What are marketplaces? And why is it important to consider them in your online sales strategy?
Marketplaces are virtual spaces that connect multiple retailers and brands to millions of potential buyers. Amazon, eBay, and Zalando are just some well-known examples.
If e-commerce is the digital showcase exclusively owned by a brand, marketplaces are a sort of digital shopping malls where users browse through millions of products from different brands and categories.
According to Statista, marketplaces dominate the e-commerce sector in Germany and Italy. Online sales estimates for January 2024 show that 44% of transactions in these countries take place through marketplaces. In France, however, the share of marketplaces represents 29% of the market.
Marketplaces can be of two types:
- Vertical: specialized in a single type of product or merchandise category (e.g., clothing and accessories).
- Horizontal: offering products from multiple categories.
Why sell on Marketplaces
To increase online sales, maintaining a presence on marketplaces can be an effective choice. Numerous studies indicate that more and more users regularly shop on these platforms for at least four reasons:
- Wide variety of products
- Frequent promotions and affordable prices
- Fast shipping
- Precisely indicated shipping times
- Security of buying through a well-known “brand”
In fact, according to research we conducted in collaboration with Confcommercio Roma and Format Research, 91% of consumers who shop online regularly use marketplace platforms as a purchasing channel.
53.6% of businesses use their own website to sell online, while 46.4% use marketplaces.
9.1% of businesses that currently do not use marketplace platforms for online sales plan to do so in the future.
For businesses, selling on marketplaces means obtaining 5 advantages:
1. Reach a significantly wider pool of potential customers
Marketplaces are popular and optimally positioned on search engines, making them easily accessible to millions of visitors who increasingly start their searches on these platforms.
2. Acquire traffic at a lower cost and sell more easily abroad
Compared to the resources needed to make your e-commerce stand out (SEO activities, Pay per Click campaigns, social media, etc.), reaching a wide audience through marketplaces is generally less expensive. For this reason, many brands begin selling abroad through marketplaces.
3. Intercept latent demand
On marketplaces, users primarily conduct unbranded searches, meaning searches not connected to a brand (e.g., “work pants” vs. “Diadora Utility work pants”). This allows lesser-known brands to be found online.
4. Clear out inventory
Attractive prices are one reason users frequently visit marketplaces. Reaching millions of customers through marketplaces is an effective tactic to clear out stock. Marketplaces operating in Flash Sales mode are particularly useful in this regard.
5. Study the needs of your audience
Selling on marketplaces can be an excellent way to quickly assess which products are most sought after and purchased by the public, observe competitors’ prices and strategies, and adjust the offer based on the data collected.
How to sell on marketplaces
There are 3 strategies for selling on marketplaces:
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Sell as a Vendor: In this case, the brand sells some of its products to the marketplace, treating it as another retailer (online). Generally, the brand sells these products at wholesale prices, resulting in lower margins and loss of control over pricing and content.
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Sell as a Seller: Brands sell directly on the marketplaces, handling digital content, shipping, billing, customer service, and returns. Selling directly on marketplaces requires specific resources and skills.
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Rely on a specialized Direct-to-Consumer (D2C) Seller: With this model, brands sell on marketplaces through a specialized partner who has the technology, expertise, fiscal requirements, and experience necessary to maximize penetration on various platforms.
Common mistakes
Including marketplaces in your sales strategy requires competence and experience. Without understanding their mechanisms, languages, and rules, you risk making mistakes and wasting resources. Here are the 4 most common missteps by novice brands and retailers:
1. Publishing incomplete or non-optimized product listings
The product page must provide clear and complete information to the user. It should include a title indicating the brand, product type, main function, and possibly some keywords to help users find it.
The product listing should also have an adequate description and high-quality images that match the product being sold.
2. Managing inventory poorly
It is essential to keep your inventory continuously updated: if a product is unavailable, it should not be published. The risk is offering a poor user experience, with obvious consequences on the seller’s reputation.
3. Underestimating the importance of Customer Service
Responding to a customer within 24 hours, communicating in the language of the country where the transaction takes place, meeting deadlines, and providing transparent information are just some of the good customer service practices that brands and retailers must adopt. In most marketplaces (like Amazon), these activities directly impact each seller’s ranking.
4. Selling at too low a price
The overall cost of selling on a marketplace may sometimes be underestimated. A common mistake is not accounting for marketplace fees, shipping costs, or logistics costs (in case of specific programs like Amazon’s FBA, eBay Guaranteed Delivery, and Zalando’s ZFS).
5. Not operating with a multichannel approach
Multichannel e-commerce is essential for success, offering visibility and flexibility. Relying on a single channel is limiting, while using various distribution methods allows you to reach a wider audience.
Adopting a multichannel strategy maximizes online presence and successfully addresses market challenges.
According to a Harvard Business Review study, 73% of consumers use multiple channels during their shopping journey, highlighting the importance of reaching customers through different channels such as marketplaces, e-commerce sites, and social media.
6. Reusing B2B logistics for B2C channels
A logistics structure that meets the needs of traditional retail networks is not always ready to process individual customer orders.
This underscores the need to adapt and enhance logistics capabilities to meet the specific needs of individual consumers, highlighting the importance of greater flexibility and versatility in the logistics process.
Based on our experience, we have identified the 28 most common mistakes companies make when selling on marketplaces (and we have also indicated how to avoid them). We have compiled them in a dedicated sheet that you can download for free here.
The Main Marketplaces
Depending on business objectives and the relevant merchandise category, brands today have the opportunity to choose from numerous marketplaces. Here is a selection of the main ones:
- Amazon is the ultimate site for online sales, and the most valuable brand in the world. It has over 350 million products and more than 300 million active users in over 180 countries.
- Zalando is a vertical platform exclusively specialized in the sale of clothing, shoes, and accessories. It operates in 25 countries.
- eBay offers more than 1 billion products in different categories. It connects millions of sellers and buyers in over 190 markets worldwide.
- Veepee is an online fashion and lifestyle outlet present in 10 countries, offering limited-time promotions and averaging 13 million visits per month in France.
- Spartoo is a French marketplace named after the sandals used by gladiators. It mainly focuses on shoes and clothing.
- Otto is a generalist German marketplace present in over 30 countries.
- Cdiscount is one of the most important e-commerce platforms in France. It is a horizontal platform, encompassing different merchandise categories.
- Allegro is the leading Polish marketplace and the fifth in Europe. In 2023, it reached almost 20 million active buyers. Customers can choose from more than 250 million product offers at competitive prices.
- La Redoute, a French company based in Roubaix and Paris specializing in clothing, has more than 10 million customers in 26 countries.
- Farfetch, the world’s largest global luxury fashion marketplace.
- JD.com is the Chinese equivalent of Amazon. Together with Tmall, it controls over 80% of online sales in China.
- Tmall is a Chinese marketplace focused on high-quality products in clothing, personal care, furniture, and food.
Success Stories
There are many stories of small and large businesses that have grown exponentially thanks to the showcases of various marketplaces. With an adequate strategy, marketplaces offer multiple opportunities for both established brands and small businesses.
Read also the story of how the clothing brand DOPPELGÄNGER registered a +123% growth on Zalando.