The Advantages and Disadvantages of Selling on Online Marketplaces

Though online marketplaces have existed for quite a while now, the pandemic has led to much more focus on digital shopping. While they were already popular with youngsters, the older generations have also started cosying up to the idea of online shopping. With brick-and-mortar stores suffering huge losses during the covid lockdown, many businesses have turned to these established online marketplaces to sell their products. 

The pandemic has also led to a boom of new and small businesses with classes and colleges suspended and allowing the younger ones to pursue interests other than their education and make decent money out of it. If you are one of those people looking to start their own business and have your products listed on online marketplaces like Amazon, Flipkart, Myntra, etc., read the following pros and cons of such practices before making a decision. 

Pros of selling on online marketplaces

  1. A Large Number Of Customers 

You already have a large audience at hand. These shopping sites are flocked by millions daily. Your new products are exposed to their large customer base without heavy advertisement. Online marketplaces like Amazon and Flipkart are well established and trusted by many, so having your products listed there gives you credibility automatically. With proper and fair business practice, your products can easily become bestsellers.

2.   Easy And Hassle-Free:

Selling your products online requires a smooth website with an easy user interface. You have to ensure your products are displayed properly and the checkout flow is hassle-free. It is easy for a customer and seller to do business. You also need a team to handle technical difficulties. But using e-commerce marketplaces helps you save the budget of such technological infrastructure. These online marketplaces are well equipped to handle a heavy influx of customers and have a thorough system in place to fix technical issues.

3.   More Smooth:

These online marketplaces are household names. People automatically trust products associated with them. You don’t have to invest your time and money in building trust. Customers are not that keen on opening up their purses for small, independent businesses. E-commerce giants have a meticulous system to provide smooth and secure online transactions. Their excellent refund, return and exchange policies lure the customers to try out your new products without the fear of getting scammed.

4.   Better customer support: 

All these e-commerce websites have a strong customer service team who are given thorough training to handle customer queries and help them in case there is a problem. Most small and new businesses don’t have enough manpower or technical prowess to handle all customer questions. Having such an experienced team for your new business is a blessing.

5.   No Need For Inventory:       

Many e-commerce giants such as Amazon have their inventory and warehouses to store products listed on their websites. You don’t have to worry about storage spaces for your products if you use their services.

6.   Easy Delivery System:

The main part of an online business is shipping and delivery. As a small business, ensuring fast and correct shipping and delivery for every customer would be very tough. E-commerce sites like Flipkart and Amazon have delivery agents who take care of the shipping process and make sure the products reach the customer. These delivery agents also manage pick-ups in case of returns and exchanges.

7.   Advantage In Testing Products:

Online marketplaces are perfect places to test your new products because of the wide range of customers they offer. You can gauge the profitability of your products by seeing the buyer pattern and investing in the more popular ones.

Cons of selling on online marketplaces

1.   Lack of Customer Acquisition:

While online marketplaces give you access to a large customer base at the very get-go, you can’t claim these customers as your own. With a myriad of products available in an online marketplace, the customer focuses more on the item rather than the brand. If you are keen on creating your brand, then selling on an online marketplace might not be the best place for you.

2.   Higher Competition:

The competition is high. You are fighting for a place among sellers offering similar services as you from all over the country. You might not be able to control the prices and discounts you want to offer with your products due to such a competitive environment. Small businesses generally suffer because they get overshadowed by bigger businesses and such competitive prices puts the business at loss.

3.   No Actual Place:

You have no control over the pages where your product is to be displayed. These online marketplaces don’t allow Search Engine Optimisation (SEO) for individual brands and products.

4.   Profit Instability:

These online marketplaces focus more on the overall sales of products available on their site. A seller’s profit and margin are not their priority.

5.   Delays In Payment:

Businesses offering their products through e-commerce sites suffer delays in payments. The money from the customer doesn’t go directly to the seller as in the case of an in-person store. The money takes time to get processed, which is then handled by the marketplace to deduct service fees and taxes. Such delays can obstruct cash flow for small businesses that require a constant flow of capital to remain operational. High commissions charged by the marketplaces also cut down the profits that sellers make. 

6.   No Direct Communication:

The online marketplaces don’t allow direct communication between a seller and a buyer to prevent the seller from fostering its customer base inside the marketplace and avoid service and commission fees by directly getting paid by the customer. 

7.   More Refunds And Exchange:

As a seller, you might not like their return, refund, and exchange policies. You have to comply with the services they offer even if it means you have to incur losses. 

So, here are some pros and cons of selling in an online marketplace, but one must make sure that the customer is getting a smooth experience, no matter if it is an online marketplace or your website. Paypound introduces a smoother way to get payments via an all-in-one gateway. Get it for your website and make the payment process hassle-free.

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