According to this report, the world’s 75 largest online marketplaces registered sales worth more than $1.5 trillion in 2017, which accounted for nearly 50% of the total online global shopping. These marketplaces showed more than 30% growth as compared to the previous year. In the last few years, marketplaces have emerged as a goldmine of selling opportunities for value-added resellers and is predicted to hit $4 trillion by 2020.
- What is a Marketplace?
- Why Marketplaces are Good for Buyers
- Advantages of Marketplaces for Value Added Resellers
- Disadvantages of Marketplaces for Value Added Resellers
- Should a Value-Added Reseller Sell Through Marketplaces or Have Their Own E-commerce Store?
- The Benefits of an E-commerce Store vs Selling on a Marketplace
- The Disadvantages of an E-commerce Store vs Selling on a Marketplace
- How Can VARStreet Help IT and Office Supplies Resellers?
What is a Marketplace?
A marketplace is an e-commerce store where several third-party sellers list and sell their products. It serves as a platform which brings sellers and buyers under one roof and gives sellers a platform to sell their products and expand their reach.
The onus of inventory maintenance, logistics, product descriptions, images and pricing rests on the shoulders of the sellers. When the marketplace receives an order, it forwards the same to the seller who then ships the product directly to the customer. However, order processing, payment collection, release and shipment tracking are done by the marketplace operator.
Amazon and eBay are examples of successful online marketplaces. In fact, when it comes to product searches, Amazon is leading the way over Google. A study revealed that between 2015 and 2018, Amazon had overtaken Google in terms of product searches. While Amazon product searches grew from 46% to 54%, that of Google declined from 54% to 46%.
These figures indicate that you are losing a BIG chunk of revenue if you do not have a presence on online marketplaces.
Why Marketplaces are Good for Buyers
Some customers prefer to buy directly from the seller’s e-commerce store, others prefer to compare products against other brands on marketplaces before buying. Marketplaces offer the convenience of comparison to customers, and they are assured the best price for the product.
Marketplaces list several suppliers of the same product and several brands too. Customers always have a variety of choices and the assurance that they will find what they are looking for, if not from one supplier then the other, and if not one particular brand then another. The chances of ‘Out of Stock’ are really low.
The range of products that you can compare on a marketplace, within and across categories, is unparallel. Buyers have the convenience of browsing through an entire product range and comparing prices and features before buying.
Competition among sellers is high on marketplaces, every seller is vying for a piece of the pie and looking for ways to reduce prices and offer buyers the best possible price, discounts and sales.
- Customer Experience
A marketplace is a one-stop solution for a customer. It offers them convenience, competitive pricing and a wide range of products to choose from. Buyers have their order, search and browsing history saved, which gives them a personalised shopping experience.
Advantages of Marketplaces for Value Added Resellers
- Ready Customer Base
Marketplaces, especially popular ones like Amazon have millions of customers registered with them. They have their own marketing and branding strategy to drive traffic to their stores. You as a reseller on these marketplaces, get a huge audience and potential customer base.
- Massive Reach
The biggest struggle when you launch an e-commerce store is to generate traffic. Marketplaces attract high traffic on all days and reach out to the mass market in huge numbers. Like we mentioned earlier, they market the platform to drive traffic to the store and thus to you. You, the value-added reseller can tap into the marketplace’s reach and audience easily without any efforts.
- New Channel for Customer Acquisition
Marketplaces are the go-to channel for most online buyers today. As a small to medium business, you may not have the reach or budgets as a popular marketplace might. A buyer may not have heard of your brand but will still find your products on the marketplace if they’re searching for the same. If they are happy with your pricing and the products you offer, they may visit your e-commerce store and eventually become a loyal customer. Being competitive on marketplaces will lead to visibility and brand awareness, and it is a great channel for customer acquisition.
Consumers are fiercely loyal to their favourite marketplaces. Being visible and competitive on these will ensure conversions. If they like your products listed on the marketplace, they will keep coming back for more. You too will gain a loyal customer base.
- Access to New Segments
Sometimes, it may not be possible for you to reach out to new segments due to a lack of resources. Or you may not even be aware of segments where your products will have a market. Marketplaces have ventured into different segments across different demographics and geographies. Being on a marketplace is a great way for customers to find you rather than the other way around.
- Improved Customer Experience
Marketplaces offer excellent customer service in terms of product information, transaction processing, shipping and handling, returns, etc. They also spend huge money on marketing, brand promotions and integration to create a personalised shopping experience for their users.
Disadvantages of Marketplaces for Value Added Resellers
- Hidden costs
Marketplaces charge either a fee or a percentage of sales. The VAR market works on low margins and hence selling only on a marketplace will escalate the cost of selling for a value-added reseller.
- Multiple Competing Brands
There are various sellers like you who are listed on the marketplaces and selling the same products with the same features and prices. The downside of this is that customers will not just find your products when looking for something, they will find your competitors too.
- No Branding
While marketplaces spend millions on building their own brand, they do not encourage sellers to promote their individual brands. As a reseller, you cannot maintain your own branding on a marketplace but have to follow their guidelines.
- Restrictive Terms and Conditions
Sellers on marketplaces are bound by several terms and conditions on product listings, categories, shipping and returns etc. You cannot have differential pricing, shipping etc. for different customers and hence only a marketplace will not work for VARS who have contracts or different price margins for different customers.
- Preferential Marketing and Promotional Treatment to Their Best-Selling Partners
Marketplaces push the sales and promotions on their top-selling brands. When these brands get more visibility, they sell even more and continue to retain their top position. Such a biased treatment adversely impacts the sales and reputation of other sellers.
- No Access to Customer Data
Marketplaces do not share customer data with the sellers. The customer, unless they visit and buy from your e-commerce store, is essentially a customer of the marketplace. You will not have any access to their data and preferences. Retargeting, email marketing etc is not an option for you.
Should a Value-Added Reseller Sell Through Marketplaces or Have Their Own E-commerce Store?
Selling on multiple marketplaces is integral to an omnichannel e-commerce strategy. Any business today cannot ignore changing consumer behaviour and the prevalence of multiple channels. As a value-added reseller, you should not stop working on your own e-commerce website, not just because you have more control over it but because an e-commerce store is the need of the hour to stay relevant.
The Benefits of an E-commerce Store vs Selling on a Marketplace
- Establish and Maintain Full Control Over Your Brand
Your own e-commerce store allows you to sell and promote your products as well as position your brand the way you want it. You have full control over what you can do and what you can’t. Unlike marketplaces, there are no rules or guidelines to follow.
- Convenient for Your Existing Customers
Your existing customers know your e-commerce store better than a marketplace. Your e-commerce store can address preferential pricing, customise landing pages for different customers, personalise payment methods etc. Customers would always prefer to buy from your website than spend time browsing and researching thousands of products on marketplaces.
- Retarget Shoppers to Become Repeat Buyers
When you sell on your own online store, you have complete access to customer information and buying behaviour. You can launch retargeting campaigns and send personalized ads to customers and encourage them to make repeat purchases.
- No Direct Competition on Your Own Website
You are not competing with anyone on your e-commerce store. In the case of marketplaces, there are multiple sellers selling the same products and vying for the same segment of customers. Your e-commerce store showcases only your products.
The Disadvantages of an E-commerce Store vs Selling on a Marketplace
- Setup can be Time-Consuming and Technical
A marketplace is a ready set-up to sell your products. All you have to do is register as a seller and fulfil a few formalities. And you’re ready to sell!
Building your own e-commerce store can be a time-consuming and cumbersome task. You have to register a domain name, choose a platform, create a website, etc. You can either choose an e-commerce platform or build your own if you have the technical expertise or the budget to hire a developer or a service.
- Driving Traffic
An established marketplace draws traffic in big numbers. Selling on one gets you instant access to a huge audience. However, driving traffic requires a strong marketing strategy. Unless you do not have the bandwidth to do so or an e-commerce platform that is SEO enabled and offers you marketing features, getting traction on your e-commerce website can be an uphill task.
How Can VARStreet Help IT and Office Supplies Resellers?
VARStreet’s e-commerce platform is built specifically for the IT and office supplies’ value-added resellers. With VARStreet you get not just a custom-built e-commerce store but also an aggregated product catalog of over 1 million IT products from 40+ distributors from the US and Canada.
VARStreet can help set up a robust storefront with a custom look and feel, products, pricing and discount policies, cross-sell and upsell features, shipment and payment methods and open your branded e-commerce-store in less than a week.
The storefront is SEO-enabled which means you don’t have to worry about driving traffic. With its aggregated catalog complete with technical specifications and images, both of which are continuously updated, catalog management becomes a breeze. You can even export the online product catalog to marketplaces and social media stores giving your customers a truly omnichannel experience.
Click here for a quick product demo.
What are your thought on marketplaces? Are you a VAR and sell on both? We would love to hear what works better for you. Leave your thoughts in the comments.