Online marketplaces are gaining popularity. In 2020 alone, the best online marketplaces like sites like Alibaba, Amazon, eBay sold $2.67 trillion in goods.
Yes, it's a great time to start selling online. Before you dive into the world of eCommerce marketplaces, it’s good to know the basics. These are websites that host the products of many third-party sellers. These marketplaces let you list your products and sell directly to your customers. These platforms can be your primary sales channel or a supplement to your main online store.
In this guide, you’ll learn how to start selling on online marketplaces. When you start shipping, remember that Easyship saves you up to 70% off retail shipping rates from all couriers.
Table of Contents
What is an Online Marketplace?
Online marketplaces are websites that connect sellers with buyers. Shoppers visit these sites to find various items, and if you list your products on these sites – they might buy from you.
According to Lengow, 60% of eCommerce sales happen on online marketplaces. Amazon and eBay are prime examples of eCommerce sites that prosper with the online marketplace business model.
Unlike Amazon, some online marketplaces don’t sell anything themselves. For example, sites like Etsy and eBay play host to sellers and take a cut of every successful sale. Despite these fees, merchants can prosper on online marketplaces because they’re an easy way to reach millions of customers at once.
Two main product types get sold on these marketplaces:
- Commoditized products: Mass-produced physical or digital products in high demand
- Niche products: Specialized or one-off goods or services offered by singular sellers
To sell on an online marketplace, you’ll need to create an account on the platform and list your items. You can sell a mix of niche and commoditized products
The Pros and Cons of Online Marketplaces
The world of eCommerce marketplaces is evolving rapidly. Sellers are flocking to online marketplaces because they allow ready access to millions of eager buyers.
Your success on these platforms depends, largely, on which products you sell. An eye for trending products backed by savvy on-platform marketing skills is a recipe for success. Some drawbacks offset these advantages, which we’ll discuss here.
- Reach: Millions of people visit online marketplaces each day. Access to ready customers is a real leg up because marketing is a serious challenge for eCommerce marketplace newbies. No worries about driving traffic – just work on converting visitors.
- Trust: Buyers are more likely to purchase from sellers on trusted websites like Amazon. By contrast, first-time buyers hesitate to buy from unfamiliar merchants on personal websites.
- Less investment: It takes time and money to set up an eCommerce marketplace store on Shopify, for example. You can be set up and selling on online marketplaces in a fraction of the time, and for nothing out of pocket.
- Scalability: You can sell larger volumes of products without incurring commensurate costs. Online marketplaces take less of a financial risk, as compared to eCommerce websites because they don’t sell or buy products.
- Fast: You can start selling as soon as you upload your products.
- Ready assistance: Online marketplaces offer customer support around the clock
- Convenient checkout and shipping: These platforms process payments and coordinate shopping on your behalf which is for greater ease and conversions.
- Selling fees: You pay to list and sell items on online marketplaces. This results in lower margins than on your eCommerce marketplace website.
- Anonymity: Customer loyalty is harder to achieve with online marketplaces. Top-notch customer service and perks like free shipping can help you entice repeat purchasing.
- Competition: Online marketplaces are saturated with buyers. Unless you’re selling unique products, it can be hard to acquire customers.
- Rules and restrictions: Each platform sets its own rules and bans users who overstep them.
- Free shipping: Today’s shoppers are allergic to paying for shipping, and platforms like Etsy are penalizing merchants who don’t. If you don’t pay for shipping on Etsy, the platform limits your visibility in the search results, which are the main way buyers find sellers. Be prepared to shoulder the added costs of free shipping.
Now that you know the pros and cons of selling on online marketplaces, it’s up to you to decide if you want to take the next step in selling your products. The potential advantages of selling on online marketplaces will vary depending on sellers, however, don’t let that sway you from selling.
How to Launch Your Online Store
As you consider whether an online marketplace fits your business, consider these steps to get started. That way you know what online marketplace to sell on.
1. Pick Your Platform
Online marketplaces are a convenient way to expand your eCommerce presence. Online sellers have also increased their sales by as much as 1,250% by listing on online marketplaces.
It’s crucial to pick the right marketplace for your products. For example, you wouldn’t sell tires on Etsy because Etsy caters to buyers in search of handmade, vintage, and creative goods. eBay, however, is a great place to sell new and used tires.
Consider the list of some of the best online marketplaces for selling your product:
- Amazon: A general marketplace for all types of goods
- Etsy: A creative marketplace for handmade, vintage, custom goods
- Craigslist: An online marketplace with advertisements for all types of goods
- eBay: an online auction marketplace for all types of goods
2. Determine Your Costs
Online marketplaces differ in how they charge for selling items. Generally, you can expect to pay a range of fees, including:
- Listing fees: Each online marketplace has its requirements, including listing fees for selling products on its platform. However, platforms like Facebook Marketplace don’t charge any listing fees, but Amazon’s Individual Plane charges $0.99 per listing.
- Transaction fees: Transaction fees vary depending on the online marketplace.
- Commission: Commission fees vary depending on the online marketplace. However, places like Alibaba charges a 5-8% commission fee on every transaction.
- Signup/subscription fees: Not all online marketplaces charge a signup/subscription fee, though Amazon charges a $39.99 subscription fee as part of their Professional Selling Plan.
- Ad fees: To get more visibility, you can pay an ad fee to rank higher in search results. Yelp lets businesses buy ad listings.
- Payment processing fees: Fees vary depending on the payment solution. For Stripe Connect, you can expect to pay 2.9% + $0.30 per transaction in credit card processing fees. Other payment solutions include PayPal and Square.
Transaction fees are also highly variable spending on the marketplace. For example, there may be flat fees per every purchase you make or even a percentage-based fee - it depends on the online marketplace.
3. Organize Your Inventory
Inventory management is the backbone of an effective retail business. As an online merchant, you can’t order, reorder and sell the stock with confidence if you don’t manage inventory. In other words, you’ll want to organize your inventory and create a system before you start selling.
Of course, you can always opt for storing your inventory via your home office, storage shed, garage, or whatever you like best. However, depending on the size of your business, you might want to consider using an inventory management system.
A good inventory management system should offer the following:
- Inventory tracking
- Ability to calculate inventory and stock costs
- Inventory control
- Storage location information
- Evaluate the past sales data
To learn more about how to manage inventory, read this article here.
4. Create Your Listing
Regardless of what you’re selling, it needs to be listed on the online marketplace. And to maximize your success, you’ll want to create an eye-catching listing that compels purchases. Here are a few tips for optimizing your product listings:
- Shorten & Optimize Product Titles: Don’t stuff your titles with every possible word related to your product. Instead, you should pick a couple of primary keywords and use them organically in a title. Titles should be no more than 2 lines long.
- Upload Plenty of High-Quality Images: High-quality images are crucial to the success of selling your product. Try using a high-resolution photo of your product on a white background.
- Add a Video to Showcase Product: According to Hubspot, 90% of people find product videos helpful in making their decision. It’s important to keep videos short (under a minute), add a thumbnail, and regularly update them.
- Write Engaging Product Descriptions: Just like the title, images, and videos for your product listing, writing engaging product descriptions is just as important. The description should give users the information they need to add the item to their shopping cart.
5. Market Your Listing
It’s paramount to strategize and choose the best practices to bring traffic and revenue to your online marketplace. Here are some helpful strategies that’ll help increase visibility:
- Optimize on-platform search visibility: Organic search drives more than 50% of all website traffic. Using relevant, targeted keywords will rank you higher in SEO visibility, and will make sure your intended audience reaches your site.
- Paid Social Media: Social networks like Facebook, Instagram, Twitter, and others offer paid advertising features backed by algorithmic targeting. These capabilities can be effective in driving traffic to your listing directly, but it’s recommended you have a deep knowledge of your audience to maximize your return on investment.
- Organic social media: It’s free to blast out your new products to your followers. To be extra enticing, you can run contests or giveaways.
- Use influencers: Partnering with a social media influencer can generate both hype and sales for your product. Reach out to influencers whose audience aligns with yours, and see about arranging a mutually beneficial relationship.
- Create content: Attract customers by writing blogs or videos that highlight the value of your products. The best content speaks directly to your audience's needs or desires and positions your products as a ready solution.
How to Ship on Online Marketplaces
What happens once someone buys your product? It’s time to fulfill the orders and get them shipped. Fulfillment is the process of receiving, packaging, and shipping orders for goods.
Fulfillment centers also allow eCommerce marketplace merchants to outsource their warehousing and shipping. This can be extremely helpful because it relieves merchants from having to pay for the necessary physical space to store all products.
Now, eCommerce marketplace merchants can send their merchandise to the fulfillment center, where an outsourced provider ships and delivers the packages to their intended destination.
3 Fulfillment Strategies for Online Marketplaces
Self-fulfillment shipping lets you use any courier service you like, so you’ll want to compare rates from different couriers to find the cheapest shipping option.
To quickly compare courier rates, try using our Free Shipping Rate Calculator. It's a faster, easier way to compare prices than visiting the websites of individual couriers.
Third-Party Logistics Providers (3PLs)
Third-party logistics (3PL) is a service that businesses use to outsource elements of their distribution, warehousing, and other fulfillment services.
Partnering with third-party logistics providers (3PLs) can help high-volume shippers save on shipping costs like warehousing and transportation. The benefits of using 3PLs include:
- Better packaging: Fulfillment partners often offer better packaging than shipping companies or individual shippers
- Faster shipping: 3PLs accelerate delivery lead times thanks to efficient fulfillment processes and last-mile delivery
- Less business overhead: Outsourcing fulfillment to a 3PL helps high-volume merchants save on labor costs associated with fulfillment
Overall, using 3PLs can be a good solution for sellers who sell the same items in large quantities. Shipping with 3PLs isn’t a good fit for one-of-a-kind items such as valuable jewelry or collectibles.
Fulfillment by Marketplace
Some online marketplaces offer done-for-you fulfillment services. Fulfillment by Amazon (FBA), for example, is a service available to Amazon Sellers in which, for a fee, Amazon will handle all shipping and fulfillment on your behalf. These services are convenient for you but they also eat into your bottom line.
7 Tips to Ship on Online Marketplaces
Shipping is an integral part of selling online. By the year 2040, it’s estimated that 95% of all purchases will be through eCommerce. That means you’ll need to craft an effective shipping strategy, to keep up with the continuous growth of eCommerce.
Here are a few best practices for shipping on online marketplaces:
1. Offer multiple shipping options
By offering multiple shipping options for customers, you give them more control over the delivery speed and price at which they so choose. Fortunately, Easyship offers real-time shipping rates at checkout. You’ll be able to show the cheapest, fastest, and best value shipping options at your store’s checkout.
2. Offer free shipping
Consider offering free shipping for customers who spend a certain amount. Offering free shipping is a great marketing strategy for eCommerce businesses.
3. Show delivery dates
Displaying delivery timelines will help customers know when to expect delivery before they make a purchase. Easyship can help you with this with the help of our Rates at Checkout feature.
4. Share tracking information with your customers
Manage consumer delivery expectations by sharing tracking information. This can be done through automated messages so that customers can see where their package is and when it’ll be delivered.
Fortunately, Easyship offers branded tracking, so that customers can continue to get your banded experience while they await their order.
5. Ship from multiple locations
When you partner with warehouses in strategic locations, you can ensure that your orders don’t have to travel as far as to reach customers. This also reduces shipping costs and guarantees that your package will be delivered faster.
Easyship proudly offers clients warehousing in various parts across the globe, so that you can easily build your global brand and send orders to various counties.
6. Communicate with customers
In times where there are delivery issues, excellent communication can help manage your customers’ frustrations. Be timely and make sure you keep your customers in the loop.
Each marketplace has its own returns policy. Consider the following when deciding on how to handle returns for your eCommerce marketplace business model: Promote customer-friendly returns, decide whether to standardize returns, or perhaps build in the expense of returns to cover costs.
Online Marketplaces and Easyship
Selling on online marketplaces is easy and lucrative for many sellers. It’s important to remember that selling is only the first half of the process, though. Today’s modern shoppers expect a streamlined shipping experience and affordable, if not free, shipping. Buyers who don’t get this premium experience are happy to shop elsewhere.
Easyship integrates with all online marketplaces like Amazon, eBay, and more to make shipping and fulfillment a breeze. Plus, you’ll instantly save up to 70% off all couriers’ shipping rates from USPS, FedEx, DHL, and 250+ global couriers. To access these savings instantly and our automated shipping features, just create your free Easyship account. Easyship is 100% free to use for your first 50 monthly shipments – so there’s no risk. Just savings.