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An ecommerce marketplace connects buyers & sellers on a single platform. The success of running a business in a marketplace is determined by personalization elements, streamlined experiences, and conveniences across all channels. It brings revolutionary business opportunities for small and mid-sized brands who are looking for a good platform to sell their products. 

As a seller, online marketplaces allow you to reach more consumers and expand your brand visibility significantly. However, every platform has its unique requirements, listing fees, and product categories. So, if you would like to start selling your products on ecommerce marketplace platforms, upfront research is highly necessary. Continue reading and know all key aspects of selling on online ecommerce marketplaces.

Index

  1. Definition and features of an ecommerce marketplace
  2. How do marketplaces make money?
  3. Benefits of selling on ecom marketplace
  4. Steps to leverage marketplace success
  5. Tips to build a successful marketplace
  6. Top 5 online marketplaces that will scale your business
  7. Final words
  8. FAQs

Definition and Features of The Marketplace

An ecom or online marketplace is a multi-channel platform where plenty of service information and products are mainly offered by several third-party sellers. Every online marketplace platform is distinct in its product categories, target audience, listing fees, and specifications. Technically, there are three parties involved in a marketplace – the marketplace operator, online sellers, or vendors & buyers. 

Online marketplaces have different taxonomies, however, professionals usually categorize these platforms based on the business models such as B2B marketplaces, B2C marketplaces, C2C C2C & D2C marketplaces. 

Nowadays, ecommerce marketplace platforms are deeply influencing our daily lives. Over 2.14 billion people use marketplaces to buy products online every day. As of 2022, more than $3.25 trillion in goods were sold globally by the top marketplaces. The report says that online sales are predicted to reach $3.5 trillion by 2024. 

This is no surprise online marketplaces have limitless demands. No matter where you’re & where you want to target your market, with a potential online marketplace, you can easily expand your business online. Core features of an online marketplace include: 

  1. User-friendly portal for sellers: An ecommerce marketplace with a user-friendly portal always attracts sellers’ attention efficiently. It helps to enhance the user experience by allowing sellers to build new catalogs, insert products & organize orders with ease. For instance, the order management system is a common portal feature of online marketplaces, where sellers easily track their product status, sales volume & so on. 
  2. Seamless seller onboarding: Seller onboarding can be a big hassle for online retailers. To make the process streamlined for the sellers, a marketplace should have a user-friendly page that contains all the required information for the registration of the sellers.
  3. Easy-to-find products: In an online marketplace, it must be straightforward to discover the appropriate product. The marketplace must have top-notch search features that will allow users to find the product they are in search of. High-quality product images help to identify any product more accurately. Moreover, the product information must be appropriate which will help customers make the right choices. 
  4. Ratings & review options: Ratings & review features allow customers to seamlessly rate the products they purchased from the seller. In addition, this also helps sellers improve the quality of their products as well as the services they are offering to their customers. In this way, the ratings & review feature of a marketplace enhances user experience and product quality parallelly.
  5. Payment systems: The payment system is one of the crucial components of any eCommerce development marketplace. Without a proper payment system, sellers and buyers nobody can transact easily. A good payment system always offers a comprehensive refund procedure, high security protocols, different payment methods, tax invoices, sales receipts, and reports.
  6. Notifications and messaging: A marketplace is not just a set of software or an ecom platform. It’s a community that effectively requires proper communication. To enhance the sellers' & buyers' communication experience different notification channels such as SMS, e-mails & cross-platform alerts must be incorporated. A proper communication system minimizes the take taking for buyers' and sellers’ responses that results in a quick checkout process.

How Do Marketplaces Make Money?

An online marketplace platform bridges a gap between sellers and potential buyers through a website or a mobile application. It works as a middleman who puts buyers & sellers together for executing transactions efficiently. With an ecommerce marketplace sellers get a dedicated space to manage all orders and drive more sales. On the other hand, buyers have access to the inventory of sellers. Here are 3 common ways by which a marketplace makes money:

  1. Subscription model:

It’s one of the prevalent business models for ecommerce marketplaces. This is also called the monetization model by which marketplaces charge a monthly subscription fee from the users for the platform. This model allows sellers to find out new clients and gain access to potential clients’ database

  1. Commission model:

Commission-based revenue models are mainly used by larger and newer marketplaces. Marketplaces usually charge a percentage or a flat fee for each transaction as a commission. As compared to subscription-based revenue models, the commission charges are fully justified. This means parties only pay once they get value from the website. 

  1. Product listing fees:

As the name suggests, this is a nominal fee that you need to pay for listing your products on eCommerce marketplace sites. In this business model, sellers are usually charged a variable amount. The listing fee mainly depends on the product value & number of days you would like to keep your item on the site. 

Benefits of selling on ecom marketplace

No doubt, online marketplaces bring a wide spectrum of business opportunities for sellers. Moreover, these platforms also deliver an unmatched shopping experience with ease, especially during checkout. Here are the top benefits of selling on online marketplaces

  1. Huge customer base: One of the most prominent advantages of selling on marketplaces is that it helps you access millions of potential customers. As large marketplace platforms already possess their customer base, you can smoothly run your online business without finding prospective buyers and high brand promotion. 
  2. Cost reduction: Undoubtedly, an ecommerce marketplace is an affordable option & it always requires very less investment in comparison to a physical retail store. With a marketplace, online sellers don’t have to pay any kind of additional upfront costs such as store design, inventory, store rent, etc. 

In some cases, many offline sellers never get desired ROI & profits due to investing in stock, workforce & maintenance as well. Fortunately, online marketplaces give opportunities to small scale and mid scale sellers to expand their business without such expenses. 

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  1. Fast launching: Many online selling marketplaces have already established straightforward processes to encourage online sellers & allow them to start selling products on their platforms. The product launching process is simple. All you need to do is fill up all the paperwork and once you are approved as a registered seller, you can easily start uploading your product listings and selling with ease. Apart from that, many marketplace giants provide SaaS solutions that are simple to configure and execute.
  2. Faster buyer responses: When you start selling on online marketplaces, you will experience faster responses and interaction with buyers. Ecom giants offer streamlined delivery and logistic systems to their sellers. This means all orders will be delivered efficiently to the buyer’s doorstep. Moreover, product returns management is another plus point which is also managed properly. You can either give an order replacement or refund the payments to your buyer’s accounts. 
  3. Market demand management: Market demand management allows sellers to take action immediately. For instance, when buyers see a desired product is out of stock, they can easily select the ‘Notify Me’ option. This will inform them to buy again when the product will be available. This option also informs online sellers that they have to restock the items that have huge market demands. This helps to grab more customers and enhance the chances of driving more sales. 
  4. Enables international exports: E-commerce marketplace platforms assist their sellers to sell their products internationally to grab more customers. International exports help them transcend beyond boundaries & expand their business abroad. 

With these platforms, as a seller, you do not have to pay for any kind of physical store setup to reach new audiences. They can easily build an international customer base with the help of impressive product listings. For growing ecommerce businesses and aspiring entrepreneurs, international exports can be a very lucrative model that helps in global expansion & increases revenue.

  1. Maintain your brand value: Establishing your business on an online marketplace doesn’t mean renouncing your brand. As an online seller, you can use your brand name & logos when you’re selling your products on the marketplace. This can make many things simpler for your customers. 
  • Buyers can rate your brand independently
  • Buyers can easily find your brand on the marketplace before making a purchase
  • You can work on a corporate image by providing top-notch customer service & catalog

Steps to leverage marketplace success

There is a need to update and refine an online marketplace because of its ever-evolving nature – according to eCommerce development companies. By exploring the ways to enhance your marketplace strategies, your business can start gaining competitive advantages. Here are 7 crucial steps that will help to leverage long-term online marketplace success.

  1. Product content optimization

For customers, the product page is the ultimate destination. This is where they often find products and make their purchases eventually. The product content, product categories, and descriptions also push your customers to make purchases. 

If you put more effort into content optimization, there will be a great chance to see your listings start rising to the top of the search results. There are different services available that help you optimize online marketplaces and increase sales & visibility.

Moreover, for authentic content optimization, experts suggest searching for the appropriate keywords, making compelling product descriptions, finding out the best product categories & optimizing images. 

  1. Preparation for advertising

A wide range of product pages is mainly populated with ads. However, these ads are not just like banners or pop-ups that customers tend to ignore or block, they get clicked. If you really want to get long-term online marketplace success, you have to invest in online marketing to promote your product and accelerate your brand visibility. 

  1. Pricing automation

You may have proper pricing on your e-commerce store, however, it doesn’t mean that these prices will carry forward to every marketplace automatically. Always keep in mind that shoppers have a wide variety of options to purchase the same products at several prices within the marketplace. If you would like to stay competitive, you need to manage each product's price based on the overall pricing of your competitors. For automating the process, many online sellers take advantage of algorithmic repricers.

  1. Diversify the shipping strategies

In 2023, online shoppers do not just only want free and fast shipping, they expect it. There are too many ways that help you diversify shipping strategies. Some sellers go for leverage programs while others choose third-party logistics. Apart from that, some sellers also rely on both methods to ensure the fastest & affordable shipping options. For your convenience, we have shared 4 right shipping strategies: 

  • Make a unique customer experience: By making proper expectations with your online shipping strategy, you can ensure a positive and consistent experience for your potential customers. Try to keep transparent about any kind of shipping delay due to natural disasters, pandemics, carrier delays, etc.
  • Maximize your AOV or average order value: Offers and promotions around online shipping are the best ways to encourage your customers to purchase products from your marketplace. This increases AOV or average order value effectively. For instance, you may offer free shipping options on selected products for a limited time limit. 
  • Expand your e-commerce business: You can easily expand your online business with a global shipping strategy. With it, you can be able to reach more audiences around the globe and sell your products effectively. This will help you boost your business growth. 
  • Enhance your conversions: Having a high rate of conversion is the foundation of excellent sales volume. When your consumers know what they expect from your website, they prefer to finish their purchase. So, to improve your conversion, give several options to your customers so that they can do desired actions on your landing page or website. 

Tips to build a successful marketplace

When you’re planning to join a marketplace as an online seller, it’s important to consider who will be your target audience and what kind of online marketplace will align with your e-commerce business. For making a successful marketplace, the following tips can be helpful to you. 

  1. Choose industry wisely

One of the major reasons many ecommerce businesses fail is a lack of market demand. So, for marketplace success, you need to pick an ideal business model and a viable industry. Choosing the right industry domain not only helps you make more suppliers or buyers but also allows you to stay competitive in the market. Moreover, you can also assess the overall market availability & entire size of your target audience. 

  1. Horizontal vs vertical marketplaces

Secondly, you can consider three important aspects – marketplace structure, specializations, and trends. It will help you understand the market type clearly. There are two types of marketplaces – vertical & horizontal. Vertical marketplaces aim to single market domains for serving particular product categories to the target customers. On the other hand, horizontal marketplaces provide services and goods in several categories. 

  1. Proper business model

Next, you need to select a business model that drives more profit. An online marketplace may fail because its service can end up being irrelevant or unprofitable. There are multiple marketplace models that you can choose for your brand. They include:

  • Subscription: It requires users to pay some amount of registration fees
  • Commission: It’s a percentage or fee that is taken from the gross sales
  • Listing Fee: The sellers can be charged for product listing on the platforms
  • Featured Listings: This helps members pay for ads and featured listings
  • Lead Generation: This allows sellers to pay for generated leads
  • Freemium: In this model, the important marketplace functionalities are accessible & free. The sellers are able to pay for the premium features
  1. Value proposition

Always remember your platform can resonate with sellers & buyers. So, you need to understand the value proposition of your ecommerce business & how it can fix the pain points of the buyers. The key objective of your online marketplace is to give experiences & transactions that are not quickly available. Marketplace success completely relies on your value proposition. 

Furthermore, you should also consider the overall size of the market to achieve marketplace success. You can assess the market size by choosing the driving factors, and gaining insights into global or local turnovers, profit margins, etc.

  1. Build Trust

One of the best deep secrets of every ecommerce business's success is establishing trust with the audience. To build trust and make a strong relationship with the customers, you must follow the below rules: 

  • Add images & videos: Today’s customers believe in graphics and video content. When they know what you’re offering, they will prefer to make a purchase. 
  • Explain your product: Before selling your product, explain its pros and cons thoroughly to your customers. It will help them complete the purchase process
  • Ensure secure payments: Always offer reliable and safe payment methods to your users, so that all information and data are highly protected while utilizing your platform

Top 5 online marketplaces that will scale your business

Nowadays, a number of eCommerce marketplaces are available globally. Some of them enable retailers to sell anything, while some marketplaces only focus on particular niches such as books, fashion, tech, etc. 

In some cases, it becomes very difficult to find a perfect ecommerce marketplace for business growth. For your convenience, we will give you a list of online marketplaces that will effectively scale your business. Take a look at a list of region-wise marketplaces with maximum visits per month. 

Sl no

Marketplace

Region

Visits per month

1

Amazon

Global

5.7 Billion

2

eBay

Global

2.9 Billion

3

AliExpress

AliExpress

526.4 Million

4

Walmart

North America

514.03 Million

5

Etsy

Global

397.5 Million

6

Wildberries

Russia

279.8 Million

7

Flipkart

India

202.4 Million

8

Wayfair

North America

143.1 Million

9

Mercari

Japan & Bulgaria

139.52 Million

10

Americanas

Brazil

86.7 Million

 

  1. Amazon

Region: Global

Estimated traffic per month: 5.7 Billion

Amazon is the most-visited giant marketplace having the highest estimated traffic in the world. No doubt, this eCommerce platform is an excellent choice for expanding your business across the globe. The gigantic product listings with effective fulfillment ability make this marketplace the ultimate shopping destination for worldwide users. 

Many popular businesses have taken advantage of the large customer base of Amazon to empower their brand visibility and generate ROI. Moreover, many small-scale & mid-scale businesses also rely on this platform to build a strong customer base by delivering their products. 

When you sell on this platform, you will get a number of automation tools to run your online store smoothly. Moreover, if you do not want to pay attention to logistics, depending on Fulfillment by Amazon can be the best choice. When you start selling:

  • Try to invest in Amazon Advertising
  • Enroll in the Amazon Brand Registry to protect your business & make an authentic customer experience
  • Focus on identifying top-selling products on Amazon
  • Try offering your items on global Amazon markets

 

  1. eBay

Region: Global

Estimated traffic per month: 2.9 Billion

eBay is one of the popular online selling platforms that can effectively expand your brand globally. This is a Merchant-friendly platform that allows you to access more than 187 million users from 190 worldwide markets. eBay offers a massive opportunity for new marketplace sellers.

eBay helps sellers open stores with storefront pricing plans. It makes it easier for solo entrepreneurs and small-scale businesses to promote their brands globally. These pricing plans usually come with several features such as driving more sales, minimizing listing fees, personalizing eBay shop fronts, and many more.

On this marketplace, you can easily sell anything, whether it's a brand-new item or a used product. Once you register on eBay, you will get 250 listings per month with zero insertion fee. After that, you have to pay non-refundable listing fees for each product. So, it’s important to analyze the entire market & estimate the margin of your product before selling on eBay. When you start selling on this platform:

  • Understand what sells best here
  • Consider Global Shipping Program for optimal shipping strategies
  • Optimize product listings to enhance visibility including product titles and descriptions 
  • Add proper and high-quality product images
  • Advertise your offers with Promoted Listings
  • Offer your items on the global eBay markets

 

  1. AliExpress

Region: Global

Estimated traffic per month:  526.4 Million

Belonging to a leading eCommerce giant Alibaba Group, AliExpress is a very popular cross-border B2C marketplace having more than 500 million traffic per month. This marketplace allows small business owners to expand their brands internationally. Moreover, AliExpress offers a localized shopping experience & it's also available in eighteen languages.

As the best platform to sell online, AliExpress holds a wide group of customers who are searching for various products. You can find everything you want in this ecommerce marketplace and it also helps sellers to explore new business opportunities. In AliExpress, no overhead fees are required for selling, you have to only pay 5 to 8% commission fees on all transactions based on your product categories. Other benefits of this platform include: 

  • Gaining traffic is easier than other independent online stores
  • Good audience with massive purchase intent
  • Auto translations to multiple languages
  • Extensive product catalogs
  • Zero overhead fees
  1. Walmart

Region: USA

Estimated traffic per month: 514.03 Million

According to current statistics, Walmart received the third ranking position as the most-visited online marketplace in the US after Amazon & eBay. As the leading e-commerce giant, Walmart opens a wide business opportunity for medium and large-scale sellers. 

Though this marketplace is based in the US, you do not have to stay here to sell your products through Walmart. All you need to do is fulfill an application procedure & once you become a seller, you can start accessing millions of active users.

Just like Amazon, Walmart also offers a variety of innovative solutions for online sellers such as Walmart Fulfillment Services, expedited shipping, etc. Moreover, you don’t have to think about hidden fees, as it only charges 6 to 15 % for each transaction. Benefits of selling on Walmart include

  • Helps to boost brand awareness 
  • Enables you to reach more customers
  • Competitive commission rates & transparent fee structure
  • Simple fulfillment process
  • Built-in listing management
  1. Etsy

Region: Global

Estimated traffic per month: 397.5 Million

Etsy is a top-notch online marketplace for handmade products, craft supplies, vintage items, and more. As a business owner, if your products are targeted to arts & crafts communities, Etsy will be the ultimate marketplace for you. 

Etsy has around 400 million monthly visits, no doubt, it’s the best place for new sellers who are seeking a promising online marketplace. Apart from exploring the wide base of customers, you can also customize your own storefront & also use a number of built-in tools to promote your products. 

As this platform only focuses on a niche market, the annual revenue is lower than other international marketplaces. However, it enables you to access a laser-focused audience that you may hardly find elsewhere. In addition, the standard monthly subscription on Etsy is free and for the Plus subscription, you have to pay $10 per month. Key benefits of selling on Etsy include: 

  • Easy to start selling
  • Commitment to smaller business growth
  • Lower listing fees
  • Free standard monthly subscription
  • Built-in tools for product marketing

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Final words

Whether you are planning to start a new business online or reach more customers with your existing business, ecommerce marketplace platforms should be an integral part of your business strategy. Although selling on online marketplaces is not difficult, if you need to strongly expand your business & generate high revenue through it, proper research and analysis are important. Want to know more about online marketplaces, get in touch with Sphinx Solutions

FAQs

FAQ1: What is an online marketplace?

An online marketplace refers to the electronic marketplace that makes the online shopping experience easier. It connects buyers and sellers through a website and every marketplace platform has its own product categories, target audience, listing fees, and features. In a marketplace, the product info is provided by third-party sellers and it allows sellers to build a solid customer base by selling their products. 

 

FAQ2: What is a B2B marketplace?

A B2B marketplace stands for a business-to-business online platform where vendors offer their products in bulk quantities to their potential customers. The concept of a B2B marketplace facilitates the selling & buying process, enhances customer experience, and takes financial transactions transparency to the next level. One of the best examples of a B2B marketplace is Alibaba. 

FAQ3: What are the 3 main types of online marketplaces?

Based on the type of target audience, online marketplaces are categorized into three major types. They are:

  1. Business-to-business or B2B marketplace
  2. Business-to-consumer or B2C marketplace
  3. Peer-to-peer or P2P marketplace

FAQ4: Which is the best online marketplace?

There are plenty of online marketplaces that provide excellent shopping experiences. However, based on the customers’ choice and monthly traffic visits, 2023’s top ecommerce marketplaces include: 

  • Amazon
  • Ebay
  • Aliexpress
  • Walmart
  • Etsy

FAQ4: What do I need to consider when choosing an online marketplace?

Before choosing the best online marketplaces to sell products, 8 things should be considered:

  1. Marketplace size and reach
  2. Base of the target audience
  3. Order and payout management for vendors
  4. Comprehensive product management
  5. Scalability
  6. Pricing options
  7. Platform security
  8. Technical support

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