The Pros and Cons of Online Marketplaces for Business

Published: Sep 16, 2020

In this modern day and age, if your business has no online presence, then it is unlikely to succeed. An online presence allows your business to gain credibility, it makes it easier to reach customers and it helps you stand out from the competition and control your brand. When your business is online, people can leave feedback and reviews, giving your business a chance to adjust and improve its ways and its product in order to please customers.

Sell online

If you are selling goods, then you may have considered joining an online marketplace. This is an e-commerce app or website where your product or service information can be provided by a number of third parties. It helps to connect buyers to sellers and the owner of the marketplace will not own any of the inventory. However, just like any aspect of a business, there are pros and cons of online marketplaces for business and today, we will be taking a closer look into them.

Increase Sales

One of the first advantages that comes to uniting your business to an online marketplace is that it will provide an additional channel to sell and market your products. It also offers your business the opportunity to sell your goods overseas. Sales play a huge part in forming trust and loyalty between a business and its customers.

Also interesting: 5 Reasons why your own online store is better than Amazon.

During a sales interaction, customers should be encouraged to give a positive feedback or recommended your business to a friend. As your sales increase, so does brand awareness, which will support the growth of your company.

Reduces Costs

Compared to other sales channels, using online marketplaces to sell your goods will reduce marketing costs. Marketing is an area of your business that should not be ignored and is crucial for success. Marketing is required to help your business sell its products. If your business does not market itself, then it would cease to exist, as it ultimately drives sales. When your business signs up to an online marketplace, you will have the opportunity to cut the amount you spend on marketing your business, while continuing to increase profits.

Convenient Comparisons

Online marketplaces have become an extremely popular way for customers to shop for the products they desire. This is because they are so convenient and are open 24/7. Customers can browse an online marketplace in their own time and compare products and prices from a single source and can be easily accessed via an app. If you would like to learn more, then you should check out this study on online marketplaces by Appetiser Apps. This app development company will be able to help your business build and grow successful apps to help solve everyday problems.

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Builds Trust

When a business is part of a reputable and established online marketplace, it will build more trust between your brand and the buyer. This is especially important when you are trying to grow your customer base. When people can read impartial reviews of the goods you sell, then it may provide new customers with the confidence that they need to purchase your product over that of your competition. When trust is built and established between customers and a business, brand loyalty will develop and the reputation of your company will begin to improve.

Charges Commission

Now to the cons. An online marketplace has the power to charge commission on each sale your company makes. The fee that you will be charged will vary on the site you use to sell your products. Before you sell your goods on an online marketplace, you need to make sure that you fully understand the pricing structure of the marketplace you join, as this could affect your sales and profit.

T&C Restrictions

Selling on an online marketplace will have its advantages, but these will be no good if your product is not allowed to be sold on their platform. These restrictions will vary on different platforms and you will need to look into this before you commit. Another issue you may face are the restrictive terms and conditions that may be imposed when it comes to communicating with your customers.

Marketplace Limitations

As well as the above restrictions, you may also have to deal with other marketplace limitations. This may affect how your business is able to brand its online presence. If your online presence is poor, then your business will suffer in return. If the marketplace restrictions will affect the way you can brand your business’s online presence, then it may be best to avoid it altogether.

The advantages that your business is likely to gain by joining an online marketplace will depend on your industry and your customers. This means that it is vital that you understand the pros and cons. You also need to research the platform you use, to ensure it suits your business’s needs.