9 Pros and 13 Cons of Selling at Online Marketplace

Advantages and Disadvantages of a Marketplace Seller / Vendor

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You have already decided to sell your products online. But you don’t know where to sell them. You have heard that you can sell your products at different Marketplace websites such as Amazon, Flipkart, Snapdeal, Etsy, eBay etc. Here we are going to talk about different advantages and also some disadvantages to become a seller at different Marketplace websites.

Know about 9 advantages and 13 disadvantages of becoming a Seller/Vendor on Marketplace Websites

9 Advantages when Selling at Marketplaces:

  1. An already established market, so no need to create Demand.
  2. Instantly recognisable by Buyers
  3. Start Selling Fast as soon as uploading your first product.
  4. No need to worry about IT and Infrastructure.
  5. Some Marketplaces even handles your Inventory (e.g. Amazon Prime/FBA)
  6. Already established 24*7 Customer support by Marketplace
  7. Buyers Pay with confidence
  8. Easy Product Shipping and delivery management
  9. Test your Product’s acceptability among Buyers
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Advantages of Marketplace in details:

  1. The Marketplace websites are very popular. They have already acquired a very large customer base. So they get millions of customers visiting that site every day. You can take advantage of they are large customer base without creating a new demand for your product.
  2. Your product can be recognised instantly by already existing buyers.
  3. You can gain trust as soon as you upload your first product for selling because customers trust the Marketplace so much that they already know you as a seller are trustworthy.
  4. You don’t need to have your website or any IT infrastructure to sell your product. You can take advantage of Marketplace structure for your own. So you save a large amount of your it budget when selling at any Marketplace.
  5. You don’t need to worry about your product inventory. Some Marketplace sites like Amazon Prime/FBA handles your product inventory at their own warehouse. This is another great advantage of cutting down your warehouse and inventory management budget.
  6. Nearly all marketplaces have their own customer support team and they handle every query regarding your product and services round the clock for you.
  7. All Marketplace sites have payment escrow services of their own. This means customer confidently pays for your product. They know if any dispute happens the Marketplace will not release the seller’s payment and the dispute will be resolved quickly.
  8. Many market place sites allow product shipping and delivery management with their own courier service. You can take advantage of this delivery service as a Marketplace seller.
  9. If you are selling a new kind of product, you can’t assume whether this product will be acceptable to potential buyers or not. In this scenario, you can test the product with any reputed Marketplace site. You can make or import a few sample products, and try to sell at any marketplace you prefer. If buyers accept your product happily then you can make or import a large amount of this product and sale with different marketing channels.

These are all advantages you can get by selling at a Marketplace website. If you know more about disadvantages please share your knowledge with others by commenting below.

13 Disadvantages when Selling at Marketplaces:

Now we will talk about the potential disadvantages when you sell your product on different Marketplace websites. We have figured out this 13 cons or disadvantages if you become a Marketplace seller.

  1. Lower Profit Margin even greater Sales
  2. Buyers are Not your Customers
  3. Higher competition inside Marketplace between same type Sellers
  4. Lower Brand Visibility
  5. Product focused not Seller Focused
  6. Not SEO friendly Brand or Products
  7. Missing detail customer analysis and CRM
  8. Higher requirement levels like Tax and Legal papers
  9. Delayed pay-out duration
  10. No Customer Loyalty
  11. No direct communication between Buyer and Seller
  12. Many products are Prohibited at Marketplaces
  13. No Seller’s Store customisation available.

Disadvantages of Marketplace in details:

  1. Every Marketplace website runs different promotional and marketing campaigns. They allow various discounts at different times to sell more products. Although you can sell more products, profit margins get less even great at sales. Because you have to lower your price to allow more sales.
  2. Marketplace buyers are not your own customers. You share the customer base with other sellers. You lose the opportunity of cross selling and upselling your products at different stages at Marketplace.
  3. You have to compete with different sellers inside the Marketplace who sells the same product like yours. You have no control over price and profit because they are always competitive.
  4. If you are an established brand, which sales premium products with great price and good product quality you will not be visible differently among price competition at a marketplace. Because many times customers judge the product based on price range at any large Marketplace.
  5. Many marketplaces are always product focused they are not seller focused. It means they always do care about large sales volume not about the profit and margin of sellers.
  6. You cannot do Search Engine Optimisation (SEO) for your brand or product exclusively at Marketplace sites. You do not have any direct control on the pages had your products are shown.
  7. Customer analysis and customer relationship management (CRM) is an essential part of any online selling. Marketplaces do not give many details about your customers. And also you can’t directly contact with your customer or potential customers at any Marketplace.
  8. If you are a Startup you may not have detail tax registration like VAT, Service Tax or GST at early stages. Any Marketplace site requires this legal papers to become a seller on their website.
  9. We already know marketplace sites always have an escrow system. They hold the payment for your product for a certain time until the product reaches to your customer. They always have their own refund policies which main effect or conflict with your own policy.
  10. In maximum cases, marketplace buyers are not loyal. They are not your regular customers. They visit occasionally and buys any product if it has a large discount. There is no guarantee that the customer will come back to buy again from you.
  11. The marketplace does not allow direct interaction or communication between the buyer and the seller. The reason for this is that the seller might sell their products directly to the customer later, to bypass the fees taken by the marketplace as a Commission per sale.
  12. Different Marketplace allows different types of products. They have a Forbidden list of products which you can’t sell on their website. If you deal with these kinds of products you are not allowed to become a seller at any Marketplace.
  13. As a seller, you might want to customize your store page to make attractive for your potential buyers but in the case of Marketplace sites, you cannot customize your Store or product pages. You have no control over this layout and settings.

These are all different disadvantages I have figured out by interaction with different Marketplace sites. If you know more, please share your knowledge and experience with our readers by commenting below.

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