How to choose a suitable Marketplace for your product?

While there are a lot of options to choose from, one question remains, how to choose a suitable marketplace for your product? In this article, you will find how to judge the best eCommerce marketplace, the advantages and disadvantages of marketplace dynamics, and how you can manage all your products from different marketplaces.

Almost everyone knows what a marketplace is, either intuitively or due to their professions. Online marketplaces usually are eCommerce platforms that act as a bridge between sellers and buyers.

Marketplaces could sell their own products while also allowing third-party merchants to list their products on the website. Marketplaces attract a lot of traffic and visitors and this recurring traffic helps both sellers and customers.

If owning an eCommerce website is compared to owning a shop in a less populated area, selling through eCommerce marketplaces is like selling in grand bazaars of the world. With distance no longer being a barrier to your customers.

All marketplaces have different advantages and disadvantages and all of them charge a percentage fee from the third-party sellers. But when you understand the dynamics of each, it will be easy for you to answer “How to choose a suitable marketplace for your product?”

1- Understand your target audience and their needs

Now we all know that there are multiple marketplaces with the exact same products. This competition comes with both freedom and choices. Because it’s hard to know which marketplace will help you to prosper unless you know your customers!

For every business in every industry, this question is that is always asked is: "Who is buying your products, where are they, and what are their spending habits?"

Answering these questions will help you to understand your ideal customer demographics such as age, gender, socioeconomic class, likes, dislikes, habits, and values.

These decisions can’t be taken based on assumptions. It has to be supported with data, research, and insights.

When you understand your ideal customer and their habits, you can start to tailor your marketing and communication activities to their needs.

Building a strategy around your products and ideal customers will help you to sustain your business for steady growth.

2- Who is your ideal customer?

Identifying your ideal customer will also help you to understand their experience throughout their journey. Once you know this, you will have the insight to act and connect with them to turn those pain points into solutions.

A great example of understanding the ideal customer is Gap’s struggle in the early 2010s. They wanted to appeal more to a younger, trendy audience but their existing customers were people who don’t follow trends and seek basic apparel for daily use. This misalignment directly affected Gap’s growth and business results.

3- Where do your ideal customers usually shop?

This is the second part of understanding your ideal customer and their habits.

Now that you know who your customer is, it’s time to target where they shop and build out your multichannel marketing strategy.

4- Does your ideal customer prefer niche or specialized Marketplaces?

You know your customers and their preferences, habits, and primary choice of marketplaces. If your customers usually make purchases from niche marketplaces, you should consider adding them to your multichannel marketing mix.

In this way, the advantages of the marketplace could be better retention, direct communication with buyers, better customer experience and more. However, the disadvantages of the marketplace with a niche audience will be much lower traffic and visitors, so make sure to check your margins and ad spend.

What are the largest online marketplaces?

You can find niche online marketplaces specific to every hobby, interest, or profession. The larger ones you can imagine are like department stores, with large inventories and product catalogs.

A recent study revealed that 1 in 5 people who look for products start from online marketplaces.

Finding which eCommerce marketplace biggest is hard to describe with one metric but here are some of Channable's largest online marketplaces in terms of traffic volume and usage for the US and EU:

1. Amazon
2. Bol.com
3. eBay
4. Walmart

Compare marketplace fees and costs

Every marketplace has its pros and cons. It’s hard to point out a single one as the best eCommerce marketplace. Just make sure to consider fees and costs to operate your eCommerce business through marketplaces, the trick is knowing what the value of the marketplace is to you. Here are the most common fee and cost categories you might encounter.

• Listing Fees: Even top eCommerce marketplaces charge a fee for listing products. This became an industry standard as a revenue model but it can vary as a fixed fee for each item or a fee per item but that amount sometimes depends on the product category.

• Transaction Fees: This is the second main revenue model of marketplaces. They usually take a percentage from each sale. These numbers are not hidden and sellers can calculate how much they’ll earn when they make a sale.

• Subscription Fees: Top eCommerce marketplaces started to offer a subscription model to their customers and sellers. Their value proposition is bundling many advantages into one fee, such as discounts, benefits, lower transaction costs, and exclusive tools.

• Shipping Fees: This might be the most flexible cost you will face in your operations. Compared to other fees, this changes due to the product’s size and weight, the buyer’s location, and other factors. Some online marketplaces offer discounted shipping rates or storage facilities to streamline the shipping procedure.

Evaluate which features and tools are provided by Marketplaces

The best eCommerce marketplace for you is whoever provides the best tools for sellers to understand their performance. Because every marketplace provides some sort of analytics dashboard.
Understanding the data in front of you and making sure they align with your business goals is key to leveraging analytics. The main tools provided by marketplaces are:

• Inventory management

• Marketing and campaign management

• Analytics and performance review

• Customer satisfaction and support panel

Channable provides integration with 2,500 top eCommerce connections to track, monitor, organize, and manage your shops on multiple marketplaces all in one place.

You can visit the Marketplace Integration page to learn more about how Channable can help boost your sales.

Advantages of Marketplaces

• Marketplaces are your storefront. You will get traffic and appear on search results once you're selling.

• Some marketplaces can promote and advertise your products on your behalf.

• If you have niche products on niche marketplaces you can end up with a big impact in the niche ecosystem.

• If you prefer listing your niche products on broad marketplaces, you’ll get many visitors in your vertical.

• Marketplaces will handle all the technical facilitation, such as online payment, hosting, and data storage.

• The best eCommerce marketplaces also have customer trust. This preconceived idea will also benefit your business.

Disadvantages of Marketplaces

• If you focus on only one marketplace to run your business you might be dependent on the marketplace’s policies.

• There are a lot of sellers present on top eCommerce marketplaces creating a lot of competition.

• The commission and fee policies of eCommerce marketplaces.

Last thoughts

There is no single, definitive answer to how to choose a suitable marketplace for your products because there are many variables to think about.

But, the right path is understanding your product, ideal customer profile, and differences between marketplaces. Just like an investment or personal development, you shouldn’t put all of your eggs in one basket.

Using more than one marketplace or channel will help you reach a wider audience and create the opportunity to generate more revenue.

Channable is here to help your eCommerce operations by providing detailed dashboards and marketplace integrations, so you can manage your business seamlessly across channels all in one place.

Check out what Channable can do for your business!