We have heard this feedback from many of our first-time online retailers but the reality is that Amazon and Ebay solve the biggest problem for new entrants in the market: traffic. When you first launch your storefront, your direct traffic will be a small percentage of your overall traffic and it will take months to build up. Therefore your options are either to pay for traffic (via pay-per-click ads) or list your products in online marketplaces where hundreds of millions of customers already exist.
Why are Online Marketplaces more important than ever?
The Internet has revolutionized the way that customers discover and purchase products. Shoppers who were once satisfied with mainstream options and loyal to just a handful of retail brands are now seeking niche and differentiated alternatives that are harder to find and less well known. It is also easier than ever to start an online retail store in which you can list products from hundreds of niche brands or wholesale suppliers. But what the data shows is that an online store without a defined and multifaceted sales strategy will struggle to get discovered. What’s more, an online store without an online marketplace channel will never build a scalable and profitable brand to remain competitive in a dynamic and fast growing retail environment.
Many first-time online retailers believe that building a beautiful site, using Shopify or BigCommerce, will automatically lead to customer traffic and sales. Their thesis is “build it and they will come.” Others subscribe to the idea that becoming third-party sellers on Amazon and Ebay is only helping Amazon and Ebay and does nothing for their own retail store brand. But what these retailers may not realize is that it takes months, sometimes years, to generate significant direct traffic to your own store. And ultimately, what is most critical in the early stages is customer traffic and sales. So why not list your products where consumers already reside and are ready to make a purchase?
The stats in favor of Amazon are astonishing and should be noted. Internet Retailer cites that approximately 39% of U.S. online shoppers initiated product searches on Amazon in 2014’s third quarter, versus 11% through search engines (such as Google). That is nearly 80 million online shoppers in just three months, on Amazon Marketplace alone. Doesn’t the moral of this story seem obvious?
But wait, there’s more. You may think that most online retailers are “protecting” their brands and avoiding online marketplaces. I suppose you would be mistaken in that assumption as it has been reported that 90% of U.S. and U.K. independent online retailers are selling through online marketplaces, and these marketplace related sales account for over 25% of total online retail sales. In other words, if you are not thinking about the online marketplace as a sales and marketing channel for your business, you will be left behind by the competition.
Which online marketplace channels are worth my time?
Most online retailers are seeking to generate income while building a long-term, profitable brand with repeat customer interest. The online marketplace sales channel is a great way to attract your first customers and get new exposure for your retail store. But deciding which one is the best for you is contingent on many different factors, including your product categories and price points. While we advocate for participating in the marketplace economy, we also encourage you to examine the key factors and whether your products align with the kinds of products that perform well on the various online marketplaces.
As online retailers contemplate which online marketplace is best for their products and price point, the most obvious options that may come to mind are Amazon, Ebay, and Rakuten. If you want a step by step on how to best sell products on Amazon, check out BigCommerce’s comprehensive guide here.
And although these are some of the top performing venues for marketplace commerce, there are dozens others that may better align with your product niche, target customer, and price points.