Can I make money selling on Amazon or eBay?

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Can I make money selling on Amazon or eBay?

Can I make money selling on Amazon or eBay?

What are marketplaces and are they right for me?

Marketplaces make up a huge percentage of online sales in 2018, with many consumers now using the likes of eBay and Amazon as a research tool and their first point of contact on the net when considering a new product purchase.

Marketplaces make online shopping ludicrously convenient for consumers, because of the huge product catalogues and sizable number of third-party sellers providing a range of products, prices and shipping options in every category.

The challenge for online retailers is two-fold, (1) is selling on an online marketplace right for my business and (2) which marketplace(s) should I invest my time and effort into to get the best returns.


What do I need to know about marketplace selling?

Apart from the obvious, there are a few key issues that you need to understand before you start selling on a large marketplace.

1. Get to know the marketplace Amazon.com.au

Every marketplace has specific rules, processes and terms of use that you need to understand to make the most of the platform. This vary wildly from marketplace to marketplace, for example the listing requirements, data formats etc are vastly different between eBay and Amazon.

They make the rules, and its up to you to follow them. Period! It is very easy to get listings or even your whole business banned on a marketplace if you break their rules, even if unintentionally. Simple mistakes like including contact details in a listing can see that listing removed from the platform, and repeat offences can be severely dealt with.

2. How to I win business on a marketplace?

Marketplaces thrive and attract huge traffic by having extremely large catalogues and the most competitive prices. In order to secure sales in that environment, merchants have to work a much lower margins per sale with thew view to secure significantly higher sales volumes.

Before starting make sure you have a clear understanding of your costs and margins for each product, it's easy to have the lowest price but if you lose money it somewhat defeats the point.

3. How will I get customers?

One of the key selling points of marketplaces for merchants is the shear quantity of shoppers browsing at all times. The marketplaces are responsible for marketing and securing traffic to their site, and it's in their best interest to get your products sold.

Every part of the marketplace's user experience and marketing is focused on ensuring customers come to the site, find the product they want (hopefully your product) and purchase it with the least amount of effort.

This can be a win:win for merchants and the marketplace, if you play their game.

4. But what will it cost me?

Of course, there is no free lunch. Marketplace fees vary substantially but expect around 12% to 15% of the sale price to go to the marketplace.

With the exception of some marketplace's account fees or fees for custom "shops" within the marketplace, the fees are generally restricted to these "transaction" or "value" fees that only get charged when you sell something.

The benefit of this is you can effectively determine your final margin on each sale upfront as the cost of sale will be fixed based on the final sale price, though the downside is generally that you are giving away a large amount of your margin to the marketplace on each and every sale.

The comparison to this is the fees paid if you sell the same product through your own online store. While the transaction costs will generally be quite low (i.e. 1-2% for the payment gateway fees etc), you also need to account for the on-costs of the sale such as marketing costs, website and hosting fees etc to determine your final margin per sale.

Largely a successful online store will be more profitable per transaction than selling those products through a marketplace, but for smaller retailers, new merchants or merchants selling niche products a marketplace can be a better avenue as the other costs of selling your product can outweigh the marketplace's value fees.

5. How will my customer's know they are my products? eBay.com.au

Again this varies from marketplace to marketplace. eBay allows for very heavily customised business listings and shops, whereas Amazon strictly controls every listing and identifying the specific merchant can be much harder.

If you are used to selling via your own store you may find it difficult to to relinquish control over various aspects of the customer engagement and sale process like:

  • Your unique brand - the marketplace will prescribe how/where you can identify your business
  • The layout and presentation of your products - most marketplaces apply a standard product layout/template to your data
  • Out of the square marketing - you have no control over how your products are marketed
  • Pricing - to be competitive you have to play their game, customers will generally pick either the cheapest or fastest delivered product out of a set of identical (or similar) listings.
  • Customers - the customers aren't really yours on a marketplace, you are fulfilling the order on behalf of the marketplace but they retain the customer accounts and details, and provide very little detail to allow you to target those same customers for further sales or engage with them in future.

So should I sell on a marketplace or not?

Without sounding unnecessarily vague, it largely depends on your business and your products.

Both selling through your own store or selling through a marketplace can be very successful, and do not need to be mutually exclusive, but care should be given to ensure you aren't wasting your time and money.

Both your online store and any marketplaces you chose to list with require investments of time and money. Your store will need you to engage with customers directly, develop marketing plans, and maintain your website content. A marketplace by comparison will take care of those elements, but will need you to ensure you are competitive in a very busy environment through pricing, logistics, customer reviews/feedback and ensuring you have the right products available for sale.

All that said, many online retailers these days are "multi-channel". Using technology, like eCornerStores, you can use the data you are already curating for your online store to populate listings on other channels like eBay, Amazon Australia, Google Shopping and others. By automating those data management processes, you can save a great deal of time by only needing to deal with your data once. The orders from all those platforms should then consolidate back into your online store, allowing you to streamline your business processes around order fulfilment.

Which marketplace is right for my business?

There is technically no limit to which marketplaces you list your products on, however you need to balance the time and effort that you invest in order to maximise your value from each marketplace.

Every marketplace has it's strengths and weaknesses, and it's up to you to determine which suits your business best. By way of example, some of the largest are:

eBay

eBay allows for the sale of items using both a fixed price and bid based auction system, and has an enormous customer base and product catalogue. It is suitable for a wide range of products including used goods, parts and accessories.

eBay offers sellers tools to allow you to customise the shopping experience for customers browsing your products, and allows you to feature your brand and personality in your listings (and eBay "shop" depending on your package).

You will need to fulfil and ship all orders, as eBay does not provide those services.

eBay remains very competitive in the marketplace space, and are constantly working to improve their platform and market penetration. For example, recently eBay announced a partnership with the video streaming service - Stan - whereby new eBay Plus subscribers receive a free subscription as a benefit of their engagement with eBay.

Amazon

Amazon and the Amazon Marketplace is heavily focused on a consistent and high-quality user experience for all customers shopping on the site. In order to acheive that Amazon tightly control the nature and content of listings in the marketplace, and provide tools to assist sellers to conform with the marketplaces requirements and get products listed correctly.

Amazon also offer sellers and customers a range of other services and benefits. Sellers can access 'Fulfillment by Amazon' where Amazon will warehouse your goods for you and manage the shipping and fulfilment of orders on your behalf. For customers, Amazon has services like Amazon Prime, where shoppers are given free, fast and reliable shipping on eligible products (generally those that use 'Fulfillment by Amazon') as well as other benefits like subscriptions to Amazon's Prime video and music services.

The Amazon Marketplace has industry leading product comparison and recommendation functionality. While this means that your products are more likely to be found by the right customers, it also means that your products will be regularly compared to other like products and must be appealing and competitive.

Google Shopping

Quite different to the other two examples, Google Shopping is more akin to a product search engine built into the Google search website and in some ways operates in a similar way to Google AdWords. Google Shopping allows prospective customers to search for, view and compare Google_Shoppingproducts, and is displayed at the top of the Google search results page and in detail under the 'Shopping' search category.

In order to have your products displayed for customers searching for related key words, you must submit to Google your product information in the required format to Google Merchant Center and establishing your 'bids' and budget (somewhat similar to an Adwords campaign but without the focus on keywords - as Google will do that for you, though you can establish negative keywords where you won't show and cost you money unnecessarily).

Like Amazon, the format of listings is highly controlled by Google to establish a consistent user experience for customers, and sellers have little control over the listings other than the specific product details and product image.

Due to it's bid based pricing, the cost can vary dramatically depending on the type of product and competitiveness of the category.

So what products should I list on marketplaces?

As a rule, only list products you can afford to sell with a much lower margin. Your pricing will need to be more competitive and the marketplace will take it's clip of every sale that goes through.

The same goes for products where people will put in little effort to find what they want and are likely to sell in some volume regardless of the platform. Those consumers will likely find the product on Amazon or eBay, pick the lowest price and purchase - so it may as well be your product that they buy.

For niche products or item where customers will put in higher effort to research and identify the specific product to purchase, then these may be best left for your online store. That type of customer will take the time to search for and find products across the net, and that way you can retain the lion's share of the margin on each sale.

That being said, marketplaces can be a great way to "educate" customers of a niche or unusual product as they can often be displayed through complementary searches. So by listing some of your more niche products on eBay or Amazon, you may attract customers who were not specifically searching for your product but happened across the listing by searching for related products or browsing in related categories.

Can you help me get started?

Yes absolutely. eCorner support most major marketplaces for online retail including eBay, Amazon Australia, Facebook Shop and Google Shopping, and provide the technology to connect to those platforms in most of our packages.

We provide a range of guides and how-tos to help you get your site connected to the marketplace of your choice including:

eBay - https://www.ecorner.com.au/ebay

Amazon - https://www.ecorner.com.au/Amazon

We can also provide support to help you get your site connected and get your first listings published. Just reach out to our team and we'd be happy to discuss your needs.

 

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