Many retailers have a mixed relationship with marketplaces, as they can provide access to larger markets, but also come with their own downsides and restrictions. Marketplaces are online sites which allow customers to browse a selection of products from different brands all in one place, then order them within the same basket. The most popular marketplaces include Amazon, Zalando, bol.com, eBay, AliExpress and Etsy. But what can marketplaces offer retailers, and are they worth investing in? In this article, we take a look at three of the benefits that marketplaces provide, and three of the drawbacks which are worth considering.
1. The ability to shift stock that just isn’t selling
When selling on a marketplace, one of the benefits is the new customers it provides. With a different audience for your products, marketplaces often provide a platform from items which haven’t previously sold, such as old stock or items that have been discontinued.
2. Increased opportunity for traffic, and brand exposure
With marketplace giants receiving millions of visitors in traffic each day, there are plenty of opportunities to increase your brand awareness, and get new customers buying from you. The exposure these marketplaces provide can be enormous, and the benefits include the fact that these shoppers might then move to buying directly from your website, where you’re in control, and receive the revenue directly.
3. Outsourcing logistics and administration
When moving products onto marketplaces, you might lose control of certain elements, but this can also be a relief when it comes to logistics and administration. Certain aspects of the product journey will be controlled by the marketplaces, meaning you then don’t need to worry about these elements internally. What exactly is no longer your responsibility can depend on the marketplace, but it often includes warehouse storage, and shipping logistics.
1. Marketplace fees
Perhaps the most obvious downside of using marketplaces, is the fees that come with it. Retailers are no longer able to keep costs to a minimum, by buying and selling their stock directly, but instead, they must pay fees for marketplaces to manage and sell their stock. Some of this will cover the aforementioned warehouse and shipping logistics.
2. Loss of control of customer service and data
When shifting to marketplaces, retailers lose control of their customer service, and direct contact with shoppers and their data. For example, many might find that they can’t see what’s happening to their products on the other side of their journey, or that they aren’t allowed to access data about the shipping and selling of their stock. This can cause problems when attempting to further develop business strategy.
3. Products may become lost in a crowd
There’s two sides to every coin, and whilst marketplaces are a great way to get rid of old stock, they also present the challenge of a far larger pool of competitors. With a far larger amount of stock for shoppers to browse through, it can become difficult for your product to gain traction and get noticed.
In conclusion, it’s difficult for retailers to know whether the benefits outweigh the risk of marketplaces, as they often have a love-hate relationship with them. However, it’s essential that they are considered within strategy, as they are only continuing to grow, so retailers won’t want to be left behind or miss out. Delivery management software can help integrate your business with a marketplace, smoothing over the transition. Specifically, our Webshipper solution has an integration to Amazon. Read more about this here. Have you considered marketplaces in your strategy?