There are dozens of worthwhile marketplaces worldwide. Amazon, Walmart, eBay, and Etsy are examples. But each marketplace has unique fees, commissions, and overall rules. Competition can greatly vary. Thus determining which marketplaces fit a merchant’s products and audience can be a challenge.
What follows are tips for using data to identify (and optimize) marketplaces to sell your products.
… determining which marketplaces fit a merchant’s products and audience can be a challenge.
Key Marketplace Metrics
Profit margin per marketplace. Each marketplace has its own costs and shipping margins. Knowing your profit margin for each marketplace can help establish a priority as to where to sell products.
Transaction volume. Not all marketplaces have the same sales volume. Niche marketplaces can be high-margin but low-volume, whereas huge sites such as Amazon and Alibaba can be the opposite: high-volume, low-margin. Estimating transaction volume can prioritize based on overall profit, not just the percentage.
Competition. Marketplaces are typically very competitive. Your products could appear beside exact or very similar items. We’ve all seen multiple sellers for the identical product on Amazon. Depending on the brand and item, your pricing will likely vary across marketplaces. Software using algorithms can automatically match your prices to competitors’. You may choose not to offer certain products or categories on various marketplaces and, instead, sell them on your own online store.
Pricing. Some sellers choose the same price across all marketplaces. Others set prices based on the marketplace. Attributes to differentiate pricing include color or texture. You could also ensure your website always has the lowest prices, thus encouraging shoppers to buy from you directly.
Shipping costs. Shipping costs can vary by platform, such as using Fulfillment by Amazon versus your own shipping vendors. A marketplace could have mostly domestic shoppers or, alternatively, cross-border. If the latter, be prepared for the extra cost of shipping.
Target audience. Marketplaces can attract different shoppers. For example, Etsy appeals to consumers looking for unique products while Walmart tends to compete on price and Amazon on convenience and delivery speed. Offer products based on the marketplace’s audience. This could include international expansion.
Keywords. If you sell the same items on marketplaces as on your site, use different keywords in product titles, descriptions, and even categories. This will ensure own pages are prominent on organic search results.
Cost per conversion. You can place ads on Google, Facebook, and on marketplaces directly, such as Amazon Advertising. Each option will have its own cost per conversion. Remember that cost per conversion could be lower on marketplaces, but it will likely be more difficult to convert the buyer into a long-term customer. Obtaining a customer’s email address could be more profitable in the long run than making a single sale on Amazon. Remember, also, to include the cost per conversion when calculating profitability for each product and marketplace.
Inventory. Managing inventory and fulfillment across multiple marketplaces can be tricky, especially when doing it yourself, without third-party logistics providers. An automated, multichannel inventory management system is essential.
Product placement. Marketplaces typically have unique procedures for adding products. Some require annoying spreadsheets. Others are manual — individually upload each photo and product description. Consider the time (and labor cost) to place or update a product when evaluating profit per marketplace. The time it takes to place a product could eliminate any profit.
Customer service. Returns, exchanges, and refunds can be a nightmare when selling on multiple marketplaces. The polices of each are likely different than your own, which could increase customer service expense. Take this into account, too, when assessing profitability.