Technology evolves almost at the speed of light. What works today may soon become obsolete. However, what is a constant and continues to grow daily are online sales. In fact, e-commerce has accelerated five years due to the pandemic . And that is why today we want to talk to you about what a marketplace is, what it is for and why it can be useful for your business.
It seems that it is fashionable to have an ecommerce, but making it prosper is an arduous task. It is not enough just to have a good product, you also have to dedicate time and effort to digital marketing strategies ( SEO , SEM , email marketing, social networks …), without forgetting orders, suppliers, shipments, invoices… and a list endless.
For many small businesses, local brands, or entrepreneurs just starting out, setting up an online store seems like the ideal option to reach more people . However, in many cases they have neither the resources nor the knowledge to start engines.
But not all is lost. That’s when the possibility of selling products through a marketplace , a store of stores, an intermediary between sellers and buyers, an Amazon, an Ebay… Well, read on to find out what a marketplace is.
What is a marketplace?
A marketplace is an online platform or ecommerce website that provides a space for companies to sell their products. It would be something like an online shopping center or a virtual showcase with products from many different brands.
Some of the best known are Amazon or Ebay. But surely Privalia or Aliexpress are also familiar to you, which are also marketplaces, that is, an intermediary between sellers and customers.
These types of platforms or online businesses are growing like wildfire. Without going any further, only in the last month we have learned that the Facebook marketplace has reached one billion users; Ankorstore has raised 100 million dollars to grow in Europe; the former president of El Corte Inglés plans to launch his own marketplace and Decathlon is also considering this possibility .
The success of this type of platform lies in many factors, but we could highlight the possibility that the user has a wide range of products or services from different brands on the same web page. On the other hand, for the brand it is a possibility to reach a large target audience from anywhere in the world.
Is it the same as an ecommerce?
NO. There are certain differences between a marketplace and an ecommerce.
The marketplace is an intermediary between seller and customer and has products from many different brands and stores. However, ecommerce is a website that belongs to a specific brand or store that only sells its products and is responsible for the entire sales process: from order management to customer delivery and after-sales service. Therefore, in an ecommerce, there is no intermediary between seller and customer .
How to sell in a marketplace?
There really isn’t much difficulty in knowing how a marketplace works. To begin with, it is a business model that has three basic pillars:
- The website or sales platform
- The sellers
- The clients
The marketplace is an intermediary between both actors (sellers and buyers). There are different accesses for vendor and customer and, while the former is in charge of offering their products or services on the platform, the latter searches for them, compares and buys them.
Once registered on the platform and accepted the conditions of sale, commissions, etc., the selling company can upload all its products to the web following the guidelines indicated by the marketplace.
Regarding the management of a product once purchased, it will depend on each marketplace and the services that the company contracts. In other words, you can contract only the space to display the product or subcontract services such as storage and delivery of the product, after-sales service, etc.
The more services remain in the hands of the marketplace, the more expensive it will be and, of course, the less control over the client you will have.
And what’s good about it?
The advantages of an ecommerce for the consumer are obvious: a variety of products on a single website and the possibility of comparing brands, prices, etc.
And if we talk about the seller, there are also several advantages:
- Lower investment or cost savings: The marketplace provides all the infrastructure, you only have to pay a monthly fee and they usually take a commission for sales.
- Access to a large audience: Selling in a marketplace opens up the possibility of reaching a very high volume of traffic that would be difficult and expensive to achieve with your own ecommerce. In fact, in many cases it is possible to become an international export channel, avoiding legal, technical, language barriers, etc.
- Trust and credibility: For brands that are just starting out and are more unknown, being present on this type of platform helps them to generate more trust and credibility in the client.
- Positioning: The platform is usually a very well positioned space to be attractive to sellers and customers, so you can forget a little about SEO and SEM. However, even if they do SEO and advertising, it is also usually possible to promote the products in the marketplace to have more visibility compared to other brands.
- Payment management: The customer pays the marketplace and then you receive the money, so there are also bank savings and there is a lot of ease and security in the payment of transactions.
- Cross-selling: Being part of a platform where there are also other brands, cross-selling is the order of the day. For example, if someone is looking for bikes and you sell cycling clothing and accessories, your products may appear as related to their search.
- Logistics: It depends on the marketplace, but many of them also include logistics among their services using dropshipping.
Sales tracking: Being an online platform, it is common to be able to track sales and results. - Comments: Marketplaces usually offer the opportunity to rate the products and make comments about them, something that generates confidence in the rest of potential customers and can give a product more value if their opinions are good.
In line with the aforementioned, José Antonio Jiménez Bisbe, an expert in Ecommerces and Marketplaces , highlights that “thanks to Marketplaces we can reach millions of users in a simple way, and at a controlled cost; They also allow us to test an international market without the need to have a structure in the country in question”.
Another of the characteristics most valued by the expert is the possibility of making use of the logistics of the marketplace without the need to have its own structure.
Disadvantages in the marketplace
Although selling on a marketplace offers countless benefits, it also comes with some drawbacks that must be taken into account. They are the following:
- Space is shared with the competition. Your potential customers will also be able to see your products or services without having to leave the web.
- You cannot customize the way you present your products, but you have to adapt to the rules and style of the marketplace.
- Adjusting, reviewing and comparing prices with competitors is a constant. In fact, if you have a lot of sales, it can become expensive since the platform usually takes a significant commission and the sales margin is reduced.
- Investment in ecommerce increases as you outsource certain procedures, such as product storage or returns.
- Payment may be slower. If the marketplace is the one who receives the price of the sale, it may take weeks or months to pay the amount to the seller.
- The clients are not yours. You do not have their data or email, so it is not possible to create a database to communicate with them.
- Growing as a brand is more complex since you will always be under the umbrella of the marketplace brand.
Are you interested in selling on a marketplace?
DEPENDS.
What does it depend on? As the wonderful Pau Donés used to say,… depending on how you look at it. If, for example, you’re just starting out with your brand, don’t have much of a budget, and need to reach a larger audience, then it’s a good option.
It can also be interesting to be in a marketplace just to sell products on sale or with very specific offers. Think of Privalia, they work with many brands, but most of their products are not seasonal, but sales or discounted garments.
Types of marketplaces
The marketplaces that will be most familiar to you are giants like Amazon, Aliexpress, Ebay, Privalia… However, the boom in this business model has also made social networks jump on the bandwagon.
Facebook already has its own marketplace and Instagram has also offered the Shopping functionality for some time so that brands can tag products and sell them through the platform, directly from their posts and without the user having to leave the app.
There are countless marketplaces, but all of them can be divided into three categories based on what they offer:
- General Marketplace: you can find all kinds of products from different categories. For example, Amazon or Aliexpress.
- Services marketplace: its name says it all. It is focused on services, for example, hotel reservations, ticket purchase, etc. For example: Booking or Airbnb.
- Vertical or niche marketplace. Specialized in categories. For example, Infojobs is a job marketplace, Westwing specializes in home decor and fashion, Mentta sells food, and Hotmart is a marketplace for digital products.
Conclusions
With all the knowledge you now have about this type of platform, the decision to be in a marketplace depends on when your business is.
Selling in a marketplace can be a good opportunity to start , but when your business takes off and stabilizes, it is advisable to develop a website with an online store where you are in charge of everything (website, orders, contact with the client, branding, etc) and you can grow.
When you start on that path, count on Malyk Solutions to give you wings and help you with your digital marketing strategy and web positioning .