There are countless reasons for businesses to sell their product through online marketplaces, but here's the most important one: when shoppers want to buy something online, they increasingly start their searches with Amazon instead of Google. If you're counting on customers finding your product through search, then you're not maximizing your brand exposure.
Online marketplaces offer simple and convenient portals that bring together buyers and sellers, and represent a huge boon for businesses of all size. A single product posting on eBay or Etsy can expand your sales channels and place your merchandise before a huge online audience.
But which of the dozens of third-party marketplaces is best for your business? And what are the differences between them? Below, we'll cover the major players in detail and identify the important pros and cons for each.
Comparing the online giants
Amazon is the leading online retailer in the United States with more than $100 billion in net sales. The company covers nearly every type of product and service, so no matter what you're selling—be it bird-watching books or iPhone accessories—you can probably find an Amazon category for your merchandise. Many third-party sellers will start with Amazon by default before expanding to other marketplaces.
Huge audience: Amazon features more than 304 million active customer accounts worldwide.
Credibility: Amazon is a known and trusted brand across the globe. Customers may be more comfortable purchasing a product from Amazon than from a website they're unfamiliar with.
Branding: Amazon features very few branding options for sellers—the only thing you control is your product's photos and text description. Every other component of the shopping experience is Amazon branded. Sellers are not allowed to capture buyers' email addresses or remarket to them.
Competition: You'll compete with not only other third-party merchants selling the same or similar goods, but also Amazon itself if they decide to sell the same product.
eBay established itself as the web's premier auction site in the 1990s, although today auction sales constitute only a small percentage of total sales. Fixed price listings are much more common. Just about any product you can imagine can be bought or sold on eBay, and the site is a better fit for rare and obscure items—especially sports memorabilia or other collectibles—than Amazon, which tends toward more everyday merchandise.
Global reach: eBay features 165 million active buyers located around the world, and its Global Shipping Program makes its cost-effective to deliver anywhere. The site also has excellent SEO practices, and its products often rank highly in search.
Branding: eBay lets sellers create customized store homepages where sellers can highlight promotional offers, offer newsletter sign-ups, and use larger product images.
PayPal: Because eBay owns PayPal, sellers must accept payment via PayPal. Other payment methods are also available, but it can be cumbersome for buyers to access these options.
Too buyer friendly: eBay features a 180-day return policy, and sellers must accept all returns. The site doesn't allow sellers to leave negative feedback about buyers, even if the buyer is at fault in a dispute.
Walmart initially limited its third-party marketplace to only a handful of authorized online retailers, but it has recently taken steps to support more merchants. Third-party seller items are listed alongside Walmart's normal online inventory, but with a "Walmart Marketplace" moniker attached to differentiate them. Right now it's difficult for SMBs to get authorized, although that may change in the future.
Huge exposure: Walmart.com attracts about 80 million unique visitors a month, according to Internet Retailer. The site still lags behind the largest online marketplaces in the United States, but some retailers are noticing big gains of late.
Brick-and-mortar support: Customers can pick up their orders at Walmart stores instead of having them mailed. This is convenient, as two-thirds of the U.S. population lives within five miles of a Walmart, and many already shop there.
Select partners and products only: Merchants need to through a registration process to become a Walmart partner before they can sell through the site. Sellers are chosen based on reputation, sales projections, and alignment with Walmart values. The company is looking for sellers who fill the gap of products they can’t fit inside stores.
No SMBs: At the moment, it appears difficult for small- to medium-sized businesses to get registered and offer their products through the site.
Etsy launched in 2005 as a New York-based online community for crafters, artists, and vintage enthusiasts. Today, the elegant site has 1.7 million active sellers and 27.1 million active buyers, and has brought boutique crafts to a huge global audience. Etsy has very specific rules about what products cannot be sold on the site, including any "handmade" goods that you were not involved in the creation of.
Targeted market: Etsy appeals to discerning customers looking for unique, hand-crafted items they can’t find anywhere else.
Seller friendly. The site is incredibly easy to use, and sellers can set up their own storefront pages displaying all of their merchandise. (Although storefront customization is limited.)
Saturated market: It's hard to stand out on Etsy when there are so many other merchants there selling knitting supplies, vintage jewelry, and other artsy goods. Sellers also complain about copycats replicating their products and cut-and-pasting their product descriptions.
Fees: Etsy's fees—including a $0.20 listing fee per item, a fixed 3.5% commission, and PayPal processing fees—can add up quickly, especially if you're listing small items individually rather than as part of sets.
The marketplaces listed above are among the largest available to third-party sellers, but there are other smaller marketplaces that are worth your consideration. Newegg, for instance, specializes in computer parts and tech supplies, and has emerged as one of the largest online only retailers in the United States. Houzz is a Pinterest-like site geared toward interior design and home remodeling. And Sears offers an online marketplace for third-party sellers similar to Walmart's. Any and all of these may be good options for your business, depending of course on what type of product you sell.
In our next installment, we'll cover the logistics of selling on Amazon. In the meantime, we invite you to download our SBN 101: How To Start Your Business guide, which covers the basic steps necessary to transform your great business idea into a fully functional operation.