Selling on a marketplace is one of the easiest ways to start a business. Getting into this type of business is not difficult: all you have to do is decide on the product and choose the right marketplace. In this article, we’ll break down exactly what a marketplace-based business is, as well as what its pros and cons are.
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If you have any questions regarding its operation, you can visit the blog at YoMix.io and get all the necessary information there. A marketplace is a platform that brings together sellers of different products and provides information about them to customers. This definition is quite similar to that of an online store, right? But the marketplace and the online store have big differences:
- A marketplace doesn’t sell its own merchandise but rather collects offers from different sellers in one place. Merchandise is instead offered by sellers, and the marketplace simply aggregates them.
- The marketplace determines the rules of the trade, not you. When you sell in your own online store, you are the one who dictates the rules. Shipping terms, payment terms, and returns all depend on you. On a marketplace, the seller agrees with the terms of the marketplace, and if he violates them, he may be fined or even blocked forever.
- On marketplaces, you have no data on the buyer and no direct contact with him. In an online store, you can build an audience, interact with it, and thereby make additional sales. You have customer data to which you can send mailings with discounts and offers. On the marketplace, there is no access to client data, so sales can only be increased by competent promotion.
Why is business on marketplaces popular?
Perhaps the main advantage of a business based on the sale of goods on the marketplace is the fact that the entry threshold here is minimal. And here’s why:
- You don’t need your own website when trading on the marketplace. All sales go through the Marketplace platform. The seller only needs a personal account, which is provided by the marketplaces for free.
- Fewer costs for promotion, marketing, and advertising – to successfully trade and earn money on the marketplace is sufficient for internal SEO. But it is worth bearing in mind that competition may come into play – other sellers are able to buy advertising on the marketplace to get ahead of their opponents.
- Delivery is taken care of by the marketplace for a fee. You do not have to worry about building logistics, and this is just great – especially if you are a novice businessman.
- Goods can be sold all over the world.
- Marketplaces are customer-friendly – it’s easier to place an order in them than in an online store. With a couple of clicks in the app, the product is on its way. There is no need to wait for order confirmation and a call from the manager.
What about the costs?
If you choose to take the plunge into this type of business head-on, you’ll need to properly calculate the costs. When you set up a store on a marketplace, you will need to consider the costs of:
- Market analysis.
- Promoting products.
- Ensuring the right level of inventory.
- Personnel costs.
- Marketplace commission on sales.
- Order shipping costs.
- Warehouse costs.
- Shipping and transportation.
- Disposal of spoiled items.
- Returns processing
- Self-purchase of goods.
- Documentation costs.
- Commissions for money transfers.
Creating a marketplace business is a really cool and modern venture that can bring a lot of profit in both the short and long term.