Should You Sell Products on a Third-Party Online Marketplace?

What Online Marketplaces Offer, What You Risk, and How to Integrate

 

Considering selling through a third-party marketplace?

It’s one of the most common questions a business has to answer: should you sell through Amazon, eBay, and other third-party marketplaces? Or are you better off only selling direct on your own domain?

What marketplaces offer

Some specific marketplaces offer more than others (and we’ll touch on one of them soon), but in general, the appeal of selling on Amazon (or eBay or whichever seller makes the most sense for your market) is to expand your customer base. Those marketplaces have the highest possible reach and make your product discoverable to millions of people who might not otherwise find it through your organic funnel. 

Additionally, they have value as potential “sales savers.” One common example is a customer discovers a product, makes it halfway through the checkout, then is scared off by the shipping cost. With no other marketplace channels, this sale is lost forever. But if your product is available on Amazon, there’s a fair chance the customer will order it there to take advantage of Amazon’s free shipping options.

Between discovery and “sale saving,” offering your product on Amazon (or eBay, or whomever) benefits your company by increasing your customer base and creating additional conversion opportunities for customers you otherwise might have lost. 

What you risk 

The main potential downside to working with a major reseller, is the concern for potentially alienating the distributors or resellers you currently work with. How much of a concern that is will depend on your unique relationships and needs, but many distributors are not willing to sacrifice a relationship over that; on their end, it’s the difference between potentially losing some volume and losing the entire contract.

There may be exceptions, but then it’s a choice between Amazon’s superior reach and the benefits (convenience, familiarity, profit share, etc.) of your existing distributor. When given this choice, many companies choose to go with Amazon, but every situation is different and you know your company’s needs best.  

The second concern is that Amazon will take their cut, and you’ll make less per sale. This is true, but unless your marketing funnel is one of the best in the world, it ultimately doesn’t matter. Given the extensive reach of Amazon, it’s quite likely most of the sales you’ll get through their funnel are sales you otherwise wouldn’t have gotten at all. It’s easy to fall into the trap of seeing an Amazon sale as making 75% of the profit instead of 100%, but in reality, it’s much more like making 75% instead of 0%.

It’s easy to fall into the trap of seeing an Amazon sale as making 75% of the profit instead of 100%, but in reality, it’s more like making 75% instead of 0%.

Integration considerations

You’ve made the decision to sell on a marketplace. Now what?

There are countless plugins for Amazon (let alone for eBay and others), and figuring out which one to go with can feel like a daunting task. Your integration matters, not just for bottom-line functionality, but for your own comfort, convenience, and time.

You don’t want an integration that requires constant input and monitoring on your end, but you also don’t want to end up paying an outside consultant to do something you could either easily do yourself or delegate to your existing team, if not entirely automated. 

We work closely with Magento Commerce and can speak to its ease of integration.

How the Magento Commerce plugin works

If you happen to run your main store on a platform like Magento Commerce, the next step is easy. Magento has an Amazon Sales Channel plugin and there are similar plugins available for eBay and most other major resellers. 

These plugins essentially allow you to manage both your main store and any marketplaces from a single admin panel. 

As for the Amazon plugin, it offers both the baseline functionality you need and several exceptional features you may not have realized were an option. On the initial “does it do what I need to” side, it offers listing, fulfillment, order, and inventory management; all the administrative tools you need in one place, and all interconnected and synchronized. 

Beyond that, Magento’s plugin also comes loaded with specialized features like Intelligent Pricing and Business Pricing.

Without getting into the tech-y nuts and bolts of it all, Intelligent Pricing automatically adjusts your pricing to increase your chances of winning Amazon’s “Buy Box” position. Given that the vast majority of Amazon sales (between 80%-90% depending on when you read this) come from the Buy Box, this is a massive competitive advantage.

Business Pricing, meanwhile allows you to conduct B2B business through Amazon’s familiar storefront, allowing you to offer your B2B partners the tiered pricing and other benefits they expect while simultaneously building up your Amazon sales rank. Similar Magento plugins exist for eBay and other major resellers.

Taking the plunge

The process and functionality of integrations can vary greatly depending on the eCommerce platform your business is using. The important thing is to get started sooner rather than later. 

Next up: More tips for businesses looking to build out their eCommerce strategy.