secret that both Amazon & eBay see some serious traffic. Their audience tends to be loyal to the platform and shop accordingly. In fact, some even treat these sites like a virtual big box store: coffee in hand mindlessly browsing. That’s something you definitely want to be a part of.
How high traffic are we talking, exactly? Well, Amazon sees about 184 million visitors a month while eBay attracts about 164 million active buyers.
An Amazon executive stated that sellers report an average 50% increase in sales when they join Amazon Marketplace.
Find & acquire new customers
Remember how we said some users treat these marketplaces like a big box store? Well, that’s how new customers discover your product! The truth is, no one is running to these sites to specifically hunt down your store. That’s just not how it works, sorry. BUT! These marketplaces open the door to discoverability for you.
Amazon & eBay offer you the chance at a first introduction, most often to customers who may otherwise never have known about your store. Once you’ve established that connection, you have the opportunity to convert those buyers into repeat customers!
most customers prefer to shop via marketplaces
Facts are facts. And the truth is, many people prefer to do their shopping via marketplaces. Amazon & eBay offer up variety, and they’ve done the dirty work to establish themselves as easy-to-use and trustworthy.
Customers want shopping to be easy and painless. They like to know what to expect. These large marketplaces offer them that reliability.
While these marketplaces offer their vendors a whole lot of benefits, there are a few cons to consider.
Research is key here. While these marketplaces can supercharge your sales, your bottom line can take quite a hit.
Marketplace fees are usually deducted as a percentage of each sale. These can vary from site to site.
Something to note: in highly commoditized, low-margin categories, these numbers just may not add up. So be sure to do your research! Having a keen sense of your margins and a firm understanding of the marketplace fee structure is imperative.
It’s important to note that these marketplaces don’t necessarily exist to help you. At the end of the day, they’re a business ultimately looking out for #1. That’s not to say they’re without their advantages, but it’s wise to be mindful of their end game.
Focus is primarily on the products, not the sellers. So they may implement some restrictions on how you can:
- Brand your presence
- Communicate with your customers
- Sell your products by dictating which products you can and cannot sell.
Something else to be mindful of is that there is nothing in place that stops these marketplaces from going around third-party sellers. If they identify that a particular product does well, they may decide to stock the product themselves, offering up even more competition for you.
Marketplaces are essentially another point of sale for you. And usually, this point of sale cannot be configured to sync with your shopping cart. This can make inventory management an extra painful headache.
It’s not impossible to manage by any means, but you will need to implement some regimented systems to keep on top of things.