
Sep 04 2023
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Benefits & Risks Of Selling On Online Marketplaces
In today’s rapidly evolving digital landscape, online marketplaces have become a cornerstone for startups and small business owners aiming to expand their reach and boost sales. In the early days of your online store you might be wondering why your online store is not attracting traffic so you may look to online marketplaces.
With platforms like Amazon, eBay, and Etsy offering precedented access to a global customer base, business owners find themselves faced with both enticing opportunities but also need to consider the downsides.
In this article, I’ll dive into the risks and benefits of selling on online marketplaces, helping you make informed decisions about whether these platforms are the right fit for your business.

Advantages of Selling on Online Marketplaces:
- You Don’t Need A Website: Platforms like Ebay and Etsy will allow you to start selling your products on their platform without the need for a website yourself. It allows you to dip your toe into the ecommerce world without the risk and expensive of purchasing a domain name, hosting, potentially paying a web designer and worrying about not appearing in SERPS (search engine results pages).
- Wider Audience Reach: The larger online marketplaces provide access to millions of potential customers, allowing startups and small businesses to tap into markets that would have been otherwise difficult to penetrate. If the platform regulations allow, an easy win is to include your branded invoices, discounts off next purchases with links to your own store if you have one. You want that customer to return to you rather than the marketplace.
- Established Infrastructure: These platforms offer a ready-made infrastructure, sparing sellers from the need to build a website from scratch. This saves time and resources, allowing businesses to focus on their products and customer service. Their top-level infrastructure generally means their site is rarely (if ever) down, is usually fast & utilising a lot of industry leading website features.
- Trust and Credibility: Established marketplaces come with built-in trust and credibility, which can be particularly advantageous for newer businesses. Shoppers are more likely to buy from well-known platforms due to their reputation for secure transactions.
- SEO Benefits: Marketplace listings often rank well in search engine results, potentially increasing the visibility of your products and brand beyond the marketplace itself. Working on SEO if you’re just starting a website can be a laborious task, often leaving you wondering if you’re doing it correctly if you’re new to it.
- Logistical Support: Many online marketplaces offer fulfilment services, handling storage, packaging, and shipping on behalf of sellers. This can significantly ease the logistical burden on startups and small businesses.
Disadvantages of Selling on Online Marketplaces:
- Intense Competition: The same accessibility that attracts businesses to online marketplaces also draws in countless competitors. Standing out among the crowd can be challenging, especially in saturated markets. You need to try and differentiate your proposition from the established competition on the platform or get into a pricing war.
- Limited Brand Control: Selling on marketplaces means adhering to their rules and guidelines, which might limit your ability to fully showcase your brand identity through customizations. Multi brand retailers may find that some of their brands have restrictions on what platforms they would like to be visible on. Throughout the last few years, I have found that less and less established brand are wanting to be listed on the likes of Ebay and Amazon as they feel like it cheapens their brand.
- Fees and Commissions: Online marketplaces typically charge fees and commissions for each sale. While these fees contribute to the platform’s services, they can eat into your profit margins. Amazon have a pricing calculator but you may be better reading an article from Jungle Scout which informs you of the true cost of selling on Amazon in 2023 -> https://www.junglescout.com/blog/amazon-fba-fees/
- Dependency on the Platform: Relying solely on a third-party platform puts your business at the mercy of their policies and decisions. Changes in algorithms, policies, or even account suspension can impact your sales overnight. For example I’ve been in situations where a 3rd party technical integration between a website and an online platform has gone down, products stopped syncing and ended up overselling products, thus affecting your seller rating.
- Lack of Customer Relationship: When selling on a marketplace, customer data and relationships are often controlled by the platform, limiting your ability to establish direct communication and loyalty. Some third party platforms like Farfetch, a fashion platform, completely control the interaction with the customer whilst selling your products. You use their packaging, they handle the customer emails and therefore the customer ultimately comes back to them increasing their market share and return customer rate.

Choosing the Right Online Marketplace:
- Research and Analysis: Carefully evaluate different online marketplaces to determine which aligns with your target audience, product category, and business goals. Be careful to check all of the terms and conditions; fees for missing items, return windows, overall costs involved, compensation levels for missing items etc.
- Niche vs. General Platforms: Consider whether a niche marketplace (like Etsy for handmade goods) or a more general platform (like Amazon) is better suited for your products. Many different retailers have a different pool of third party platforms to work with but you need to do your research and investigate the costs involved with integrating your website or whether you’re able to list from scratch if you don’t have a site.
- Services Offered: Look into additional services provided by the platform, such as fulfillment, advertising, and analytics tools, which can impact your overall selling experience.
- Fee Structure: Understand the fee structure of each platform, including listing fees, transaction fees, and any other costs associated with selling.
- Brand Identity: Assess how much control you’ll have over branding and customization, as this can impact your ability to establish a unique brand presence.
Online marketplaces offer startups and small businesses an avenue for rapid growth and exposure. However, it’s essential to weigh the advantages against the disadvantages and make an informed decision based on your business’s unique needs and circumstances. By understanding the risks and benefits, you can navigate the dynamic world of online marketplaces and position your business for success in the digital realm.
Not Sure Where To Start With Online Marketplaces?
I have spent years working with online marketplaces in various capacities. Listing to them as a standalone business, integrating to them to websites via third party modules and writing XML / CSV product feeds. I have the experience to get you started and give you advice on what channels might be good for you.
Through my years in the ecommerce industry, I have the knowledge to know which platforms are beneficial, their ease of use and how to integrate with platforms via product feeds or modules.
Contact me to discuss your project