How to start selling on online marketplaces

As shoppers shifted online, worldwide e-commerce sales exceeded $5 trillion for the first time in 2022 and are projected to pass $7 trillion by 2025.¹ Though many businesses already sell through their own online store, attracting customers and managing digital sales can be difficult and expensive.

What is an online marketplace?

An online marketplace, also known as an e-marketplace, is a website or platform that connects buyers and sellers. Marketplaces can be used to sell anything from physical goods to services to digital products, making them the ideal place to grow your business.

Some online marketplaces, such as eBay and Amazon, give you broad access to global audiences, while others, like Shoppee and JD.com, are more popular in specific countries or regions.

The benefits of online marketplaces

Leveraging online marketplaces as part of your online sales strategy can provide numerous advantages compared to relying strictly on your own e-commerce site.

Benefits of online marketplaces include:

• Increase customer reach. Many online marketplaces have active customer bases of hundreds of millions of users, exposing your brand to more potential customers than you’d be able to reach on your own.
• Cost-effective to start and sell. Setting up an online store on a marketplace is relatively simple and can often be more cost-effective than creating and maintaining an e-commerce website on your own. Marketplaces typically handle payment processing, customer service, and sometimes marketing, inventory management, and shipping, saving you time and money.
• Sell to a global market: Online marketplaces can help you sell your products to a global audience, which can help you reach new customers and increase sales.
• Leverage positive reviews: Most online marketplaces encourage customers to leave reviews and ratings for products. A few positive reviews can help you build trust and credibility with other customers, making them more likely to buy than if they were to find your product on your website.

Types of online marketplaces

There are many different types of platforms that you can sell on. By understanding the different types of online marketplaces available, you can focus your time and energy on getting your products in front of the right customers.

Buyer-oriented e-marketplace

A buyer-oriented e-marketplace is focused on making it easy for buyers to find and buy a wide variety of products from many different sellers. Platforms like Amazon, eBay, and Etsy all fit this model, making this type of marketplace the one most people are familiar with. You would list your products on these types of sites if your business primarily sells products to consumers, known as business-to-consumer (B2C).

Supplier-oriented e-marketplace

A supplier-oriented e-marketplace connects businesses with other businesses, also known as B2B. These platforms act as a critical point in the supply chain by helping business source products, find vendors, make bulk purchases, manage quotes, and access financing. Examples of supplier-oriented e-marketplaces include Alibaba and Thomasnet.

Horizontal and vertical marketplaces in e-commerce

A vertical marketplace lets you focus on a specific niche or industry. For example, a medical equipment manufacturer would likely find more success selling their products on a healthcare-focused marketplace, allowing them to target buyers at hospitals and clinics.

A horizontal marketplace, on the other hand, offers a wide range of products across multiple industries, similar to shopping at the mall or a department store. A business that sells products that appeal to a wide range of users is more likely to reach more customers here than in a horizontal marketplace.

Independent e-marketplace

An independent e-marketplace is run by a third-party provider that provides the infrastructure for selling but does not sell products itself. This is compared to popular e-marketplaces like Amazon and Walmart that sell products in addition to listing items from third-party sellers. While these big marketplaces give you access to more customers, keep in mind that they are selling products in competition with you, which means you might not get the preferred placement available on independent e-marketplaces.

How to choose an online marketplace for a business

Not all platforms are right for all businesses. The online marketplace platform you choose will depend on your business, industry, audience, and overall business strategy. Here’s what to consider when comparing and choosing a platform:

• Target audience. Make sure their audience aligns with your target audience, including where the platform is most used, the demographics of who shops there, and the language they speak.
• Product/platform fit. Check to see if the online marketplace is somewhere people will think to go to look for your product. For example, if you sell specialty medical equipment, then it likely doesn't make sense to list on a vertical marketplace that focuses on auto supplies.
• Features. Look into the features that the platform provides to both buyers and sellers. For buyers, is the site easy to use, navigate, and check out? If not, frustrated shoppers will abandon their carts and go elsewhere. For sellers, look at how easy it is to list products, manage listings, track sales, manage communications with customers, market products, and access funds.
• Fees. Platforms make money by charging a fee or commissions for listing and selling products, not to mention additional fees for services like preferred placement, shipping, inventory management, and marketing. Some platforms charge more than others, impacting your overall profitability.
• Customer service. A negative customer experience like a damaged order can reflect as poorly on your brand as it does the platform’s, making it important to research the customer service and support offered by the marketplace. In addition, look into the support the marketplace provides sellers in case you have issues with your listings or sales.
• Payment options. Find a platform that offers the payment options your specific audience prefers, such as alternative payment methods or pay later options. This can help you capture additional sales from customers who have strong payment preferences or require payment flexibility.

Online marketplace checklist

We created a comprehensive online marketplace checklist you can use to compare different online marketplaces. Use the checklist to evaluate their audience, features, integrations, payment methods, and more, so you can find the marketplace that’s the right fit for your customer and your business.