The Pros and Cons of Marketplace Selling
by Tim Parry
Selling your goods on ecommerce marketplace sites such as Amazon, eBay, and Etsy seems like a no-brainer. Just put your jewelry on Amazon and watch it fly off the shelves as 100 million Prime members race to make a purchase.
But are the marketplaces the best places to sell your goods, and is third-party selling as simple as the marketplace experts make it seem?
While the marketplaces are a great place to test the e-tail waters, there are pros and cons of selling on them. Here are some of the things you should know before you decide to expand your business as a third-party seller.
The Quick Sale
Selling on the marketplaces can take you from Mom and Pop status to Mass Merchant overnight. As of early 2017, Amazon reported that it had more than 300 million users worldwide (including those 100 million Prime members). eBay has 179 million active users worldwide, and Etsy is right behind that with 175 million.
The third-party marketplaces are set up to be user-friendly, even for sellers. Plus, if you do not have your own ecommerce site yet, it is easier to be a third-party seller than to set up your own site and fulfillment infrastructure. It’s as simple as listing your product or products, monitoring sales, and making a profit. It’s also a great way to test the waters to see if online selling is right for your jewelry business. You can sell in multiple marketplaces and see which gives you the best sales results.
While shoppers go to Amazon and Walmart for their daily essentials, they look for hard-to-find items on eBay and one-of-a-kind products on Etsy. If you plan to sell everyday 14k gold wedding bands online, then the marketplaces may not be right for you. But if you’re selling diamond-encrusted FitBit bands or stainless-steel bracelets with inspirational messages, the marketplaces may be right for you. Fair warning though: If you sell an item that’s easy for a crafter to make, then Etsy may not be the best place for you.
Hello, My Name Is…
The marketplaces will not be a place where you will make your name, even if you decide to open an Amazon Storefront instead of launching your own ecommerce site. The marketplaces are built to move product, not make a name for your business. Plus, as a third-party seller, you are privy to very little customer data. In fact, all you will know about your customer, for the most part, is where they live. Plus, the shopper sees the sale as an Amazon, eBay, or Etsy purchase. Unlike Cheers, the marketplaces are not where everybody knows your name.
Cost to Sell
There are several cost factors to consider if you’re going to be a third-party seller. Some are straight up costs, some a variable, and some could be unknown. For example, Amazon charges sellers $40 per month just to be a seller. Then there’s the 99-cent fee per item sold, plus “other selling fees, which vary by category,” according to Amazon. Also, shipping a 1 lb. domestic package via the United States Postal Service will cost just $7.95. But if you’re charging buyers a $7.95 shipping fee, and you get an International buyer, you could wipe out your profits – and more. The cost to ship a 1 lb. package to Russia via UPS starts at $137.11.
Crowded Playing Field
When you’re selling on your own ecommerce site, you are the master of your own domain. When you’re selling on Amazon, eBay, Etsy, Walmart, Jet.com, and so on, you are far from the only game in town. You will be competing with thousands of other people who may be selling the exact same items that you are. Some of these sellers may also have their items priced in a way you cannot beat. When you’re a fish in a big pond, you need a way to stand out.
Tim Parry is an ecommerce consultant and the Principal of Woodbury, CT-based A Content Shop, LLC. He is one of many ecommerce experts who will speak at the Atlanta Jewelry Show’s E-Tail Pavilion on March 2 and 3.