In this article, we provide an overview of the advantages and disadvantages of online marketplaces for sellers and review the top online marketplaces that offer reliable buying experiences.
Top 5 Online Marketplaces to Sell in 2024
The standard of living in the United States is high. Measured by a gross domestic product of over $27 trillion, the United States is the largest economic power in the world. While most purchases are still completed on a desktop or laptop, more people are choosing to make purchases via mobile devices. Online marketplaces are vital in this process, offering easy access to various products and services across all platforms.
In this article, we provide an overview of the advantages and disadvantages of online marketplaces for sellers and review the top online marketplaces that offer reliable buying experiences.
The Essence of Online Marketplaces
The demand for flexible, simple, and convenient shopping options has been growing for years. Experts say that by 2024 E-commerce sales will have increased to around $6,388 billion annually. Since the first online stores launched, companies have started closing brick-and-mortar locations in favor of more cost-effective online businesses.
More than half of online shoppers start their product search on online marketplaces instead of using a search engine. Thus, a marketplace is an important channel for online retailers that should be considered in the digital sales strategy.
Types of online marketplaces include:
- Vertical marketplaces that focus on just one product category. In many cases, these are so-called holistic solutions, i.e., packages of goods and services from the same business area. These bundles are curated by providers specifically for customers, which requires their participation and eliminates middlemen. TrueFacet.com, for example, only sells jewelry and related products.
- Horizontal marketplaces offer many different products that all have a common characteristic. They are not designed for a specific industry but focus on their product’s function. The goods traded here are in demand across all sectors, and the market is comparable to classic department stores due to the variety offered. Dote.com, for example, allows customers to shop at multiple retailers at once, seeing all products from all retailers at the same time.
- Global marketplaces offer everything. The popularity of E-commerce websites is particularly relevant because they attract a large number of customers. eBay and Amazon are the most widely known examples.
B2C E-commerce marketplaces are highly popular businesses that set up stores for additional sales channels. Expected to reach $3.5 trillion in sales revenue by 2024, these marketplaces are crucial in global commerce. Let's look at the most common benefits of selling on online marketplaces.
Access to a Wider Customer Base
Online marketplaces allow sellers to quickly reach many potential customers and enable companies to internationalize their business. They aggregate diverse consumer demographics in one platform, exposing sellers to a broad audience base they might not reach through standalone channels. In 2022, 47% of digital purchases globally were made through online marketplaces.
Operational Efficiency and Risk Management
Recent findings indicate that 2.9% of global E-commerce revenue was lost to fraud from 2022 to 2023, making risk management a crucial problem for businesses worldwide. Online platforms help marketplace sellers mitigate risks such as unpaid invoices, fraud, and litigation, ensuring smoother business processes. Marketplaces typically offer secure payment systems, buyer protection policies, and dispute resolution mechanisms. These measures help reduce administrative burdens and safeguard sellers against financial losses.
Cost Optimization and Scalability
Shopping platforms offer low-cost acquisition and potential sales opportunities. By tapping into the existing infrastructure and customer base of online marketplaces, sellers can expand their reach without significant upfront investment in marketing and infrastructure. They can call operations as demand grows.
Built-in E-commerce Solutions
Built-in tools in E-commerce solutions provided by marketplaces simplify the setup and management of the online storefront. Marketplaces offer intuitive interfaces, inventory management systems, and order fulfillment solutions, enabling sellers to establish and maintain an online presence with minimal technical expertise.
The LeverX project helped improve customer interactions and sales processes by creating a global E-commerce platform based on Adobe Experience Manager (AEM) and SAP Hybris Commerce.
The result?
- Robust E-commerce platform with tailored product catalogs
- Refined demand forecasting
- Data silos eliminated
- Streamlined data collection and processing
- Cost-effective data aggregation and visualization
- Improved customer experience
Marketing Power and Visibility
Marketplaces allow sellers to increase their visibility in search engines and solidify their reputation to amplify brand exposure and reduce marketing costs. Online marketplaces invest heavily in advertising and search engine optimization (SEO), driving traffic to product listings and enhancing sellers' visibility without additional marketing expenditure.
Customer Loyalty and Retention
Tailored subscription offers and loyalty programs provided by marketplaces attract and retain customers, fostering repeat purchases. Research shows that boosting customer retention rates by just 5% can result in profit increases of 25% to 95%. Large marketplaces augment customer service with exclusive benefits, incentives, and discounts, thus encouraging clients to remain loyal to participating sellers.
Overall, marketplaces offer E-commerce sellers the opportunity to use an existing system without the hassle of having to create their own shop or design a complete online presence. Selling via a marketplace is a suitable entry into E-commerce for many entrepreneurs, but it also comes with a few challenges.
Online Marketplaces: Collateral Challenges
The opportunities offered to sellers by online marketplaces also have significant disadvantages that you should be aware of before cooperating with any of the platforms. Let's consider the ones that online retailers note most often.
Fee Structure
Marketplace commissions, ranging from 5% to 20%, can impact profit margins, requiring sellers to carefully manage costs to remain competitive. Changes in fee structure or rules may impact a merchant's sales success. Businesses must navigate listing fees in seller accounts to maintain profitability.
Compliance Guidelines
Sellers have less control over the customer shopping experience in global marketplaces, particularly regarding product design, brand messaging, and customer experience. Stringent marketplace branding, descriptions, and pricing guidelines may hinder seller flexibility and efficiency.
Intense Competition
In online marketplaces, sellers compete with a large number of competitors. This often leads to price wars, eroding profit margins, and value perception.
Risk of Suspension
Sellers face suspension or exclusion from the marketplace if customer issues are not addressed promptly, risking revenue and reputation.
Top US Marketplaces to Choose in 2024
The US market is dominated by domestic players like Amazon, eBay, Walmart, Etsy, and Target. How do you choose the one that will make your product skyrocket? Most often, evaluation criteria include the marketplace's reach and the size of its audience, the level of support and resources provided to sellers, brand fit, seller guidelines, return policies, and more. Let’s examine each of the biggest market players in detail so that you can make more informed decisions about planning your sales strategies.
Amazon
Amazon is one of the largest and most popular online marketplaces in the United States. It offers a wide range of products, including electronics, clothing, books, and more. Amazon also provides a platform for third-party sellers to reach a large customer base through its Marketplace program.
Why sell on Amazon?
- Number of Visits per Month: 2.0B
- Global Reach: The company's international marketplace now includes over 1.9 million sellers, generating 58% of its total sales.
- Prime Membership: Offers Prime membership benefits like free two-day shipping, streaming services, and exclusive deals that enhance customer loyalty.
- Fulfillment by Amazon (FBA): Sellers can use Amazon's fulfillment centers for storage, packing, and shipping, which streamlines operations.
- Fees: Fees for Amazon vary depending on the category and fulfillment option, typically ranging from 6% to 45% per sale, plus additional fees for FBA services.
eBay
eBay is another well-known online marketplace that allows individuals and businesses to buy and sell a wide range of new and used items, including collectibles, electronics, fashion, and more. It is based on an auction or fixed-price model.
Why sell on eBay?
- Number of Visits per Month: 688.9M
- Global Reach: With over 1.7 billion listings and 135 million users worldwide, the platform allows sellers to reach a global audience, expanding market opportunities beyond domestic borders.
- Auction and Fixed Price Model: Provides flexibility with both auction-style and fixed-price listings, catering to different seller preferences and buyer behaviors.
- Fees: eBay fees typically include a listing fee and a final value fee, ranging from 10% to 12% of the total transaction amount.
Walmart
Walmart's online marketplace has grown rapidly in recent years. It offers a diverse range of products and, like Amazon, allows third-party sellers to offer their products on the platform. Walmart emphasizes competitive prices and often offers special offers and promotions. Their user-friendly interface and reliable shipping options have contributed to the popularity of their online marketplace.
Why sell on Walmart?
- Number of Visits per Month: 388.8M
- Variability: Over 57% of Amazon shoppers also shop on Walmart.com. Offering on both marketplaces therefore gives sellers a better chance of attracting these customers.
- Convenient Fulfillment and Delivery Options: Walmart offers eligible sellers the benefit of free two-day shipping, increasing the appeal of your listings to customers. Additionally, the platform provides convenient pickup and delivery options, including same-day delivery and store pickup, enhancing customer convenience.
- Fees: Walmart charges a referral fee ranging from 6% to 20% depending on the category, with additional fees for fulfillment services if utilized.
Etsy
Etsy is an online marketplace known for handmade, vintage, and unique goods, connecting independent sellers with buyers seeking one-of-a-kind items. It differs from the other marketplaces by the product focus on arts, crafts, and gifts.
Why sell on Etsy?
- Number of Visits per Month: 238.4M
- Global Reach: Over 95 million active buyers.
- Community Engagement: The platform fosters a strong sense of community among sellers and buyers through forums, events, and shared interests.
- Fees: Etsy charges a $0.20 listing fee per item and takes a 5% transaction fee, along with payment processing fees.
Target
Target's online marketplace offers a wide range of products, from home goods to electronics, emphasizing quality and affordability, making it a trusted destination for convenient shopping. Like Amazon and Walmart, Target welcomes third-party sellers to list their products on its platform, expanding its selection and providing shoppers with diverse options.
Why sell on Target?
- Number of Visits per Month: 175.7M
- Brand Recognition: Target leverages its strong brand reputation to attract shoppers seeking quality products and trusted retail experiences.
- Curated Selection: The online marketplace offers a curated selection of products across various categories, ensuring high quality and relevance for shoppers.
- Fees: Target does not charge listing fees but applies a referral fee ranging from 8% to 15% on each sale.
Unlock Your Full Potential With SAP Commerce Cloud
In addition to listing products on third-party marketplaces, establishing your own online shop is essential for operation without the constraints of marketplace regulations.
SAP Commerce Cloud (Hybris) platform provides access to expansive online marketplaces, broadening your reach to a larger target audience and thereby enhancing brand visibility. With your shop, you can avoid commissions, gain full access to valuable customer data (which is typically withheld by marketplaces), and maintain control over pricing, promotions, and marketing activities.
IDC MarketScape’s 2023-2024 Vendor Assessment notes that SAP prioritizes user experience, offering intuitive interfaces that streamline B2B commerce processes for enterprise buyers.
With SAP Commerce Cloud, you can:
- Eliminate Commissions: By operating your own shop, you can bypass marketplace fees, allocate resources more effectively, and improve your bottom line.
- Access Customer Data: SAP Commerce Cloud provides comprehensive analytics tools that grant access to valuable customer data. This enables you to better understand your customers, personalize their shopping experiences, and implement targeted marketing strategies.
- Maintain Control: With SAP Commerce Cloud, you have complete control over pricing strategies, promotions, and marketing campaigns. This flexibility allows you to adapt quickly to market changes and tailor your approach to meet the unique needs of your business.
- Scale Efficiently: The platform seamlessly integrates with various systems and technologies, providing a scalable and efficient platform for managing your online shop. Whether you're a newcomer to E-commerce or an established online retailer, integrating SAP Commerce Cloud (Hybris) as a solution opens up new avenues in your sales planning.
For companies looking to expand their digital presence in reputable e-markets, partnering with a reliable technical provider not only makes strategic sense but it could also be necessary to compete in today's highly competitive online arena. As an SAP Gold Partner and Global Strategic Supplier, LeverX can assist you in SAP solutions implementation and customization.
Conclusion
US E-commerce sales are expected to reach $1.25 trillion in 2024. With scalable solutions and a full understanding of their potential in place, businesses can easily adjust their operations to meet increasing demands and seize new opportunities.
Want to receive tailored advice on expanding classic shop functionalities from conception to design and technical implementation? Fill in the form below to schedule a call with the LeverX team.
