A Guide to Online Marketplaces
Online advertising and marketing bring more business to your online store, but they get expensive fast. What if you could spread the word about your brand while selling more products in the process?
Online marketplaces offer the opportunity to do just that—showcasing your brand and merchandise on platforms that connect you with new and increasingly global audiences.
What are online marketplaces?
Regardless of their format or revenue model, online marketplaces typically offer:
A single platform used by multiple sellers.
Web hosting, transaction processing, and maintenance of the overall website interface. Depending on the platform, fulfillment services may also be on offer for additional fees.
While this definition covers the basics, these days the lines are blurring.
Search engine shopping destinations, like Google Shopping, display products from multiple sellers like a marketplace—but traditionally shoppers linked back to retailer sites to learn more and buy. For a more in-depth look at multichannel retailing, check out our guide.
Now Google is offering its own payment functionality, edging closer to a true marketplace.
Similarly, social networks have long featured product listings linked to eCommerce websites in paid advertising—but Facebook (see our guide on how to sell on Facebook Marketplace), Instagram, Pinterest, and even TikTok now support transactions within their environments, blending with marketplaces to create new social commerce platforms and experiences.
Why sell on an online marketplace?
Marketplaces are potentially beneficial for your business because:
People use online marketplaces. The convenience of conducting a single transaction for a wide selection of items from multiple sellers is appealing. Of the top eight most-visited online retail sites in 2020 by online monthly traffic, six were online marketplaces, generating 62% of eCommerce transactions worldwide.
The marketplace maintains the infrastructure. You get the use of an eCommerce site that has been developed and honed by someone else, enabling you to focus on your core business.
Online marketplaces have international exposure. Many of the world’s most popular marketplaces serve audiences abroad, giving you a headache-free way to gain exposure across borders. While Amazon is strong in multiple regions, there are also regional players such as Mercado Libre in Latin America and Rakuten in Japan.
Niche marketplaces attract targeted audiences. The explosion in online marketplaces means there are destinations for practically every type of niche interest, from high fashion to pet items to sustainable goods. If you find the right niche market, you can expose your products to many customers who are looking for what you have to sell.
Leading online marketplaces
While some of the best-known online selling sites are run by the biggest names in retail, others are unaffiliated with established brands. Among the top marketplace destinations:
Amazon. The majority of goods sold on Amazon are from marketplace sellers in a wide array of categories, from beauty to electronics. Amazon is both a seller and a platform—that is, items from third-party retailers are featured alongside products Amazon sells itself. Those who are interested in learning how to sell on Amazon can use Wix eCommerce’s native functionally to set up an Amazon shop.
Walmart Marketplace. Launched in 2009 (partially to compete with Amazon), Walmart’s marketplace now claims more than 100,000 sellers, helping fuel double-digit eCommerce growth for the retail giant since the pandemic. After their application is approved, marketplace sellers can offer goods alongside products that are sold in Walmart stores.
eBay. Originally known as an online auction site for individuals to sell their used goods, eBay is now a popular platform for brands, with the majority of items selling for a fixed price using the “Buy It Now” option. eBay boasts more than 152 million buyers, with roughly half based in the United States. Selling on eBay is included as a native sales channel within Wix eCommerce.
Wish. Wish is a mobile-first shopping destination featuring inexpensive products. Hundreds of thousands of merchants sell on Wish, reaching 950 million global consumers—43% of whom are under 35. Needless to say, Wish is a key channel for reaching younger shoppers.
Niche marketplaces
While the biggest online marketplaces offer robust platforms and mass audiences, it can be easy to get lost in the crowd—making more focused niche sites an attractive alternative. These destinations are popular with consumers, with 42% of them having bought from a niche marketplace in 2021. Among the top destinations:
Etsy. While Etsy sells a wide variety of merchandise—from 3D-printed knickknacks to colorful cloth face masks—the universal emphasis is on handcrafted items from small sellers. This gives it a niche appeal, despite having generated more than $330 million in quarterly sales at a scorching annual growth rate of 19%. Learn how to sell on Etsy.
Wayfair. Specializing in “home wares” from kitchen tools to bedding, Wayfair boasts more than 20 million customers and 12,000 suppliers. A careful seller selection process and thoughtful curation make Wayfair the top online destination for furniture in the United States.
Newegg. Since its launch in 2011, this tech-focused marketplace has grown to more than 40 million customers, who use the site to find electronics, entertainment media, games, and more.
ASOS. The British apparel retailer has expanded its offerings through a curated global marketplace featuring more than 800 independent designers and sellers of vintage items. It’s among the top fashion marketplaces in a crowded field.
Online marketplace trends
Marketplaces aren’t just beneficial because they introduce your brand to new audiences. They’re also important to retailers who want to stay agile in a constantly-shifting eCommerce environment. Here are some leading trends that dovetail with marketplace initiatives:
More variety, more agility. The top 100 marketplaces generated more than $2 trillion in sales in 2020—a number likely to get more marketplace operators to enter the fray. Sellers are already bullish, with 53% of brands saying that online marketplaces offer their best opportunity for growth. Marketplaces give merchants the ability to quickly realign with customers’ changing priorities, without significant overhead—a must-have heading into another year of uncertainty and changing conditions.
Cryptocurrency and new payment methods soar. In addition to credit cards and digital wallets, you should expect an increasing number of online marketplaces to allow payment in cryptocurrency, which is rising steeply in popularity. Paypal and other platforms already accept cryptocurrency, so if it’s a priority for your audience, partnering with a marketplace that enables payment in coins can help attract potential customers. Similarly, marketplaces may offer “buy now, pay later” and other payment options that might be cumbersome for you to offer individually.
When it comes to resale, consumers want authentication. Interest in buying resale goods is at an all-time high, with second-hand site thredUP estimating that purchases of second-hand goods will double by 2025. Marketplaces can help capitalize on this trend by providing an outlet for offering refurbished or returned merchandise at a discount, without eroding core brand pricing. At the same time, shoppers want their resale finds to be in good condition and authentic, requiring certification prior to resale. Online marketplaces have long grappled with issues surrounding counterfeiting, and newly minted standards can help bolster credibility.
Selecting the right online marketplace strategy
The options for selling on online marketplaces are nearly endless. But to maximize the benefits—both now and in the future—a sound marketplace strategy is a must. Here's a quick checklist to get you started.
01. Decide where you are going to sell
Existing and potential customers can help focus your marketplace selections. You can also scout competitor marketplace listings to get an idea of popular destinations in your product category.
02. Understand the tradeoffs for each marketplace
While marketplaces have much to offer, they bring their own challenges. Before formulating your product selection and pricing, be sure you understand:
Popularity vs. competition. The biggest online marketplaces attract many shoppers, but they also have many sellers on the platform. This means you may not automatically achieve more visibility, and may even need to undertake added expenses like paid listings to win new business.
Marketplace operator as ally vs. rival. Some online marketplaces not only stock items for sale, but they manufacture their own private-label goods, creating a potential conflict of interest with third-party sellers. Amazon has drawn criticism for copying marketplace best-sellers and offering the new products via private label. This makes owning and retaining your own eCommerce real estate, like a Wix online store, incredibly important.
New revenue vs. new customers. Marketplace operators typically “own” the data of customers buying through their platforms—so while you may gain visibility and income, you may not have the opportunity to establish customer relationships.
Base costs vs. add-ons. Marketplace fees vary for using the platform to list products: Amazon offers a monthly subscription option or a per-item fee charged up front, while Walmart charges a percentage of each sale. Other costs may accrue. Amazon’s algorithm prioritizes merchants using its fulfillment service, for example—meaning merchants must weigh those additional costs against the benefits of better visibility.
03. Pick products and set pricing
With your true costs in hand, you can select which products you’ll sell and at what cost. Established best-sellers (products that align with popular categories) and unique gifts or sets are among the items to consider; the goal is to present offerings that are unique, without being so unusual as to be rarely searched and seen.
04. Create a rich product feed
Each marketplace has its own parameters for how product images and text will be displayed. Carefully create your own product feed to take advantage of all the marketplace platform’s features.
05. Set and test your fulfillment process
Larger marketplace platforms offer fulfillment services at an additional cost, which can be especially beneficial if your customers expect swifter delivery than you can manage independently. Fulfillment speed is often one of the criteria marketplace algorithms use to determine which listings earn more visibility, so be sure to test thoroughly whichever process you establish.
06. Ramp up customer service
Most platforms monitor marketplace sellers’ response times to customer service questions and complaints, so give them prompt attention.
07. Execute, monitor, and adjust
Once you’ve launched your marketplace offerings, keep a close eye on sales, ad spending, and customer service, and use built-in reporting tools to track performance. Tweak product assortments, prices, or shipping options as needed—and always conduct a comprehensive review prior to big events, such as the peak holiday season.
Anyone can leverage the power of online marketplaces
Online marketplaces have a lot to offer independent retailers, from new audiences to speedy fulfillment options.
With a thorough understanding of the benefits, a focus on the marketplaces that matter to your customers, and a product and pricing plan that complements your core eCommerce site, you can leverage the power of marketplaces to attract customers and expand your business.
Read Also: How to start a business
Bogar Alonso
Head of Outbound Marketing, Wix eCommerce
Bogar leads thought leadership and outbound marketing for Wix eCommerce. He has an extremely soft spot for all things eCommerce, retail, tech, content, and marketing.
