What is an online marketplace? The pros and cons for ecommerce sellers

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Discover the definition of an online marketplace, examples, and reasons to use one for dropshipping.

What is an online marketplace?

An online marketplace, sometimes known as an electronic marketplace, is an ecommerce site. It is defined by two criteria:

  • A wide variety of products available to purchase
  • There are third-party sellers

Forbes defines an online marketplace as "​​a website or app that facilitates shopping from many different sources. The operator of the marketplace does not own any inventory, their business is to present other people’s inventory to a user and facilitate a transaction." However, it should be noted that operators of a marketplace sometimes have their own brand and inventory, as is the case with Amazon.

B2B online marketplace

A business-to-business (B2B) marketplace is an online platform for businesses to sell products to other businesses. For example, Alibaba.

B2C online marketplace

This type of business-to-consumer (B2C) website allows customers to browse a large number of products from many different sellers. For example, ASOS. Since B2C is the most common market for dropshippers, this article will focus on B2C online marketplaces.

Benefits of selling on an online marketplace

Using an online marketplace is a strategy used by dropshippers and retailers. These are the main advantages:

1. Get noticed by thousands of customers: Popular marketplaces have millions of visitors per month. By riding on the back of the big-budget marketing campaigns of well-known online marketplaces, you quickly get your brand noticed.

2. Easily access a local market: Global marketplaces such as Amazon have local websites with a large audience. Or, choose to sell on a country-specific online marketplace, for example, Allegro in Poland.

3. Cross-border dropshipping: To access multiple markets, online marketplaces make it easy for customers to find your business. For example, OTTO is popular in Germany and the Netherlands.

4. Optional order fulfilment: Warehousing, packing, and delivery can be organised by many online marketplaces. For example, ManoMano.

5. High customer trust and loyalty: Big online marketplaces have built their reputation over years of marketing and investment into their website. By selling on these websites, customers will place more trust in your business.

6. No cost to set up a website: Save money on building an ecommerce website, SEO, and marketing.

7. Business support: Many online marketplaces will offer personalised sales and strategy advice to help you sell.

The disadvantages of selling on an online marketplace

Consider the downsides of using an online marketplace before committing to this sales technique.

1. Competition: Online marketplaces have thousands of products and sellers. This high competition means that you should carefully research your competitors and their prices.

2. Strict rules for selling: Seller protocols and regulations are often in place to reduce the sale of fraudulent goods and protect customers. If these rules are broken, your selling account could be suspended.

3. No help centre: Some online marketplaces, such as ManoMano, don't have a help centre to troubleshoot problems.

4. High commissions: There is a price to pay for immediate access to a huge consumer audience. Marketplaces charge commissions on every sale with fees that vary from site to site.

5. Payment delays: Some marketplaces might take a few days for the payments to get to the seller after orders are made.

Examples of online marketplaces

Different online marketplaces exist in different countries. Globally popular marketplaces include eBay, Amazon, Etsy, and AliExpress. However, there are online marketplaces that only exist in one country or region. See specific information per country:

🇦🇺 Australia: 7 most-visited online marketplaces (2023)

🇦🇹 Austria: 4 most popular online marketplaces (2023)

🇫🇷 France: 10 most popular online marketplaces (2023)

🇩🇪 Germany: 8 popular online marketplaces (2023)

🇮🇹 Italy: 7 most-visited online marketplaces (2023)

🇳🇱 The Netherlands: 11 most popular online marketplaces (2023)

🇵🇹 Portugal: 8 most-visited online marketplaces (2023)

🇪🇸 Spain: 9 most popular online marketplaces (2023)

🇦🇪 The UAE: 16 most popular ecommerce stores (2023)

🇬🇧 The UK: 7 most popular marketplaces (2023)

How to sell on an online marketplace

Step 1: Check you fit the requirements

Each online marketplace has its own set of requirements for sellers. This can include whether you can offer a high level of customer service, your response time to customer requests, delivery time, quality of goods and whether your products fit their niche.

Step 2: Create an account

Visit the seller page of the online marketplace to sign up as a seller. Upload your business details, and add your value-added tax (VAT) or goods and services tax (GST) code if required. Some platforms, such as Bol.com, review businesses before allowing them to register an account. In this case, you might need to complete a short questionnaire.

Step 3: List your products

Once you have passed the review stage, you can create product pages to sell your goods. Most online marketplaces are similar in this step. Create a page for each product with the price, features, benefits, size, shipping information, and photos.

To summarise

Online marketplaces are growing bigger and more popular every year. In the third quarter of 2023, the king of online marketplaces, Amazon, earned USD 143 billion, according to Statista. Fellow rival, eBay, earned USD 2.5 billion in quarterly net sales revenue, and Etsy earned USD 13.3 billion.

The impressive sales figures prove that consumers trust online marketplaces, they enjoy the buying journey, and they find value in these platforms for finding and comparing products.

Dropshipping on an online marketplace is a strategy to consider as an alternative to investing in a top-performing ecommerce website and digital advertising campaign.

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