What marketplace channels are and how to use them to grow

Get more digital commerce tips

Tactics to help you streamline and grow your business.

The ease and convenience of online shopping paired with new buying behaviors brought on by the pandemic mean consumers and businesses don’t shop like they used to.

And that is very, very good news for your ecommerce business.

According to a recent Alvarez and Marsal study, retail ecommerce will reach $5 trillion by 2025, with marketplaces snagging the majority share of the business. Currently, marketplace sales represent more than half of ecommerce sales in the U.S.

Utilizing a multichannel sales strategy is important for growing your ecommerce business today.  Instead of selling your products at only a single location, such as a retail store, or your website, using a multichannel strategy might include also selling your products on Amazon, Instagram, or Etsy.  

A multichannel strategy has several advantages, including:

  • The ability to expand your customer base 
  • Expanding internationally, and
  • Making your products available in more of the places your customers already prefer to buy

How can you use marketplace channels to beat your competitors and help your ecommerce business grow?

Let’s dig in.

What is Marketplace Sales

What Are marketplace channels?

Marketplace channels are different platforms that enable commerce. Marketplace channels include platforms such as Instagram and Facebook, and channels like Amazon, Etsy, and eBay.

What’s the difference between a marketplace channel and a sales channel?

A marketplace channel is a platform from which you can sell your products.  Marketplace channels are often differentiated by whether they are product-focused or content-focused.  Content-focused marketplaces are often referred to as “modern marketplaces.”

Product focused marketplaces include:

  • Amazon
  • Etsy
  • eBay
  • Walmart Marketplace
  • Google Shopping

Content-focused marketplaces include:

  • Facebook Marketplace
  • Instagram
  • TikTok

Not every marketing channel is suitable for every product.  For example, hand-crafted and unique items do well on marketplaces like Etsy and TikTok, while products that appeal to a broader base of consumers might succeed on a marketplace such as Amazon or Walmart.

Because these marketing channels offer a wide variety of products, buyers search for products they would like to purchase rather than a particular brand they’d like to purchase from.

For example, if your ecommerce business sells surfing shirts, your regular customers might return to your online store regularly to see what new shirts you have in stock. On a marketplace channel, a customer may have never heard of your brand, but may find you on TikTok, Amazon, or Google Shopping simply by searching for “Florida surfing shirts.” This enables you to reach new customers who might not be familiar with your brand otherwise.

On the other hand, a sales channel represents your business’s customers.  Are they consumers?  Retail stores?  Other businesses? A mix of several sales channels?

Types of Sales Channels:

  • Retail: a retail sales channel sells your products to the end customer.
  • Wholesale: a wholesale sales channel is when the manufacturer or wholesaler sells products in bulk to a retailer or other outlet for onward sale.
  • D2C: Direct to Consumer, commonly known as DTC, is when the manufacturer sells directly to consumers or end-users of their products, bypassing retailers.
  • B2B: Business to Business, or B2B, is when a business sells its products primarily to other businesses. 

What are the benefits of using marketplaces?

Ecommerce businesses that treat marketplaces as a standalone channel within their digital marketing strategy are likely to gain a significant competitive advantage against businesses that ignore or fail to leverage these opportunities effectively.

A recent study reported, “businesses with an inability to recognize, enable and efficiently manage new channels put themselves at risk of being targeted and outplayed by disruptors and channel-specific intermediaries that focus on uncovering these weaknesses and providing solutions for gaps in the market.”

To make a marketplace strategy successful for your business, your company will need to evaluate the different marketplaces to determine the best fit for your brand and the most effective means of reaching potential new customers.

Reach millions of new customers

The biggest benefit of using marketplaces to expand your sales avenues is leveraging the marketplace’s traffic. This is important because marketplace platforms give you access to millions of new customers looking to buy.

Expand internationally

Most marketplaces are global operations, so when you sell your brands on marketplace channels, you have expanded internationally with minimal time and effort on your part. Marketplaces also remove the need to translate your website and ecommerce store into multiple languages.

Ease of use

Another significant benefit is the ease of use.  Many marketplace platforms integrate easily with your existing ecommerce store. This allows you to quickly set up a new channel without any coding skills. In addition, you can keep your order and inventory data all in one place.

Systems and rules are already in place

Finally, another benefit is that systems and rules already exist. That means you don’t need to reinvent the wheel to start selling right away.

Customers are getting more comfortable with modern marketplaces

Data from the 2021 Black Friday Cyber Monday (BFCM) shows that sales generated via social media nearly tripled compared to 2020. This data indicates that buyers prefer to make purchases within their favorite social media platforms. This is likely due to increased comfort with shoppers and improved checkout experiences on these platforms.

What are the cons of using marketplaces?

While marketplaces have many benefits, there are also some drawbacks you will need to consider.

Seller restrictions

Most marketplaces require accurate product information upfront. This means to be approved to sell on the marketplace, you will need to provide detailed information about your company’s products, including unique product identifiers, such as SKU numbers.

Building within a siloed ecosystem

Would you try to sell your products on MySpace?  No, because most consumers have moved on from that platform. Customers follow trends, not only in what they buy, but also in which platforms they choose to visit. These shifts in consumer preferences can impact all platforms and brands. (Remember Silly Bands?) And while these consumer preferences are completely outside your control, it’s best to make sure your business is not relying on a single channel or platform.

In addition, many marketplaces such as YouTube or Instagram frequently change their algorithms, which can benefit some businesses and harm others. If you rely solely on these types of siloed ecosystems, your ecommerce business may find itself at the whims of the algorithm.

Your branding can be lost

Another potential drawback of marketplace channels is that your branding may not come through to the customer. Marketplace platforms are far more concerned with their own branding than yours.

In addition, because so many products are sold on marketplace platforms, customers often associate your product with the marketplace instead of your brand. This makes it challenging to differentiate your company from other shops that sell similar or parity products to yours.

Your customers are not your own

It is also important to remember that selling via a marketplace takes many decisions out of your hands. While your business will certainly benefit from a destination that buyers choose to visit, the platform may make decisions that do not necessarily benefit your business. 

While the trade-offs for access to their large audience are most likely worth the trouble, it is certainly something you will want to contemplate.

In addition, you may give up control over shipping and, thus some parts of the customer experience.

Things to consider when picking your marketplace

When choosing to expand your ecommerce business’s sales and brand reach through marketplace channels, you’ll want to consider the following questions:

  • What is your ecommerce business model?
  • What types of products do you sell?
  • What are your overall goals for your business?
  • What sales channels does your business use?
  • Who is your ideal customer, and where do they like to shop?
  • How are you positioning your ecommerce brand and products in the market?
  • What kind of payment processing system do you use?
  • What marketplace platforms are most likely to attract your ideal customers? How do you know?
  • What is your brand’s social media presence?  
  • How large is your following? How engaged is your following?

Final thoughts

To ensure stability for your ecommerce business and boost your sales, you’ll want to expand your business to multiple marketplace channels.

Over the last several years, retail sales have moved towards what is known as an omnichannel experience. This means your brand builds trust and affinity across multiple channels to strengthen customer relationships and nurture sales.

The more places your ecommerce business sells your products, the more ways customers can find you and connect with your brand. Plus, utilizing a variety of marketplace channels can help you tap into new customer bases you have not previously been able to reach.

Marketplaces offer an extraordinary opportunity to grow your ecommerce business and outsell your competition in 2023 and beyond. SkuVault Core and Linnwork Advanced connect to marketplaces all over the globe, check them out here.