A Short Guide to Major Online Marketplaces

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Marketplaces 1

Image Credit : Dylan Luder

Click here for Part 2 of this series about Rakuten, Sears and NewEgg

Click here for Part 3 of this series about Bonanza, CafePress, Roozt

Having a private online store usually is a great idea, but is in no way a simple and effortless experience. For a small or medium business, especially if you’re just starting it, selling on online marketplaces might be an easier and quicker way to achieve profit. In this series of articles, we will briefly describe each of the major marketplaces on the Internet to help you choose best option for your business. So let’s start with the advantages and disadvantages of three of the largest marketplaces on the Internet – Amazon, eBay and Etsy.

Amazon – the Big Dog

Amazon is the world’s largest online retailer and it’s been online for nearly 20 years, so they have enormous experience and expertise in e-commerce. It was started as an online bookstore but soon extended its activity, letting everyone use their platform to sell almost anything they want… for a fee, of course.

Pros:

  1. Unmatched traffic. Amazon.com is the fifth most visited website in the United States, so you can only imagine what kind of selling possibilities it provides. The number of merchants is large as well though, so you have to constantly look for ways to stand out from the crowd.
  2. Reliable platform. The Amazon’s system prevents possible fraud from customers and ensures them of their order’s safety as well. This two-way security brings additional trust – most people tend to use well known marketplaces such as Amazon as it’s generally considered to be safer than smaller competitors or private online stores.
  3. Straightforward cost system. Selling on your own online store might inflate the marketing costs to heights you wouldn’t have ever expected and it’s not easy at all to determine future profits. Amazon, on the other hand, collects a fee for each item sold, usually a percentage of the price – and that’s pretty much it.

Cons:

  1. Major competition. Amazon has a lot of merchants you’ll have to compete with. Even if you manage to outsmart them all, there’s nothing that would stop the marketplace from identifying that your products are profitable and offering them to the customers itself. At better price and better conditions, of course.
  2. Withholding your money. Depending on the situation, you won’t get your money for 14 to 90 days after selling an item. For smaller sellers, it might cause some difficulties of running business.
  3. Rarely a second chance. There are numerous cases when Amazon closes a merchant’s store without any obvious reasons. Just a couple of negative reviews can evoke substantial problems, even though they make up only a small percentage of all your customers. The only way to completely avoid this is to satisfy every single customer, which might prove to be rather difficult.

eBay – the Ultimate Online Auction

A contemporary to Amazon, eBay has similar presence on the internet, but the business model is slightly different. The largest C2C (consumer to consumer) marketplace on the internet, it provides a possibility to sell nearly anything you want by setting up an auction as well as by a fixed price.

Pros:

  1. Plenty of potential customers. eBay.com ranks as the 7th most visited website in the United States, and most of these visitors can become your customers if you know how to reach them.
  2. The auction system. If you’re selling rare or unique items, the auction system might prove to be your best friend, as the price can inflate to unexpected levels. If your merchandise is widely available, selling with a fixed price might prove to be a better choice though.
  3. Increased trust. eBay has anti-fraud systems in place, increasing the confidence of customers, as they are ensured they’ll get their money back if they don’t receive exactly what they ordered. This usually leads to increased sales, as trust is one of the most important issues when buying online.

Cons:

  1. The dominance of PayPal. eBay requires that all transactions are made through PayPal. While this increases security of both parties, it might cause some unexpected problems which can range from withholding your earnings for a long time to an overall closure of your account.
  2. Counterfeit items. If you’re selling items that can be easily counterfeited, such as perfumes, clothes and other branded merchandise, you might find some competition that offers the same items for a much lower price. They are almost certainly fake, but they can easily get lost in the ocean of products offered on eBay, resulting in you losing potential customers.
  3. The auction system. Yes, it’s one of the main advantages of this selling system, but have in mind that if your items are easily accessible, you shouldn’t expect extensive bid wars on them. This might make you lose some profits you may gain in other marketplaces.

Etsy – the Leading Marketplace for Hand-Crafted Goods

A fairly new marketplace which was started in 2005, Etsy was created as a meeting place between those who produce handmade merchandise or want to sell vintage items that are at least 20 years old and those who are looking to buy such items.

Pros:

  1. The audience. The visitors of Etsy.com usually know what they’re looking for and have a little more sophisticated taste than the ones of the previous marketplaces. This might lead to additional sales if you produce your own goods or have something really stylish to sell.
  2. Customization of the store. Etsy has probably the most beautiful interface for your store and you can craft it to suit your (and your customers’) needs the best. A good home page of your store on Etsy could be that little something that brings extra sales.
  3. A good place for starters. If you’re an aspiring designer or manufacturer of unique, hand-made items, this might be the best marketplace to start selling. It won’t overwhelm you with its vastness as eBay and Amazon would, and again, the people here are usually looking for something different, so it’s a great place to shine.

Cons:

  1. Lesser amount of customers. Etsy is not as popular as its major competitors, although it still is near the top 50 of the most visited websites in the USA, showing considerable growth in recent years.
  2. Limited range. If you don’t sell vintage or hand-made items, you can’t sell on Etsy – it’s simple as that. Therefore if your products don’t fall in these categories, you should look for other marketplaces to do your business in.
  3. Lots of talent. If you don’t create something that is high quality as well as different from the others, you might face some difficulties selling in this marketplace, as there are lots of very talented sellers who don’t raise their prices to unaffordable levels. There’s always the all-important area of marketing though, so everything is possible.

Amazon, eBay and Etsy all have one great advantage – there are plenty of potential customers there waiting for you. The only thing that needs to be done is to attract them with your products, prices and service – which is no simple feat, of course. Amazon is usually the best of the three if you’re reselling (you’ll need very competitive prices though), eBay is best for rarer or unique items, and Etsy is definitely the ultimate place to sell if you’re producing your own goods. The choice is yours though, just remember that managing multiple memberships in various marketplaces might be a little too time-consuming – unless you use software that is specially crafted just to do that.

Click here for Part 2 of this series about Rakuten, Sears and NewEgg

Click here for Part 3 of this series about Bonanza, CafePress, Roozt