When it comes to e-commerce, shopping on online marketplaces is a universal experience. But as ubiquitous as certain global e-commerce platforms have already become, there’s a good chance that they haven’t yet peaked. The 18 largest international marketplaces have grown by 51.7 percent in the past three years, and many shoppers who once relied on traditional retailers are heading to new platforms. And with 96 percent of shoppers having made at least one purchase from an online marketplace, their dominance only looks set to rise. So, if you’re growing a small business, the ability to maneuver within marketplaces is crucial.
Marketplaces are websites or applications that allow consumers to shop from many different sources. The marketplace doesn’t own the inventory, it simply presents the inventory of other businesses and facilitates transactions with end consumers. Marketplaces come in a variety of shapes and sizes, from the behemoths like eBay and Amazon to niche platforms like Etsy and Newegg. According to Louis DeJianne, Director of Retail Strategy at UPS, “Consumers will gravitate towards marketplaces to research and purchase items. The niche marketplaces have more specific demographics and products, but also create an environment where consumers are comfortable purchasing.”
Several factors are fueling the growth and popularity of marketplaces. First of all, marketplaces are commonly used as the jumping-off point for online shoppers when they want to make a purchase. “Consumers go to marketplaces to begin their search more often than anywhere else,” explains DeJianne. There’s also the increased variety of products and retailers, which creates an ‘endless aisle’ environment, which shoppers can use to easily research and compare products.
There’s also the attractive value proposition that marketplaces offer customers, with free shipping, fast delivery, easy returns, and responsive customer service. In fact, the 2018 UPS Pulse of the Online Shopper survey indicates that free or discounted shipping is the reason why 55 percent of U.S. shoppers choose online marketplaces over traditional stores. 37 percent of shoppers say broader selections within product categories motivate them to use online marketplaces.
Getting started with an online marketplace can seem challenging, particularly if you’re growing a small business, but there are plenty of compelling reasons to push ahead. Here are some of the key ways marketplaces can boost small business growth:
Marketplaces see significantly more traffic than retailer-owned websites. Just look at Amazon. According to SimilarWeb.com, Amazon received around 2.98 billion visits in December 2018, which makes it the number one ranking e-commerce website around the world. On marketplaces, your products can reach more customers, who may not have been exposed to your brand otherwise. Plus, millennials are much more likely to use an online marketplace, meaning that businesses have the opportunity to get their products in front of key demographics before the competition.
One of the most enticing benefits of marketplaces is their ability to help businesses start selling in international markets. “You don’t have to create demand in those countries—the marketplaces will do that for you. It’s great for entry into a country” says DeJianne. Online marketplaces also provide you with the functionality to quickly test demand and see which product categories do well in new markets, and which don’t.
It can be difficult to stand apart from the competition, especially if you’re growing a small business. “Consumers make choices depending on reviews, how you position the product and the overall cost. It can become difficult to differentiate yourself from other retailers,” says DeJianne. However, all things being equal, your price and product quality can give you a competitive advantage. So, for businesses that offer a unique or high-quality product, marketplaces may provide the opportunity to reach more customers. According to the UPS Pulse of the Online Shopper 2018 survey, 65 percent of people in the U.S. say that better prices are their top reason for purchasing at an online marketplace instead of a traditional retailer.
As marketplaces provide businesses with access to more customers, there’s also an opportunity to clear excess stock at a lower price point. DeJianne explains, “Because marketplaces have a large audience, excess stock can be placed on marketplaces at a lower cost to the end consumer.” Reducing occurrences of inventory write-offs and boosting your revenue in the process, this is another key benefit of the online marketplace for growing a small business.
For businesses who have recently joined an online marketplace, it can be difficult to get up to speed with the logistics side of operations. Services like UPS marketplace shipping can help make it easier. This free tool integrates with UPS shipping technology, and lets you easily enroll all your marketplaces and e-commerce stores, so you have an all-in-one-view of all your open orders. “With a couple of clicks, users can create shipping labels for their packages and consolidate multiple orders into one order from the same consumer,” says DeJianne. That means you can handle orders from eBay, Amazon, Etsy, Shopify and more—all at once: saving you precious time. “The real benefit is the ability to easily connect to the marketplace and make the shipping process streamlined across multiple marketplaces. It helps improve efficiency,” explains DeJianne.
From access to more customers to the ability to clear surplus stock, marketplaces can provide extensive opportunities for small business growth. With the help of a logistics provider that deeply integrates with marketplace technology, small businesses can be exposed to a whole new world of customers.
Find out more about the benefits of UPS marketplace shipping.
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