Selling through online marketplaces

Advantages and disadvantages of using online marketplaces

Guide

Online marketplaces allow you to sell goods without setting up your own online store. Selling through online marketplaces provides a flexible business opportunity with relatively low start-up costs. eBay and Amazon are examples of well established marketplaces. 

Advantages of online marketplaces for your business

The potential advantages to be gained by joining an online marketplace will vary between industries and businesses, and indeed between buyers and sellers. Some of the potential benefits include:

  • it provides an additional channel to market and sell your products
  • the platform offers reduced marketing costs compared to other sales channels
  • it allows new opportunities for overseas sales - there has been online marketplace growth in the categories of homeware, pets, fashion and sporting goods
  • they are popular with customers and offer a convenient way to compare prices and products from a single source
  • being part of an established online marketplace provides a level of trust between you and the buyer
  • impartial reviews of your products and service may give new customers the confidence to buy
  • they offer opportunities to establish new trading partnerships with traders and suppliers, either within your supply chain or across supply chains
  • they provide greater transparency - availability, prices and stock levels are accessible in an open environment
  • it is possible to operate a round-the-clock - time constraints and problems with varying international trading hours are removed

Disadvantages of online marketplaces for your business

There are a number of potential drawbacks that may need to be considered when selling on marketplaces including:

  • Marketplaces can charge commission on every sale and fees can vary from site to site. Before selling your products on a marketplace, make sure you understand the marketplace's pricing structure. See fees for selling on Amazon, and fees for selling on eBay.
  • The online stores may impose restrictive terms and conditions in terms of how you can communicate with customers.
  • There may be marketplace limitations as to how your business can brand its online presence.
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