3rd party sales channels such as marketplaces are part of a well organised e-commerce strategy. Combined with other sales channels such as a webstore, price comparison engines and shop aggregators, they can quickly leverage visibility for your brand by generating sales for top selling and niche products. In this article we will review the basic incentives to sell via e-commerce marketplaces so you can compile key reasons why to list products on marketplaces.
#1 Address millions of customers
Amazon.com (only): 175 millions unique visitors/ month as of March 2015
Ebay.com (only): 122 millions unique visitors/ month as of March 2015
Another 355 millions unique visitors/ month as of March 2015 for Wal-mart, Apple, Target, Best Buy, Home Depot, Kohl’s, Etsy & Macy’s
Amazon.co.uk (only): 27 millions unique visitors/ month as of March 2014
Amazon.de (only): estimated about 35 millions unique visitors/ month
Ebay.co.uk (only): 27 millions unique visitors/ month as of March 2014
Amazon.fr (only): 20 millions unique visitors/ month as of Q4 2014
Cdiscount (Casino Group): 13 millions unique visitors/ month as of as of Q4 2014
Tmall.com: 14 000 millions unique visitors/ month (source)
Lazada.com.my 51 millions unique visitors/ month (source)
#2 International e-commerce legislation made easy
Selling in a new location most likely comes with new obligations. Those obligations are most likely toward:
- company registration
- Tax registration
- business authorization
- complying with consumer laws in terms of cancellation period and disclaimers, especially while selling on edge categories
#3 Payment and delivery methods tailored for locals
Getting paid might also be a challenge while expanding your business:
- Registering a bank account in the appropriate currency of the country
- Set up popular payment methods
- Get paid! Yes, there are areas where cash on delivery is the king – source
Fortunately, most marketplaces will arrange payments for their sellers and disburse the funds with a 7 to 14 days delay on average.
This is where Marketplaces make it easy for you international retailers to comply with most important legal requirements. They offer tools such as pre-defined compliant seller conditions, local payment methods, etc. If you want to know more about legal requirements for a specific marketplace, get in touch.
#4 Low commission rates on Marketplaces
The seller side fees for selling online on a marketplace are usually composed of:
- A monthly subscription
- A percentage on sales usually from 5% to 25%. Yes 25% commission from Amazon.co.uk on Jewelry items. You should consider this as an exception and target an average of 12% commission rates depending of the mix of marketplaces you are using.
From my experience, most retailers state that e-commerce marketplace commissions are “too high”.
So let’s analyze what you pay for:
- e-commerce platform with hosting,
- 24/7 full responsive maintenance,
- order management including tracking link sent to final customers,
- first contact point for customers,
- SEO optimisation with high budget paid SEO,
- local payment methods,
- compliance with the legal requirements,
- for the best players: A/B testing and constant
I would consider that the total is above 15% for most small players and might get to 10% for larger players. So, I would rather consider that commissions on e-commerce marketplaces are a bargain. How to overcome the last percents?
- Increase your pricing as part of your international brand strategy,
- Increase your pricing since some marketplace do not / stopped enforcing price parity (source),
- Increase margin on shipping
- Use affiliate systems to complete your webstore’s selection
Using an e-commerce integrator may help retailers benefit from an extended rebate on monthly subscription. Contact me for more info.
#5 Address unique customers
Different websites have different audience. Same applies to marketplaces.
Priceminister in France is for example historically directed to young audience 18yo to 25yo (source).
Amazon historically has build a strong customer loyalty (source).
#6 Controversial: Redirect traffic to your website
Some marketplaces are doing precenting redirections of customers to a webstore. Most common terms are:
- preventing sellers from adding commercial advertisement in the package
“You would need Amazon’s okay to include promotional material in the package.” source
- Passing anonymised emails
If redirecting traffic to your web store is key to your business, there are some creative ways to achieve it:
- Adding a visit card or rebate code in the parcel for eBay customers or customers of marketplaces allowing this,
- sending postcards to marketplace customers to remind them abut your products for holiday seasons,
- “One of the simplest options for making sure that buyers know your site exists is to add a component to the product or service you’re selling that can only be accessed on your site.” suggested by Thursday Bram noticed in her article “Use e-commerce marketplaces to drive traffic to your online store“.
Sell via e-commerce marketplaces
Marketplaces are a must for e-tailers to grab sales fast. Most marketplace customers wouldn’t buy from their webstore in a short timeframe wether due to:
- delay to position a web store for SEO on a new region
- legal requirements
- compliance with customer expectations
- high marketing budget requirement
- specificity of target
So what are the next marketplaces to receive your inventory?
I would recommend Amazon if your target is Germany, UK or Italy (source). Depending of your product category, you might have to run a more extensive business research, let me know your findings in the comments and I will be in touch.