GUEST COMMENT Tapping into a new market with the transition from online retailer to marketplace

The role of marketplaces in the ecommerce landscape has increased significantly in recent years. The best-known players like Amazon and eBay are gaining more and more ground, which means that as an online retailer you need to stay on top of your game.

Why are consumers so keen on these types of platforms, what types of marketplaces exist and what are the advantages of a transition to a marketplace?

It is hard to imagine a world without online shopping nowadays: an order is placed with the ease of a few clicks and your package will be delivered in just a few days. While regular online stores try to capture customers with a unique brand experience or a niche product range, convenience is the magic word for marketplaces.

Marketplaces stand out because of their good ranking, the wide range of products and low prices. Consumers increasingly shop via online marketplaces and it is therefore a missed opportunity if online retailers don’t take advantage of this by cross-selling via multiple platforms. 

Marketplace X, Y or Z

There are different types of marketplaces: vertical, horizontal and all-in-one marketplaces. A vertical marketplace like AutoTrader, sells one service or product group (automotive). A horizontal marketplace such as Booking.com sells multiple services or product groups that are related to each other (accommodation, rental cars, airline tickets). 

All-in-one marketplaces like Amazon sell almost everything. Recent research by ecommerce shipping platform Sendcloud shows that Amazon (67%) and eBay (19%) are the most popular in the UK, with Amazon having a large lead. What makes marketplaces so popular?

 Consumers value the convenience of a wide range of products, a favourable price and speed of delivery. All of this goes hand in hand with reliability. A platform like Amazon that is well-known among customers and has won the trust of the market, has the customer right where he wants him. 

The chance that a consumer will return to an online platform where they have had a positive experience is high, especially when a marketplace exceeds in convenience, pricing and delivery. 

Convenience through a wide range of products

Partly due to the rise of marketplaces, consumers have become spoiled when it comes to supply and demand. The vast majority of UK consumers (81%) shop at a marketplace because of the convenience they offer and another 64% claim the competitive prices are important to them. 

Consumers like to have the luxury of choice and the ability to compare multiple products within seconds. This is exactly what marketplaces are good at: with the help of useful filters, consumers can compare products in the blink of an eye, and on top of that, most platforms have a helpful review section. 

Reviews from other customers can help make the right purchase decision, for example when a comment already warns the sizing of a dress is ‘too small’ or ‘too big’. 

Competitive price

Besides the fact that consumers like to be able to compare products of different brands in a matter of minutes, price also plays an essential role when shopping on marketplaces. Nobody wants to pay too much for a product. More than half of UK consumers (64%) therefore indicate they choose a marketplace over other e-commerce sites because of the competitive pricing they offer. 

Fast delivery 

Next to convenience and pricing, delivery is also among the top reasons for consumers to shop on marketplaces. Almost half of consumers (41%) refuse to order from marketplaces that do not offer fast delivery. This is quite a challenge for third party sellers using only one carrier, as every carrier has its own strength in terms of service and speed. 

Attracting new customers through a marketplace

All in all, marketplaces do a good job in attracting customers. It should therefore be a serious consideration for online retailers to start cross-selling via one or multiple marketplaces. 

Why? You can immediately reach a large audience and tap into a new market by reaching different target groups. 

Of course, it all depends on your product category and niche which marketplace suits you best, but by selling on an external platform you can enjoy many advantages: 

1. No start-up costs

To start as a third-party seller you don’t need a fancy website or big following on social media. All you need is a relevant product range so you can start selling. As a result, the start-up costs for selling on online marketplaces are very low and you don’t need to worry about investing time and money in the website itself. 

2. Tapping into new markets

Since marketplaces have conquered quite a big market share you will instantly get access to a big audience. In the UK alone, Amazon already has over 300 million visitors a month. As an online retailer, that’s something you can hardly achieve yourself. Partnering with big marketplaces can thus be an interesting move to quickly grow your client base. 

3. Low risk and highly scalable 

In most cases, you do not have to pay for products you offer but do not sell. Offering a (small or large) range via a marketplace is free, until the moment you have sold a product. Consequently, selling on marketplaces is very scalable. Only after selling you have to pay a commission fee. These costs consist of a fixed amount and a percentage of the selling price.

4. Brand awareness

Maybe the biggest advantage of selling on marketplaces, by joining a marketplace, 

you automatically benefit from the quality of the platform, brand recognition and high customer appreciation. All of these things ensure that customers are satisfied and come back more often. Which ultimately means more profit.  

 Finally, as an online retailer you must of course meet certain requirements in order to start selling via a marketplace. This way, the marketplace also has the assurance that the buying experience and quality they want to offer remains guaranteed. 

Of course, the exact conditions depend on each marketplace, so make sure you read up on them in advance. Offering products through the right marketplace offers a lot of new opportunities, potential growth and higher conversion for the company.

Rob van den Heuvel is CEO & co-founder of Sendcloud