You've decided to take your retail business online.
But before you can forge ahead with your plans, you have a significant decision to make: do you host your own online store, or use eBay or another established marketplace?
The choice you make here can have a significant impact on your brand, sales strategy and overall direction of your business - no pressure!
Marketplaces are third-party sites where sellers list individual items. Buyers search marketplaces for their desired products and are shown results from all sellers meeting their criteria.
The most popular marketplace in the UK is eBay. Other marketplaces include:
- Etsy (craft and gift focused)
- Amazon Marketplace
- Not On the High Street (curated, craft and gift focused)
- Alibaba (Asia-focused, B2B)
- ASOS Marketplace (fashion boutiques)
There are also hundreds of other smaller marketplaces, most of which serve a specific sector.
Marketplaces usually have fees associated with listing individual items and processing each transaction. You’ll also have to pay PayPal fees or similar.
The main alternative to selling at a marketplace is to manage a store on your own website.
This means you’ll need to create your own online shop - but you can use ‘off-the-shelf’ solutions like Shopify, Squarespace, or Wix. Depending on the platform you choose, you’ll also need to consider the cost of hosting, an SSL certificate (for security purposes), and payment gateways.
Most small businesses opt for templates and ready-made options instead of trying to build their own store from scratch. These templates have monthly fees attached on top of what you normally pay for your website.
eBay and Other Marketplaces
Marketplaces like eBay can be lucrative platforms for retailers looking to boost their sales online.
Their chief benefit is their massive user base. Millions of people browse eBay, Amazon and other marketplaces every day in the UK alone. Regardless of how niche your market is, chances are you’ll find some potential customers amongst this huge pool of potential users.
Another major upside of selling via a marketplace is that you don’t need to worry about design, SEO, or any technicalities. All you need to do is create and manage your listings, fulfil your orders, and the marketplace should take care of the rest. This drastically reduces the time and energy you have to spend keeping the e-commerce side of your business ticking over.
Most businesses also find that marketplaces tend to be more affordable up front (of course, this depends on the fee structure of individual marketplaces), as fees tend to be charged per item or transaction, instead of requiring significant investment before a single product is even sold.
Marketplace sellers also benefit from the communities associated with their chosen platform. There are endless forums (official and unofficial) and Facebook groups dedicated to sellers on eBay, Amazon Marketplace and beyond. You can draw on the combined experience of the sellers on these communities to help improve your offerings and resolve any issues you have with the platform.
Finally, sellers gain from the trust and authority of their chosen marketplace. Buyers prefer to do business with brands they trust (most marketplaces let buyers rate sellers), using platforms that they believe to be secure. eBay and Amazon, despite their flaws, are household brands - customers know there’ll be a support team on hand to help them out if something goes wrong.
Overall, small businesses benefit from marketplaces in the following ways:
- Size: millions of potential customers, brand authority, and associated communities.
- Usability: no need to worry about coding or web design.
Your Own Online Store
There are many ways to add a shop to your website. These can be as simple as using a plugin that previews eBay or Amazon listings, or involve building an entire online store from scratch. Most businesses opt for somewhere in the middle, using Shopify, Squarespace or Wix to do most of the hard work for them.
Assuming you go for this approach, you eliminate many of the technical hurdles associated with hosting your own store.
And you retain near-full control over design, structure and layout, as many of these platforms provide endless customisation options.
Fees for individual transactions will also be lower - although this depends on the platform you choose to use.
But perhaps the biggest benefit of having your own online shop is that your products aren’t placed directly next to those of your competitor. There’s no competition to worry about once customers have found their way to your site. This is especially significant if you are unable to compete on price with other marketplace sellers - you can instead focus on differentiating your brand and products in other ways.
You also gain a significant amount of credibility as a business if you’re able to run your webstore efficiently - as long as your design, product photography, and the overall user experience are up to scratch.
Finally, you’ll gain access to plenty of data on visitor habits, helping you improve your site for future customers.
To sum up: running your own online shop isn’t as complicated as it once was. Today’s templates, plugins and ecommerce platforms can give you significant control over all aspects of your store, without needing to worry about the code behind it.
Other top benefits include:
- No on-site competition
- Professional credibility
- Reduced need to compete on price
This is a difficult one. There’s no way we can say that one type of online store is better than every other - it all depends on your circumstances. Ideally, your long term aim should be to have your own online store so that you have full control over the shopping experience and plenty of data on customers’ buying habits.
But when you’re just starting up, there’s no replacement for the massive audiences of the big marketplaces. If your margins aren’t completely obliterated by PayPal fees, you may well find that the huge market you have access to is worth the price.
Your decision will also depend on the products you sell and the market you’re trying to appeal to. For example, if you don’t have a large following (and don’t want to spend too much time and money growing it), a marketplace puts you on a level playing field (almost). A marketplace is also a good choice if you either sell unique products, or can compete on price.
On the other hand, if you have an established brand and compete on aspects other than price, a marketplace isn’t a good fit.
We’d like to hear from you: did you have to make this decision? What did you go for and why? Leave us a comment below!