Build your ecommerce business - Tamebay

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Build your ecommerce business

1. Getting Started

2. Going mobile

3. Using marketplaces

4. Promote

5. Deliver

6. Convert

7. Retain & Expand

8. Legal

PART 3: USING MARKETPLACES

TAMEBAY DIY ECOMMERCE GUIDE BOOK

CHAPTER 3

Getting the most from marketplaces

diy-ecommerce-guide

WHAT WE LEARN

What is a marketplace What are the key

marketplaces to be on... and why Using marketplaces to sell Tools and technology to help you



PART 3: MARKETPLACES

INTRODUCTION

For those wanting to get going with selling online there is an alternative to setting up your own site and doing it all yourself ? and that is using the marketplaces out there to do it for you.

Marketplaces can help any vendor sell to anyone as they tend to be expert at search engine optimisation, marketing and promotion

Amazon, eBay, Etsy, Pinterest, OnBuy... even Facebook. The world of online marketplaces is a booming one and, for consumers at least, they are often the first point of contact for buying pretty much anything online ? they are becoming the de facto online shopping search engines. But what exactly are marketplaces, where did they come from and how should you choose which ones to be on?

Over the next few chapters we look at what marketplaces are, what the main ones offer you as a seller and talk you through how to get going in selling on them. And remember, marketplaces aren't an either/or choice. While they are a great way to start selling online, the more established sellers increasingly are looking at how to have both a native online site of their own and using marketplaces as a way of garnering maximum eyeballs from the shopping public.

What to

?

Using marketplaces to sell

Getting my stuff on marketplaces

Setting up a business on Amazon

Setting up a business of eBay

Setting up a business on marketplaces

Other marketplaces

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WHAT IS A MARKETPLACE?

The official definition of a marketplace is "an e-commerce site where product and inventory information is provided by multiple third parties, whereas transactions are processed by the marketplace operator".

In plain English they are third party sites that handle the sales of your goods ? and more as you shall see. They are a bit like selling your stuff through someone else's shop.

In an online marketplace, consumer transactions are processed by the marketplace operator and then generally delivered and fulfilled by the participating retailers or wholesalers (often called Drop Shipping) ? although as we shall see, Amazon will also do all the fulfilment too if you pay them to.

In general, because marketplaces aggregate products from a wide array of providers, selection is usually more wide, availability is higher, and prices are more competitive (compared to vendor-specific online retail stores).

There are two kinds of marketplace: those that specialise in a single product type (such as , erento) and those that offer pretty much everything (such as Amazon, eBay, Rakuten etc...).

Marketplaces can help any vendor sell to anyone as they tend to be expert at search engine optimisation (SEO), marketing and promotion. They can however lead to your customers becoming loyal customers of the marketplace rather than you the retailer, which can cost dear in terms of loss of up and cross sell opportunities and repeat business.

Where did they come from?

The history of the marketplace is interesting as they are, in part, the history of the internet. The first ? to all intents and purposes ? was Amazon, founded by Jeff Bezos in 1994. Originally called Cadabra (from Abracadabra) and set up to sell books online in the very early days of the web, the company changed its name in 1995 to Amazon to be (a) easily found as it begins with an A; (b) because the Amazon is the largest river in the world; or (c) because people kept calling Cadabra "Cadaver" (you choose which is the right answer!).

As the web has grown, so has what Amazon sells and it now bestrides the globe and sells pretty much everything ? even moving into the grocery business in the UK this year. Currently, its biggest rival has become eBay, which was launched in 1995 as an online auction site that allowed users to sell their second-hand stuff online to the highest bidder. Since 2010, however, it has morphed into a site that sells new and has to all intents and purposes become a marketplace.

Across the world there are many, many others often serving their own domestic or regional markets, but they all work in pretty much the same way, with the same challenges. They essentially aggregate products or retailers of specific products and operate across regions and business sectors.

CHAPTER 3

What to

?

What is a marketplace

Top 10 marketplaces in UK Top 10 marketplaces globally

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WHAT ARE THE KEY MARKETPLACES... AND WHAT ARE THEIR PROS AND CONS

As you will have gathered there are many marketplaces, serving either the mass market or niches. Each has its own merits and foibles and each offers different things to the eSeller.

So what are the main ones and what distinguishes them from each other?

The big dog ? Amazon is the largest marketplace in the world and sells pretty much everything.

PROS

is the fifth most visited website in the United States, and in the top 10 in the UK consistently, so it provides huge selling opportunities. The number of merchants is large as well though, so you have to constantly look for ways to stand out from the crowd.

CONS

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.

The Amazon's platform is very reliable and is designed to prevent 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.

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.

Simple pricing is one of Amazon's key selling points. 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.

There are 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.

CHAPTER 3

What to

?

Pros of using Amazon to sell

Cons of using Amazon to sell

How to sell on Amazon

How to stop selling on Amazon

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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. It is increasingly moving into selling more `box fresh' new goods in direct competition to Amazon.

PROS

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.

CONS

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.

CHAPTER 3

What to

?

Pros of using eBay to sell Cons of using eBay to sell How to sell on eBay How to stop selling on eBay

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

The auction system is 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.

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.

There are cases when eBay 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.

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Etsy differs from the other online marketplaces, in theory at least, because it is a community for crafters and sellers of `vintage' goods. Unlike Amazon, it operates more like eBay used to, being a community of buyers and sellers.

PROS

The pros of using Etsy are the same as any marketplace: it obviates the need for a crafter to set up they own website; it is a great shop window for what you do; it attracts a relevant audience and offers simple payment tools.

CONS

It takes a lot of work to promote yourself on Etsy, say many of its users ? you have to describe each item and offer help to anyone looking which can make running Etsy shopfronts more of a full time job than any part time user may want.

Low cost: each item you list costs $0.20 plus a 3.5% transaction fee ? unless if sellers elect to use Etsy's "Direct Checkout" feature, a 3% fee is charged on each transaction.

It can also be cumbersome to post individual items

Well known, well respected and well used by shoppers for crafts and vintage.

Manufacturers and brands can also be on there competing with you.

Alibaba is the `Chinese Amazon' and as such is possibly the biggest marketplace in the world ? though it has, until recently, only really operated in China. Increasingly, companies and sellers in the UK are trying to tap into the lucrative Chinese market through Alibaba's Tmall subsidiary. It has also opened a UK site too in recent months, so if you are looking at marketplace selling, it would be wrong to overlook it.

PROS

CONS

Alibaba is the most popular destination for online shopping, in the world's fastest growing e-commerce market. Transactions on its online sites totaled $248 billion last year, more than those of eBay and combined.

Revenue share model may be costly for lower value sellers getting started

Huge audiences for your goods offer you great scope and scale ? and value for money when posting.

Cultural issues ? especially `rent' culture in China (or bribes as they are known elsewhere) ? could see your listing fall way down the list

Works on a revenue share model rather than a fee based structure so is more co-operative between site and the seller.

Language is a barrier is selling into China. The Chinese love English goods and the kudos they bring, but you need to be able to list in Chinese to be fully effective.

CHAPTER 3

What to

?

Pros of selling on Etsy Cons of selling in Etsy Getting started selling on Etsy Pros of selling on Alibaba Cons of selling on Alibaba Getting started on Alibaba

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OnBuy is a new UK online marketplace offering zero selling fees, better margins and in-built marketing support across thousands of product lines across every retail category. It works on a subscription fee of ?49 per month.

PROS

no selling fees and better pay outs as it runs on a subscription model sets OnBuy apart and makes it an ideal place to start for many sellers

being a start-up early users will benefit from TV and mainstream media marketing push the site is undertaking

CONS Being a trading platform the seller is entirely responsible for inventory and shipping

It is also new so is unproven

It is a trading platform so holds no inventory so costs are lower

Trying to compete with Amazon and eBay is going to be hard for it to gain critical mass

UK only so limited reach

CHAPTER 3

What to

?

Pros of selling on OnBuy

Cons of selling in OnBuy Getting started selling on OnBuy

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CHAPTER 3

WHAT DOES FULFILLED BY AMAZON PROVIDE THAT YOU CAN'T?

You can do all your fulfilment yourself, but part of the joy of working with a marketplace is that they can help. And in Amazon's case boy can they help. Its Fulfilled by Amazon (FBA) service offers many advantages. Here are the top reasons to use it:

1. Why should our eSellers out there be using FBA: what can it do that they can't? Amazon has built a huge logistics capability in order to deliver goods to their customers as frictionlessly and smoothly as possible. As standard, Amazon offers Express delivery (next day by 1pm), One-Day, Standard (up to 2 Day), and Economy (3-5 Day) delivery options to buyers. Its One-Day delivery option is free to Amazon Prime subscribers. On top of its delivery speed options Amazon can deliver to home or office addresses, to Amazon lockers, to Pass My Parcel locations (e.g. a local shop or a garage) and to Doddle train station pick up points. Amazon offers late order cut off times with deliveries taking place 7 days a week largely powered by its own Amazon Logistics courier service. It is also introducing Same Day delivery with its Pass My Parcel service and Amazon Prime Now One-Hour deliveries are available in parts of London, Birmingham and Coventry. Whilst as an online retailer you may be able to offer same day dispatch and next day shipping, it's simply impossible for most retailers to offer the service that Amazon can. Putting your products into Amazon FBA enable Amazon to offer their delivery experience to Amazon customers and this is the key reason that Amazon prefers FBA offers to merchant fulfilled offers.

2. What about selling internationally on Amazon with FBA? Comscore reports 29.2m unique visitors to Amazon.co.uk as of December 2014. Amazon FBA enables you to sell to Europe with 30.9m unique visitors to Amazon.de, 17.8m to Amazon.fr, 11.5m to Amazon.it and 6.9m to Amazon.es. There are three main options for selling across Europe with Amazon once you start using FBA: Amazon FBA Export to EU Option You simply list your products for sale on Amazon.co.uk and when overseas customers place orders Amazon picks, packs and delivers from your stock in Amazon's fulfilment centres. There is no extra charge, you pay the normal Amazon UK fulfilment fees and the customer pays the international shipping fees. This can be enabled on your Amazon account at the click of a button.

What to

?

What is Fulfilled by Amazon

Using fulfilled by Amazon

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