Selling products via online marketplaces such as Amazon, Alibaba, eBay, marketplace Zalando and Bol.com is a growing industry. Do you intend to use one of these online platforms as a marketing channel for your products? Here are five advantages and disadvantages of selling through (international) platforms.
- No substantial investments are needed. You will have to pay a commission to the platform for each sale.
- Cost savings. You do not have to build and maintain your own website with local extensions.
- Free-riding on the marketing activities and reputation of the platform. You do not have to invest in generating traffic to the website yourself.
- Most platforms deal with the administrative matters, such as the actual purchase, the payment, the service and the logistics.
- Opening up to international markets occurs relatively fast. You access new target groups and generate more sales.
- When your products sell well, the marketplace could start selling the product itself.
- Because you are selling on an external platform, your brand name will gain less recognition than if you were to sell it in your own online shop. This also applies to the communication with your end customer. Communication with your customers goes via the platform and is less direct.
- The correct stock level is important when it comes to marketplaces. If there are delivery problems, the consequences for your sales account can be serious. As a result, your store could drop in the rankings of the marketplace, or your sales account might be closed.
- The price transparency is high. Your products are being viewed next to other providers of similar products. You also share content (product description) with a platform.
- You hand in a margin for marketing and other costs of the marketplace. The commission is sometimes considered to be high.
InvestmentThe investment in an online marketplace is relatively small compared to building your own (mobile) shop in a different language with local extensions. These are additional costs when you invest in a platform:
- You pay a fixed amount per month for your sales account. This amount differs per marketplace. Compare the prices of the marketplaces before you make a choice. Placing the products on the platform is usually free.
- You need a financial buffer, considering that the first payout can take up to a couple of weeks.
- For each sale you pay commission to the marketplace. Usually, this is a percentage of the sales and it differs among marketplaces. The percentage often depends on the product category.
- When the marketplace does not sell products yet, keep in mind the (extra) translating costs you might need to pay for the product and the product description.
- Many marketplaces offer a fulfillment service. This means that your products can be held in stock in a logistics centre. The marketplace carries out the entire logistical processing. For every package you ship, you pay a certain amount. Notice that having a local stock could have tax consequences (e.g. registering a (local) foreign VAT number and declaring VAT abroad).