Selling on the marketplace - is it worth it?
Selling on the marketplace – is it worth it?
Statistics show that as many as ¾ of Polish Internet users regularly shop on the marketplace, what is it and is it worth putting your products out there? Are you looking to rock your e-commerce business and considering putting your products on a marketplace? Sales are indeed likely to increase, but such a solution is not without its drawbacks. Not sure if selling on the marketplace will pay off for you? You will learn the basics in this article. Do you need individual guidance? Contact me – I will take a close look at your e-commerce.
Marketplace – what is it and on what principle does it work?
A marketplace is simply an online sales platform where many sellers offer their products. It’s kind of a more modern form of marketplace, where you can set up your stall – you’ll find customers faster by showing up where people come to shop. Among the most popular marketplaces in Poland are:
- Google Shopping (products displayed within Google Shopping campaigns).
It is hard to find an Internet user who is not familiar with these marketplaces and has never bought anything on any of them. It’s certainly a way to increase your reach, but what are the other advantages of selling on a marketplace?
Selling on the marketplace – the biggest advantages
1.Increasing the number of customers
This point is obvious. By selling on the marketplace, you will reach people who probably would never have come across your store. Some users do not visit online stores at all, as they prefer to quickly compare offers in one place. Of course, if you don’t adjust your price to match the competition, your chances will drop significantly.
2.Ability to promote products
Marketplaces provide the ability to promote products for a fee, so you can display higher than your competitors. On Allegro, highlighting a product in most categories costs $19 for 10 days. In some categories, however, this price is higher – with automotive it goes as high as 49 zloty for 10 days.
Many customers are more likely to choose an unfamiliar vendor on a marketplace than an online store they have not used before. Using a larger, proven platform gives a sense of security. Of course, as long as you care about high product ratings and good customer service reviews.
4.Lower start-up costs
Creating an online store obviously costs money, which discourages budding entrepreneurs from setting up their own store. You can use the marketplace to see if your products have any interest at all. However, I always recommend ultimately aiming to set up your own store.
Dropshipping is shrouded in disrepute, but that doesn’t change the fact that it’s becoming more popular every year. If you want to ship the product directly from the wholesaler, the marketplace will also work here. Keep in mind, however, that dropshipping doesn’t offer much opportunity for growth – the only thing you’re competing with vendors offering the same products is price, which forces you to reduce your margins.
What are the disadvantages of selling on the marketplace?
There are no solutions without flaws, and the same is true of the marketplace. Selling without the cost of setting up a store, with advertising simplified to a minimum and a wide range of potential customers, also comes with limitations.
Allegro reports that up to 117,000 sellers operate on it. That’s a lot of competition, and if you’re selling standard products, your category may have as many as dozens of companies that also offer them. The customer can compare offers very quickly, so you need to compete on price, fast shipping, etc.
The Marketplace also needs to make money, which for you means costs – product listing fees, sales commissions, paid promotion options to stand out from the competition. On Allegro, the commission on sales depends on the category, price, number of products sold, possible buyer’s fee for shipping. An additional commission is charged for promoted products (at 0.75 of the commission set for a specific category). For example, in the Air Conditioners category the commission is 6%, and in the Lighting category the commission is already 12%. Recalculate whether this is worth it to you – price comparison sites can be an alternative. For example, Ceneo charges a commission of 39 gr to 1.03 for every click from a comparison site to your site. This increases traffic to the site, but you have no guarantee that the customer will make a purchase.
If you want to create a strong, distinctive brand, such as one famous for its handmade assortment, the marketplace, where low price and fast shipping count, may not be the best solution. It is better here to bet on a traditional online store and promote it with SEO and Google Ads. Marketplace can be an additional, but not the only source of customer acquisition.
4.Requirements for vendors
If you sell on the marketplace, you must comply with its rules. You may be required to provide specific shipping forms and high-quality images, complete mandatory parameters (e.g. Size), etc.
Bottom line: is it worth including the marketplace in sales?
Of course, if you want to sell more products, a marketplace can be an effective solution. However, the online store should still be the most important platform, as this is where you build your brand. Users rarely remember the names of vendors offering their products on the marketplace. When you ask a friend where he bought a set of tools, he is more likely to answer that on Allegro, rather than give the name of the seller.
Basing sales solely on the marketplace results in little brand awareness and total dependence on an external platform. If its terms and conditions change, or the marketplace for some reason ceases to exist/allow you to sell your products, there will be a serious problem because you don’t have your own customer base. I recommend the marketplace to corner sales, but not as the only place where your products can be found. It is also worth remembering that paid promotion of products on the marketplace will not replace the budget put into advertising the store. This way you can increase the conversion rate, but you won’t build brand awareness, and this is what determines in the long run whether your brand will be strong and able to cope in a market where competition is huge.
Multichannel, or omnichannel model, works well for many e-commerce businesses. It involves selling products under the same terms and conditions in an online store, stationary store, marketplaces, etc. This is a compromise, so that one can take advantage of the advantages of the marketplace, while largely protecting oneself from its drawbacks and limitations.
Is your online store not going the way it should, even in the hot pre-holiday season? Contact me – I provide not only e-commerce training, but also individual consultations.
I have been active in Google Ads, SEO and e-commerce for almost 10 years. Now I share my knowledge and experience on the blog, on social media and in courses, audits and training sessions.
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