How to Choose an Online Marketplace

Essential factors to consider while selecting the right online marketplace for your small business

As one of the most densely populated countries in the world, India has always welcomed businesses of all types with open hands. The diversity in terms of culture, traditions, and similar elements has often provided small businesses an opportunity to thrive, as there can be a customer base for almost every category of products and services.
Small Business in India
Small Business in India
Small businesses serve as the backbone of our country’s economy, by contributing heavily to the GDP of the nation. In fact, micro, small and medium enterprises across India accounted for nearly 27 percent of India's GDP in the financial year 2021

However, the recent years have been difficult for traditional small businesses, mostly due to the pandemic and the economic meltdown it caused within the entire country.

Fortunately, e-commerce has managed to help small businesses with the tools needed to scale their business while competing with major corporations with a global presence. Online marketplaces are the biggest examples of this since they have made the exchange of goods and services among third party sellers and potential buyers an easier process.

Indian entrepreneurs are growing in numbers, and so are online marketplaces that help them build their businesses. Let’s see some factors you can consider when choosing a marketplace to set up shop on in this article. However, before getting started, let us try to understand what an online marketplace exactly is, and what it offers to sellers

What is an Online Marketplace?

An online marketplace is a digital marketplace that connects potential buyers with third party sellers, helping in facilitating business transactions between them online. It essentially acts as an intermediary, helping the trade be secure. Online marketplaces allow third party sellers to list their products or services for sale, which potential buyers can purchase directly from such sellers.

Unlike traditional brick-and-mortar stores that are limited to a specific location, online marketplaces can help reach millions of buyers within the country or across the world. Moreover, online marketplaces have complex and advanced search and recommendation algorithms that help sellers get their products to more potential customers. Online marketplaces in general may offer lower cost of entry for new sellers compared to traditional retail stores.

Setting Up an Online Marketplace
Setting Up an Online Marketplace
Setting up an online store on an online marketplace requires in certain cases, lower investments, as sellers do not have to worry about the rent for a physical shop, cost of utilities like electricity bill, water bill etc. This lower cost of entry is one of the factors that enable small businesses to compete with larger players and reach a wider customer base with ease.

At the end of the day, ease of conducting business also becomes a key factor to consider selling online. Sellers can easily manage their inventory, track orders, and handle customer service from the comfort of their own homes. Meanwhile, buyers can shop from anywhere, anytime, and enjoy delivery of their purchases. Sounds exciting, doesn't it?

So now that you know what a marketplace is, and why it is an advantageous tool to leverage for your business, let us take a look at how to choose the option that is most suitable for you. Listed below are 7 factors you may consider when choosing an online marketplace to set up your business on.

Reputation and Popularity

Choosing the Right Marketplace for your Business
Choosing the Right Marketplace for your Business
Think about this from a buyer’s perspective. While purchasing goods of any type, which marketplace would you choose- a fairly new marketplace of which you are not aware or an online marketplace which has been in existence for some time?

As a seller, the answer should give you an idea about the marketplace you must scout for. Filter through various options and find those marketplaces that have been around for several years. Then look for reviews about them which will give you an idea about the reputation of the marketplace. Also, make sure to consider the popularity of your chosen marketplace in the region you are looking to sell your products. This will help you come up with a great choice that can be suitable to your needs.

Ease of Use

One of the biggest advantages of e-commerce for a buyer is the comfort it provides during the entire shopping experience. So, it is very important that your online business storefront is on an online marketplace that is easy to use. Try to look for marketplaces that provide a simple but insightful interface that is appealing to your customers.

As a seller, the marketplace should be simple to navigate, with clear buttons and menus, so you can easily manage your inventory, track orders, and handle customer service. The listing tools should be easy to use, allowing you to add pictures and descriptions and set your prices and shipping information. The marketplace should also provide tools to manage your inventory so you can quickly update your product listings.

By selecting such a user-friendly marketplace, you will be able to save time and effort and concentrate on growing your business further.

Fees and Commission Charged

Researching about any fees and commission charged by the marketplace you are planning to sell on should be among your top concerns, especially if you are a new seller. Do remember that any fees charged can vary greatly between marketplaces and can impact your profit margins.
Fee Charged by Online Marketplaces
Fee Charged by Online Marketplaces
Thus, you may want to carefully evaluate the fees charged for listing products, transaction fees, and commissions taken on each sale. It is also important to consider any additional fees such as subscription costs, storage fees, or marketing fees if any. Be sure to compare the fees charged by different marketplaces and choose the one that offers the best value for your business.

By selecting a marketplace with lower fees and commissions, you can potentially increase your profit margin and can keep your business costs down.

Customer Base of the Marketplace

To select the right online marketplace for your small business, you need to research the demographics, interests, and behavior of your potential customers. Different marketplaces have varying audiences, making it necessary to identify which marketplace is best suited for reaching your target market.

For instance, a local grocery-based e-commerce platform may be ideal for someone selling fruits to a certain location, whereas a marketplace like Amazon could be a good fit for sellers looking to sell any type of product across the country.

By choosing a marketplace that caters to your target audience, you can increase your chances of reaching more potential customers and help boost sales. Additionally, you can customize your product listings and marketing efforts to meet the specific needs and interests of your target audience, increasing your chances of converting them into paying customers. Ultimately, understanding your target audience is one of the critical aspects in selecting the right online marketplace for your business.

By setting up shop on an online marketplace that fits your audience, you may enhance your chances of success and help in growing your business more effectively.

Analyzing Potential Competitors

Comparing Marketplaces to Pick the Best Option
Comparing Marketplaces to Pick the Best Option
You may conduct a detailed competitor analysis since it can help you massively while selecting an online marketplace to sell your products. It generally involves researching about the various options that act as contenders to the marketplace you have in mind. Conducting this activity can be helpful, since it would give you a better idea of what you are looking for in your ideal marketplace.

Through competitor analysis, you can identify gaps in the marketplace and opportunities for differentiation, allowing you to create a unique value proposition that sets you apart from other sellers. This way, you will have an edge over other sellers from the time of launch, which you can then use to scale your business further.

Features and Service Integrations

Features or Service Integrations refer to the software and tools that a marketplace may offer to help you manage your business more efficiently. Marketplaces with a huge set of features, tools, and service options allow you to streamline your operations, save time, and increase productivity.

All you need to do in order to find such a marketplace is look for information provided on the website. Almost every marketplace will have a clear description of each and every tool it provides, which you can access from the homepage. By choosing an option with integration capabilities that suit your business needs, you can optimize your operations and focus on growing your small business.

Customer Support

A study revealed that 85% customers will be looking to switch their preferred brand after a single bad customer service experience. Naturally, such an outcome is not desirable, especially for small business owners like you. So, it is always a wise idea to create your online business on platforms that offer a good customer support system. Good customer service can also help build trust and credibility with your customers, leading to increased customer satisfaction and loyalty.
Providing Customer Support
Providing Customer Support
Try to engage with the marketplace’s support yourself, as this will give you an idea of how the marketplace treats its customers. Try to learn and understand the variety of support options it has, the channels of communication, and the time taken to resolve any queries or issues.

You can also keep an eye out for educational resources and instructional videos for the potential customer that would be embedded within, as these are also a very easy and quick way to satisfy your customer's needs.

One option that you may consider is Amazon. As a marketplace that has been around for several years and constantly strived to empower local sellers, Amazon has positioned itself as one of the best e-commerce marketplace for small businesses in India. With over 10 lakh sellers and millions of customers, businesses can benefit from the vast reach and potential sales on Amazon.

With all these benefits and more, you may consider choosing Amazon as a marketplace option for your future business endeavors. So now that you have an idea of ways to find a good marketplace, why not get started right now and start selling today?
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