Commerce Essentials

Marketplaces: The pros and cons of selling in a community space

marketplace picYour Stuff, Your Site?

Or Your Stuff, One of the Biggies Selling on Your Behalf?

No one knows better than you what is right for your business.

The final word is yours. You’re in charge. You’re the boss.

Feels good, right? To be in control of your own destiny? Could be an illusion, though. Maybe relinquishing some control is good for business. But how much? And to whom?

And there’s the rub.

When you’re selling online, you’re faced with many of these types of choices. Maybe one of the most difficult of those choices is whether to sell your stuff through a third-party, like Amazon, eBay, or Etsy, or to create your own site and try to hold on to some control over your product.

We can’t tell you what to do.

I mean, we could, but you likely wouldn’t listen.

So we’re going to lay out some options and leave the hard choices to you.

The Big Three (there are more than three, but we don’t have all day)

Amazon sells a lot of stuff. Like tons and tons of stuff every day. In fact, in 2014, Amazon sold a record-setting amount of stuff: more than 2 billion items worldwide. That’s a lot of little brown boxes lying on doorsteps. The thing is, not all of that stuff was really Amazon stuff. A lot of it, 46% actually, was sold by third-party sellers and fulfilled by Amazon. When we say, ”third-party sellers” we mean folks like you. Small or medium-sized businesses which listed their stuff on Amazon, letting Amazon do the heavy lifting of promoting, displaying, selling and fulfilling online. What those numbers tell us is that Amazon sells a lot of OTHER PEOPLE’S stuff in addition to their own stuff. Maybe you should sell your stuff on Amazon too? We’ll come back to that question after a short break.

Now let’s turn our attention to eBay. Can anyone tell me how many sellers market their products on eBay? You in the back! Passing notes during my lecture!

How many sellers? Over 25 million sellers are selling on eBay. eBay sells more than $19.5 billion in merchandise per quarter and the people whose merchandise is being sold are mostly earning over 20% profit. So you could say that eBay is the port of call for the ship of sales… Get it? Bay? Port? Sales instead of sails! A little eCommerce humor. We crack ourselves up.

Ok. Last one. Etsy. Etsy had 1.5 million sellers in 83 countries in 2014. They did $1.93 billion in sales in 2014. In the previous year they sold $147.5 million in goods. Mostly papier mache lampshades and other things whose purpose we’re not really sure of. This one is my personal favorite:

Why would you ever need that?

Pros of Selling Through a Third Party

It is clear that the big online platforms know how to sell stuff. But what do they offer the little guy? Well, for one thing, if your goods are on the biggie platforms, everyone knows where to find your stuff.

Plus, even if they don’t know you or your brand, a search on one of the biggie platforms will result in showing your stuff to new audiences. Amazon has tremendous name recognition, and well they should; they invest millions in advertising. Millions more than most online shops can afford. They’ve earned credibility and trust, host an excellent back-end and support, and they handle the tricky details like collecting tax and shipping.

eBay serves millions of customers worldwide. They are incredibly easy to use. They’ve been around practically since the dawn of the Internet so they also have massive brand loyalty and name recognition. They are majorly savvy when it comes to SEO, so your product should be easy for customers to find. And quite significantly, they offer lower fees than Amazon so they can deliver higher profit margins.

And quirky little Etsy? They have a very large, niche customer base. Their online shops are super easy to set up. They offer cheap listing fees, direct checkout, widgets, pay per click ads, and pre-calculated shipping.

Cons of Selling Through a Third Party

We may have sold you on the idea of selling your stuff with one of the big guys. But before you run off and join the other hippies on Etsy, we’d like to offer an alternative.

You could always create your own site and sell on your own eCommerce platform.

You see, selling with the big guys means you’re competing directly against lots and lots of other guys who are also selling with the big guys. You may be the “little fish in a big pond”. It can be hard to get your product noticed on those bigger sites, whereas everything on YOUR site is YOURS, presented, branded and described how YOU prefer.

Another challenge when dealing with third party sites is that you don’t really control your brand. Except for a little link under your product, no one really knows that it isn’t Amazon selling your stuff. No branding means no name recognition and no customer loyalty. With your own site, your brand is front and center.

There are other disadvantages to selling on a large platform. On Amazon, for example, you pay quite a lot for the privilege of being listed. Amazon’s fees start at a minimum of one dollar and can go as high as 25% of the price of what you’re selling. That can add up to a major expense. It is even more egregious when you consider that being there opens you up to someone else undercutting your price. Not only that, but in a sense, you’re competing with Amazon itself since they get to decide whether or not to let you sell with them.

You should also consider the fact that with third-party solutions you are majorly limited in what you can do to optimize your sales funnel. You don’t have access to tools and services which can help you serve and retain customers or prevent them from abandoning their shopping carts midway through the buying process. For example, you can’t even capture shoppers’ email addresses on Amazon. Who are you going to send Christmas greetings to without email addresses?!? And you can forget about sending out remarketing or recovery emails. You might as well be handing out flyers on Fifth Avenue.

Finally, once you start selling on a site like Etsy, creating potentially major exposure, you also expose yourself to copycats and plagiarists. Your creativity and talent could benefit someone else. Not to mention the fact that on Etsy, as well as the other big sites, every product listing looks the same. There is little differentiation or customization available so your brand gets lost.

I Want My Mommy

It can seem overwhelming at times, but we’ve tried to give you enough information to thoroughly confuse you. We kid! We kid!

We said it at the beginning and we’ll say it again. It is your product and you are the one in control. It’s good to have options and sometimes it can be really good to partner with a company that has billions to spend on marketing and tech. Ultimately, you know what is best for your brand and your stuff.

So go sell. You’ll do just fine.

This entry was posted in Cart Abandonment Rate, Checkout Conversions, Ecommerce, Insider, marketing, Online Retailers, Online Shop Owners, Shopping Cart Abandonment.