Ecommerce has become a prominent way for people to make money with the internet.
Having an online business comes with a certain flexibility and freedom that isn’t true for traditional storefronts. The opportunity thrives as consumers prioritize efficiency and convenience in their shopping experiences.
But running an online store is not the only way to jump into the ecommerce universe. Some might even say that an online store limits the growth potential of specific brands. While some companies have successfully sold their products across various channels, others have transitioned into full-scale marketplaces.
This transition works best when decision-makers clearly understand the advantages and disadvantages of their specific brand – something we want to help you figure out.
We’ve put together this brief guide to help you decide if your online store could become an ecommerce marketplace.
The Potential Benefits of an Online Marketplace
Brands have made this move in the past, and for good reasons. The business model sounds pretty simple on paper: get all the perks that come with an online store and get a cut of what other sellers make, too.
We’ll explain this complexity later, but let’s focus on the positives.
Growth and Scalability
Think about all the effort you’ve put into building your brand. You work hard to build awareness, instill loyalty, and create buzz.
Other online sellers do this, too.
When switching to an online marketplace, you access your sellers’ network and audience. Each one brings its customers along. If you can facilitate a fantastic experience for your vendors, they’ll stick around, and you’ll both grow together.
Different Kinds of Daily Work
Now, think about how much time you spend fulfilling orders, managing inventory, and doing other tedious tasks. Some people love that, but others want to sell good products.
Transitioning to an ecommerce marketplace could help you do more of what you want and less of the little stuff.
Each store will fulfill its orders. They’ll monitor their inventory. You’ll still have plenty to do, don’t get me wrong, but the work will be different. You’ll spend more time doing things like:
- Overseeing vendor success
- Honing in on the customer experience
- Bringing in more third-party sellers that can boost business
- Interacting with customers through support and feedback
- Maintaining your online platform
It’s not that you won’t have any work to do. It’s just that the work may look different than what you spend time on now.
A Responsible Change of Pace
Some online business owners want to mix things up slightly. Running an online store takes a lot out of you, but you probably don’t want to abandon all your accomplishments completely.
Moving from a store to a marketplace could help you strike that delicate balance. The two business models have plenty of overlap. You can still maintain your store and sell your products, but you can also bring other sellers.
You could even start small with this to test the waters. Please bring in a few select marketplace sellers related to your brand and see how you like it. See how your customers respond and then decide if you want to do more of it.
When it’s time to dive in, you’ll have to take things more seriously by:
- Building a new business plan
- Learn market expectations
- Understand vendor payouts and policies
- Have the appropriate tech tools to back you up
3 New Challenges to Consider
The operational gap between a single store and an online marketplace won’t feel huge, but you will notice it. In the end, the two have plenty of differences worth examining. You will run into unique challenges if you choose to switch over.
We’ll highlight three of the biggest ones below and give you some quick ideas about how you can respond to them.
Differentiating Yourself in a New Competitive Space
There are countless online marketplaces across the internet, some of which have huge followings – ever heard of Amazon? Or Etsy? Or eBay? Or Walmart? Of course, you have! Everyone has.
These marketplaces have made names for themselves across the whole world. You can’t just show up on the scene and expect to take over.
But you also don’t have to compete with them.
Yes, these brands lead the way in ecommerce sales and other important metrics, but you can differentiate your marketplace by focusing on a few simple things, like:
- Developing a niche
- Building a community
- Offering excellent customer experiences
- Optimizing your product listings
- Knowing your customers’ needs
You’ll find competition in any industry. You only overcome it by doing something different.
Managing Takes Priority Over Selling
This feels like a good time to bring up that old cliché about the grass being greener on the other side.
While running an online marketplace may relieve some of the frustrations of running a single ecommerce site, it doesn’t mean you’ll love every second of your job.
You will have moments when you think you’ve left the ecommerce business behind and jumped into the people management industry.
The transition has a different set of responsibilities; your success relies on the success of your vendors and vice versa. Mutual accountability happens, but ultimately, it all falls on your shoulders.
None of this is necessarily a bad thing. It’s just important to know about the changes before you jump in.
Recruiting Vendors and Buyers
Once you have an established marketplace, you don’t have to worry about recruitment. Brands will want to sell on your platform when they hear about it from their customers, but before that, you’ll have to convince them that you’re worth it.
Marketplace operators relate this to the age-old chicken and egg question. You need good vendors to attract customers to your marketplace. But vendors only want to go where there are customers.
It would be best if you attracted both at the same time.
That might look like selling them on a vision for what the marketplace will become for third-party sellers. Show them how you will compare to other competitors and convince them that they should join.
Some of that will include the perks for them. If you’re reading this blog, you have an advantage here because, as someone who runs an ecommerce store, you know what kind of incentives you’d like to see. Figure out how you can court them in a way you’d want to be courted by an emerging marketplace.
On the customer side, the basic marketing principles apply here just as much as anywhere else. Show them that your offer brings them something they are currently missing.
Maybe it’s a convenience. Perhaps it’s community. Maybe it’s something else. Whatever it is, it should be determined by what your target audience wants, so make sure you know them well enough to understand what they want.
Setting Your Online Marketplace Up for Success
The potential for success in your online marketplace comes from having a thoughtful strategy and the tools to implement it. When those two things come together, you’ll see the profits rise.
That’s what happened to Beauty Bridge. The brand started as a single online store but partnered with StoreAutomator to grow its profits by 500%.
Book a demo with us anytime if you’d like to learn more about how StoreAutomator can help your brand achieve those results. Our dedicated team of experts would love to hear about your vision and how we can help.