According to Digital Commerce 360’s analysis, global online marketplaces sold over $2 trillion in 2019, accounting for 57% of global eCommerce sales. Just think of it—more than half of all web sales is generated by marketplaces.
People prefer marketplace to traditional eCommerce shops these days. The reasons are obvious: larger product range and lower prices. Also, customer service is usually better on marketplaces as the platform acts as a middleman between the seller and the buyer and guarantees a fair deal.
So, today small businesses tend to go online through marketplaces, not through their own online shops to sell worldwide. There are a number of advantages in selling online in an eCommerce marketplace but there are also some concerns for small businesses. Commissions and fees for selling on a platform often turn small entrepreneurs away from signing up for a vendor account on a multi-vendor marketplace. But there’s no way to do business on marketplaces for free. There are always commissions and fees. Some marketplace can offer free listing but that’s it.
But not all the marketplaces are the same. There are dozens of them, and all of them have different conditions for small businesses, advantages and disadvantages like free listings, or free transactions. In this article, we’ll walk you through the largest and most popular global online marketplaces that you can use as your platform to sell goods.
- What’s an Online Marketplace?
- Is It Better to Sell on a Marketplace or Build Your Own eCommerce Store?
- Why Sell on eCommerce Marketplaces?
What’s an Online Marketplace?
An online marketplace is an eCommerce sales platform with multiple independent sellers. Sellers sign up for a vendor account on the platform (usually for free) and get their own eCommerce space for sales. For each sale, they pay a commission to the marketplace. Some marketplaces also take a fixed monthly fee from vendors so that they could sell on the platform.
Once registered, every sellers gets their own micro-store that looks just like a standalone eCommerce website—with the seller’s catalog, search, category tree, and looks. The micro-store can be a free or paid option. You might have seen this kind of micro-store on Aliexpress.
On an online multi-vendor marketplace, sellers process orders and ship goods by themselves. But sometimes a marketplace collects goods from the sellers and delivers them to customers via the marketplace’s own delivery service. This option can also be free or paid.
If any problem or conflict between a seller and a customers arises, the marketplaces acts as a middleman in all the disputes. And often a marketplace tends to resolve disputes in favor of the customer. This is one of the reasons why online shoppers prefer to buy products online on marketplaces.
It’s a common practice that a marketplace keeps the money a customer paid for the order until the customers receives the order. Once a customer confirms the receipt, the marketplace releases the money to the seller. Aliexpress works this way.
Regarding the technology, these multi-vendor sales platforms use special marketplace software. This software supports vendor administration and is tuned to work under high loads. Also, big marketplaces are hosted on powerful dedicated servers.
Is It Better to Sell on a Marketplace or Build Your Own eCommerce Store?
This is one of the most frequent questions small businesses ask themselves before going to sell online. There’s no single answer, really. What to do depends on the type and goals of a certain business.
Say, you produce and sell luxury jewelry. You have your special audience. Buyers who look for luxury jewelry online are usually ready to spend more on a quality product. And what they really want is to get a real product, made of luxury materials and with exceptional precision. They will definitely look for online boutiques and 100% they won’t go on Amazon for luxury things.
Pandora Greece—a traditional online shop of famous jewelry
In this case, it is better to create your own eCommerce website with a unique look and feel that matches your brand and the style of your jewelry. On your own website, you will be able to control prices, inventory, and effectively communicate with your precious customers and sell directly to them.
Now let’s imagine a business that sells machine tools to factories. Potentially, they could sell this kind of product on a consumer marketplace like eBay. But that would be super inconvenient and inefficient because eBay is a B2C website and machine tools are B2B products. To sell machine tools online, the company needs its own sales website with special functionality for B2B sales (and believe us, B2B eCommerce functionality differs a lot from B2C). Also, it is not likely that a factory manager will search for equipment on a B2C website like eBay or Amazon.
And now imagine that you sell smartphone accessories. These are pure B2C goods, mass ones we would say. Smartphone accessories are perfect goods for selling on consumer marketplaces. You can save a lot of money on eCommerce website development (it’s a costly venture). A micro-store on a large sales platform will be enough for your purposes.
So, before going online, think of your goods and the audience. Make sure the product fits the B2C marketplace, and your audience is ready to buy on global consumer marketplaces like Amazon, eBay, and Aliexpress.
Or… you may also consider starting your own marketplace. To do that, you’ll need a robust business plan and reliable marketplace software. But that’s a different story.
Why Sell on eCommerce Marketplaces?
It is true these days online shoppers prefer to make purchases online in virtual marketplaces. More than half of all online customers start the product search on Amazon. Just think: they do not search on Google, they go straight to Amazon.
Now open your browser and google for “buy electronics" or “buy fashion apparel". See the search results: there won’t be a single online shop—the whole search results page will be occupied by multi-seller marketplaces. Traditional online stores are disappearing, they are no more in demand. The only e-shops that still live and feel okay are super niche online stores, B2B shops, and luxury online boutiques. Mass consumer shops on marketplaces.
And there are three major reasons why customers now prefer to shop in online malls:
- A large product range. This is the main reason why shoppers go to Amazon and Aliexpress. Thanks to the multi-seller business model, these platforms don’t need to store goods in their own warehouses—all the goods are stored at the vendors’ side. An unlimited number of vendors can connect to the platform growing its product range. And customers are always sure they will find what they are looking for and the item will be available immediately for purchase. Try this experiment: think of some super crazy rare product and see if you can find it on Aliexpress. You will find it :-)
- Lower prices. A global online marketplace can have hundreds of thousands of sellers. Just imagine how strong the competition is. That’s why sellers have to play with their prices, offer bonuses and discounts to successfully compete with other vendors. It’s great for customers—they get the best prices and offerings.
- Great customers service, easy returns, and guarantees.A marketplace is like a middleman between a seller and a customer. The middleman is interested in sellers’ sales as well as in customers’ satisfaction. That’s why multi-vendor marketplaces often offer great buying terms with easy returns and refunds, and guarantee the quality of goods.
So, by extending your business online to marketplaces, you’re getting a new powerful sales channel: more customers, new audiences, and more sales. So, let’s see in what marketplaces you can successfully sell your products in 2021.
Amazon There’s no chance we don’t mention the largest marketplace in the world, whose founder recently went to space in his own spaceship. It’s the biggest eCommerce company in the world as well—Amazon generated $96.1 billion in revenue in the third quarter of 2020, a 37% increase from one year prior. Customers buy over 400 items every minute on Amazon. While we write this paragraph, Amazon has sold more than 1,000 items.
People love Amazon for its exceptional service, easy returns, best prices, and super fast delivery. In some regions, Amazon delivers orders on the same day through Amazon Prime. Also, people appreciate this multi-vendor eCommerce marketplace for its fake products policy—Amazon strictly controls its sellers, connects only reliable vendors and removes fake stuff without a delay. If you sell in the US, Amazon is the number one marketplace for you to start selling online because US customers love Amazon, and shop there constantly.
On Amazon, both individual sellers and companies can sell their stuff. There are two plans: one for individuals and the other for professional sellers. If you have a business and you’re extending it online, then the Professional plan is your best choice. It costs $39.99 per month, plus some extra fees for selling like commissions. With this plan, you can sell more than 40 items per month, advertise your goods, qualify for top placement on product detail pages, use advanced selling tools, like APIs and reports, and sell items in restricted categories.
Amazon is the best choice to reach a larger US audience and global audience, too.
We bet you shopped on eBay at least once. Even if you are not an active online shopper, you heard about eBay. It’s the original eCommerce marketplace that started in 1995 (wow, I was 5 years old). Now, eBay is one of the largest multi-vendor eCommerce marketplaces worldwide with over 1.3 billion SKUs and over 180 million active users.
On this marketplace, you can buy literally anything. There are new items from companies and manufacturers as well as used items sold by individual sellers. Check this—there’s a product category on eBay that only sells weird stuff. And guess what—it’s called Weird Stuff :-D Inflatable pink kangaroo? There’s one! Yuri Gagarin soviet badge? You got it. Shrunken head car mirror? Sure, take two. A bottle of air? Lots of them.
If you choose to go with eBay, take their fees into consideration. It’s pretty costly to sell on eBay but the exposure you get is really big. eBay takes a fee for listing a product and an additional fee for listing the same product in one more category. The platform also charges a final value fee (10%–12%), calculated as a percentage of the total amount of the sale, including any shipping and handling charges.
If you want to reach global online buyers, eBay is a better choice than Amazon. eBay has a massive audience in the United States, too.
If you want to go global with the focus on Asia, Russia, and South America, then Aliexpress is your best choice. This is a B2C marketplace by Alibaba Group, the biggest eCommerce company in Asia. Aliexpress started in 2010 and now it works in 230 countries and has 20 million daily active users.
On Aliexpress vendors sell to both individual customers and to businesses. But the marketplace focuses on B2C in the first place. Also, online stores worldwide connect to Aliexpress and use its dropshipping model.
The dropshipping model is super convenient for small businesses that don’t have their own warehouses or space to store goods. It works pretty simple: on your website, you offer goods from sellers on Aliexpress. Once a customer places an order, you send it to the seller on Aliexpress and the seller sends the order to the customer. But of course you can sign up for a seller account right on the platform and become a seller.
Aliexpress is very friendly to sellers in terms of fees. The platform takes between 5% and 8% of commission fees for each transaction, depending on your product category. No other extra and hidden fees.
Aliexpress works in over 230 countries with focus on Asia, South America, and Russia. But it is also present in other countries globally. So, it’s a great option to start selling worldwide without breaking the bank.
Etsy is the world’s most popular marketplace for handcrafted items. It started in 2015 and by 2021 it gained over 60 million buyers. Of course it’s not that big as eBay but it has a strong community and super loyal customers. Initially, Etsy was intended for individual artisans who sell their handcrafted items and vintage items. But as time went on, Etsy started to showcase maker-developed manufactured goods but only for select accounts.
Listing your product on Etsy will cost you $0.20 per 4 months. This means if a product hasn’t been sold within four months after you post it, the marketplace will charge you $0.20 again. The platform also takes a transaction fee of 5% of the display price, plus the amount you charge for shipping and gift wrapping.
Etsy is known for its super friendliness to new sellers. If you’ve never sold online or on marketplaces, you’ll be surprised how easy it is to set up your account and manage your sales on Etsy. The thing is that this platform is made for artisans, creative thinkers, and artists, not for technicians and experienced business people. The platform offers you a seller panel and a beautiful and easy to use storefront.
Etsy started a global wave of small niche marketplaces for handcrafted items. This kind of marketplaces pop up here and there all the time and that usually obtain a loyal community and become successful platforms for individual artisans.
So, if you’re going to sell handmade or vintage stuff, Etsy is the best place to do it with ease. And it is super affordable, too.
Flipkart is the leading online marketplace in India. It was founded in 2007 and now Flipkart holds the largest market share of Indian eCommerce. This is the main competitor of Amazon in India. And just like Amazon, Flipkart started as an online bookstore and then transformed into an large-scale all-in-one marketplace. Here, individuals and companies can sell electronics, books, fashion items, tools, grocery, and whatnot.
Flipkart belongs now to Walmart and is actively developing and expanding its product range. This platform has more than 167 million visits per month. So, if you plan to enter Indian eCommerce market, Flipkart is the best option.
A complicated fee structure can be one of the concerns about selling on Flipkart. The platform charges sellers a commission fee for every transaction that depends on a category and subcategory, plus shipping fee, collection fee, and a small fixed fee for every transaction on Flipkart.
As you can see, there’s no marketplace that is suitable for any product, market, and region. Some marketplaces focus on the United States only, some work globally but focus on a certain audience, some marketplace are good for entering Asian markets.
The best way to go online through marketplaces is to make research and create a pull of platforms that fit your business goals. And enter several marketplaces at once. See how it works, make corrections, leave marketplaces with the poorest performance and focus on stronger platforms that give you the most revenue.