What is an Online Marketplace?
Online marketplaces have been one of the great success stories of the Internet. The leading marketplace in the UK, eBay, has around 12 million registered users and 233 million members worldwide across 28 different countries. Initially online marketplaces were aimed at consumer sales, however, their enormous popularity has turned them into an effective online sales channel for business.
Online marketplaces such as eBay and Amazon provide small businesses with an easy and cost effective channel for getting their products quickly to market. They also provide more established businesses with an additional sales channel and an excellent outlet for their distressed stock.
What is an Online Marketplace?
Online marketplaces offer a one stop shop for businesses looking to offer their items for sale online. Businesses selling through marketplaces do not need to worry about time consuming and expensive activities such as setting up a website and generating traffic. The marketplace provides a method for listing items, a ready made marketplace and mechanism for collecting payment. Typically marketplaces charge fees for selling through their platforms, either in the form of initial listing fees or transaction fees or both.
Whilst there are a great many online marketplaces, only eBay and Amazon have real liquidity. eBay offers sellers the opportunity to sell products either in online auction or at fixed price to its vast international audience. Amazon allows sellers to offer their items alongside Amazons own product listings at a fixed price only.
What are the Opportunities for my Business?
Selling through eBay and Amazon has advantages for both large and small businesses:
- Reach new customers. Selling through eBay and Amazon allows businesses to reach their enormous customer base.
- Sell internationally. Both of the major marketplaces are international, allowing companies to reach beyond their geographical marketplace.
- Dispose of distressed stock. Online auction is an excellent way to sell off distressed stock such as end of line or returns
- Brand promotion. eBay in particular allows sellers to brand their listings, allowing a business’ brand to be promoted.
On the flip side, the ease with which prices can be compared has led to prices generally being lower on eBay and Amazon than on the wider web. On eBay there are also continuing issues with fraud and identity theft. Despite these negative factors, marketplaces, if managed effectively, can be a highly effective online sales channel.
