This is a guest blog written in collaboration with SPS Commerce. SPS specializes in EDI services and software. Learn more about our partnership here.
You’ve decided you want to start selling in an ecommerce marketplace — good for you! Online marketplaces like Amazon, eBay, Newegg, Walmart Marketplace, and countless others offer businesses an avenue to reach customers like never before. Consider this: the B2B (business-to-business) ecommerce market is estimated to be worth $6.7 trillion by 2020, and retail ecommerce profits are expected to grow to $4.48 trillion in 2021. Customers are online — and savvy businesses are too.
After you’ve carefully considered the benefits, risks, costs, and other variables related to selling on a marketplace, you’re ready to get started.
Choosing a marketplace.
The most decisive factor in choosing a marketplace is pretty straightforward — your products. You want to choose a marketplace that fits your product best and provides access to where your customers are already shopping.
While Amazon is often the first name that comes to mind when people hear “ecommerce,” the online giant may not necessarily be the best fit for your products, your business, and your ideal customers. For example, if you’re selling unique, small-batch handmade items, Etsy is probably the way to go. Conversely, if you’re reselling computer parts or other techy hardware, you might want to look into Newegg.
While you’re probably already aware of this, be sure to keep in mind that marketplaces have different recurring fees. You’ll definitely want to devote time and energy to researching the different marketplaces that are out there before committing to and paying for one.
To get you started, here are some quick descriptions of well-known online marketplaces:
- Amazon: The disruptive ecommerce marketplace that sells everything from food to jewelry to furniture to books to clothing to hardware — you get the idea. Known for its Prime two-day shipping (and same-day shipping in some cities), many credit Amazon with changing the ecommerce game.
- Etsy: Focused on handmade or vintage items in small batches from “independent makers,” Etsy is a go-to for creative people looking to take their craft to a larger customer audience.
- Walmart Marketplace: The retail giant first ventured into the ecommerce marketplace world a few years ago, but recently made a bigger push for their platform. Sellers can list any product that fits into Walmart’s product categories, aside from certain restricted items and brands.
- Jet: Walmart acquired online marketplace Jet in 2016, though the online marketplace still maintains its own unique identity. While Jet was created to rival Amazon’s wide catalog, the store appears to mainly focus on items related to home and family.
- Newegg: A more specialized marketplace, focused on new and used computer hardware and electronics.
- Bonanza: Offering both an online marketplace and customizable ecommerce stores, Bonanza is described a “seller-friendly” platform. Sellers can also list a wide variety of products including video games, pet supplies, consumer electronics, clothing, and even “experiences.”
- eBay: Known primarily for its consumer-to-consumer sales, eBay facilitates B2C and C2C ecommerce sales of a wide span of products. Around since 1995, the ecommerce site holds “auction-style” as well as “buy it now” sales.
- Alibaba: A multinational ecommerce (and much more) giant, Alibaba facilitates C2C, B2C, and B2B sales. Sellers can list the typical wide variety of consumer products, as well as larger wholesale-type items such as auto parts and machinery.
Examining your technology situation.
Simply put, selling online (and on an ecommerce marketplace, no less) will be a giant headache if your technology isn’t up to the task. Hopefully, you’ve already assessed your tech and come to the conclusion that your systems are ready to handle this new sales channel. But, if you’re using workarounds and stuck in slow legacy systems, you may want to take a step back from marketplaces for now.
Additionally, if you plan on selling on a marketplace, you’ll need to have some form of EDI (electronic data interchange) implemented in your business. If you don’t currently have EDI, you may want to hold off on selling — however, that doesn’t mean give up. If you’re committed to getting your products on a marketplace, now could be a great time to implement EDI. Learn more about when to get started with EDI here. Even if you already are using EDI, you may want to up your game by integrating frequently-used documents.
Your current software and tech systems also affect another important factor in starting off your marketplace endeavor — your inventory management.
Taking stock of your inventory management.
Your software and inventory management go hand-in-hand, so you’ll also want to examine your inventory processes before launching your marketplace endeavor.
Smart segmentation, utilizing carts and picking bins, an easy-to-use barcoding solution, and more can have a huge impact on your inventory efficiency. Speed, accuracy, and efficiency are extremely important when attempting to meet the sometimes rigid requirements of online marketplaces. Additionally, prepping your inventory management for online sales will make for more and happier customers, as well as sane warehouse employees and customers service reps.
Deciding on a shipping/fulfillment strategy.
Depending on the marketplace you choose, you have the option to fulfill orders yourself or outsource this to the marketplace fulfillment center. There are typically pros and cons associated with both. Whether or not you use your marketplace’s fulfillment option depends on the size of your products, your warehouse location, your customers’ locations, and your staffing capabilities.
If you decide to fulfill orders yourself (or if your marketplace doesn’t offer fulfillment), you’ll need to learn to play by marketplace rules. Sellers on marketplaces can get slapped with penalties for delivering late (and don’t even think about delivering the wrong item). On top of penalties from your marketplace, you could also rack up negative reviews from customers if there’s a delay in delivery. In today’s customer-centric online world, customer reviews can spell life or death for a product and business.
Integrating your online marketplace presence into your overall business strategy.Finally, remember that your online marketplace presence isn’t a simple add-on to your business — it should be considered a key part of your omnichannel strategy. Don’t be caught off guard by demand from your marketplace presence — be sure to forecast demand and track sales (this is where smart software comes in handy).
There are a couple best practices to also keep in mind when starting out on a marketplace:
- Be sure you don’t neglect customer service on the online side. Show your customers you’re grateful for their business and be prompt when replying to inquiries.
- Like any ecommerce strategy, be descriptive with your product listings and make obtaining and displaying good photos a must.
- Clearly communicate what your marketplace customers can expect — better to underpromise and overdeliver.
Are you currently selling on a marketplace? What were some of your struggles when starting out? We want your feedback in the comments section.