Online Marketplaces Becoming a Platform for eCommerce Growth
Selling on third-party marketplaces such as Amazon and eBay can be a platform for growth for many online retailers. These online marketplaces enable merchants to piggyback on the sheer size of the audience that regularly visit these websites, with traffic in the hundreds of millions of visitors for both Amazon and eBay. These online marketplaces also lend an air of credibility to a brand that customers may not have heard of before. To put the numbers in perspective, there are more than 170 million active Amazon accounts worldwide, while 116 million customers are buying items from eBay.
Amazon’s total sales numbers are growing at double the rate of overall eCommerce, with Amazon Prime subscribers spending more than $1,224 a year on average. Moreover, neither site has shown any signs of slowing down.
An infographic from Channel Advisor found that 68 percent of retailers expect online marketplaces like Amazon and eBay to continue to grow, while 71 percent anticipate the revenue of these sales avenues to increase as well. Additionally, 63 percent of retailers on the Internet Retailer Second 500 Guide sell on one or more marketplaces. The message for merchants here should be clear: not only is the popularity of an online marketplace growing, competitors are also using these online marketplaces to broaden their target audiences and increase online sales from new customers.
An online marketplace is particularly useful for retailers trying to expand the scope of their eCommerce operations and reach customers in different countries. Cross-border trade is expected to account for 20 percent of eCommerce sales by 2017, with markets outside of North American and Western Europe growing even faster than more conventional markets. In that regard, third-party marketplaces allow retailers to tap into new regions without having to invest substantially in expansion.
Making use of all the tools in the shed
A retailer doesn’t have to choose just one online marketplace to sell on. Amazon and eBay are typical starting points for retailers, but marketplaces such as NewEgg, Sears and Rakuten(Buy.com) can expose retailers to smaller niche markets. Once companies have established themselves as premier merchants, they may even want to consider starting their own online marketplace. Starting an online marketplace lets a retailer expose more products to a broader audience without having to stock additional inventory, which opens up a whole new revenue stream.
Managing multiple marketplaces
One of the core challenges of running multiple marketplaces (on top of an independent one, if that is indeed the case), is simply managing all of these different storefronts. Inventory can move quickly, and merchants must stay on top of orders, getting purchases to customers and managing stock levels across platforms in a timely fashion.
This often requires a dedicated team or software that consolidates inventory data into a single back-end solution from every online marketplace to ensure inventory levels are up to date and orders are fulfilled accordingly. Retailers looking to make better use of marketplaces may want to consider investing in eCommerce software that will help automate and streamline as much of their operations as possible, as well as facilitating the ease in which they can list their products to more than one storefront.