Partner Article

Online marketplaces: the perfect business pitch

E-commerce has changed the way we shop dramatically; it’s constantly evolving to satisfy the convenience hungry consumer - and UK shoppers seem to have the largest appetite for it.

Proving recession-proof, online retail has gone from strength to strength: while the high street struggled on, post 2008, and business after business pulled down the shutters, people still flocked to the internet for a fuss free shopping experience.

And as our shopping centres still feel the after-effects of seven hard years, ongoing extortionate commercial property rents have made moving online an attractive, and often essential, option.

Some online shops run alongside their brick and mortar business hub, some are hobbyists who have decided to branch out a little, whilst others are a standalone business with a substantial profit margin.

The Federation of Small Businesses’ report on Small Businesses and Online Trading states that ’the UK is now the largest global per capita ecommerce market’.

According to a WorldPay ecommerce survey ’the UK’s online shoppers spend an average of £3,370 a year over the internet’. With 60% of shoppers buying ’online up to three times a month’ 40% buying ’at least once a week’ and 10%’ buying ’10 times or more in the course of a month.’

And it seems that whether or not you have an online business of your own, pitching up at an online marketplace is proving a highly lucrative venture for many…

Marketplace moguls

In the beginning, of course, there was eBay. Launched in 1995 they pioneered the online marketplace scene, forging a successful template for those to come.

Online marketplaces have become the internet’s version of a one-stop shop - the clue’s in the name: a shared online platform where consumers can access a broad range of products under one (albeit virtual) roof.

Enabling retailers to sell almost anything with flexibility whilst fostering a sense of customer independence – their appeal, and opportunities are endless.

The last decade has seen an explosion in online marketplaces – besides the all-powerful Amazon (which started in the US as a humble online bookstore) – Etsy, Asos Marketplace, and Not on the High Street are just a few huge ecommerce success stories.

The thrift-conscious online platform Etsy was founded in 2005 in a Brooklyn apartment.

Showcasing mostly handmade or vintage items from myriad retailers, it now has a staggering 1.4 million sellers, 19.8 million buyers and generated $1.93 billion gross merchandise sales in 2014.

Selling on a pre-existing online hub has proved the most successful and cost effective option for many small businesses wanting to take the plunge into the digital pool.

Most of these marketplaces have an ethos of shared success, for example Etsy takes a $0.20 listing fee and then 3.5% of the overall profit of a product.

However some are a little more costly: Not on the High Street charges a joining fee of £199, with an added share of 25% in commission.

Despite this cost, it’s proved a worthwhile venture, as 22 year old entrepreneur and founder of Oakdene Designs, Ben Grist found out.

He generates 95% of his income through Not on the High Street (the other 5% coming from his own personal website) and has now made over a million pounds through the marketplace.

A recent report by The Royal Society for the Encouragement of Arts, Manufactures and Commerce (RSA) highlighted the ’low cost of using the platform, which provides an ’off-the-shelf’ business [and] requires little financial outlay in the first instance’. Referring to Etsy, they also state that:

’47 percent of sellers said they were able to rely on their own savings to get their business off the ground, while 40 percent required no funding whatsoever.’

Besides convenience there are a few other compelling reasons to sell from an online marketplace:

• Ready-made audience

The audience for these platforms is ready and waiting. The internet offers a much wider customer base than the footfall of traditional retail.

Shoppers also have their’ go to’ websites when they think of buying gifts etc., as they can find a broader range of products in one place.

• Reputation building

An ever increasing number of small businesses are making a name for themselves on online platforms and forging a good reputation via feedback.

Generating traffic from a Google search to your website is a difficult task but marketplaces create a more level playing field for small businesses competing with corporate rivals, as they come up high in search results.

• Customer/ retailer protection

Small businesses often lack the protection scheme safety blanket that many larger and well established brands have. Online marketplaces often have fraud protection covering all the small businesses they house.

• Strength in community

Selling on an online marketplaces goes hand in hand with the current social media hype with the option to like, share and easily promote products and businesses.

Many marketplaces also have a supportive online community with blogs, forums, advice and help centres at the click of a button.

Making the move

Moving to, starting or buying an online business appeals to a wide demographic, from stay at home parents, to retired pensioners, to new start-ups who want to limit their initial outlay.

Internet retailing can work around your existing schedule, be squeezed into your spare time, become the focus of a full time career or an as an addition to another business.

Once a customer’s bought your product, you have a foot in the (digital) door and its over to you to give excellent service and hopefully encourage repeat custom.

And with an established worldwide audience, potential to increase sales and develop your business, e-commerce marketplaces drive customers to your shop who otherwise wouldn’t know that you exist – what better place to start.

By Melanie Luff, staff writer for BusinessesForSale.com, the market-leading directory of business opportunities from Dynamis. Melanie writes for all titles in the Dynamis Stable including PropertySales.com &FranchiseSales.com

This was posted in Bdaily's Members' News section by BusinessesForSale .