• Charles Balladur

Is Multi-Marketplace Selling Right For You?



The Ins And Outs Of Diversifying Your ECommerce Business Into Different Online Marketplaces


Back in the brick-and-mortar days of retail, expanding your retail footprint meant betting big on a new location. Now all you need is a laptop – in theory.

Multi-marketplace selling (also called “multi-channel” or “cross-channel”) is becoming a popular eCommerce strategy. With countless platforms to sell online and the eCommerce industry tipped to reach $5 trillion USD in 2021, there’s no need to keep all your eggs in one basket.


So, should you diversify?


Well, that depends. It depends on your resources, goals, eCommerce business strategy and risk appetite, among many other factors.



Multi-Marketplace VS Multi-Geography


Let’s quickly define multi-marketplace and multi-geography before getting deeper into the decision factors.

  • Multi-marketplace means selling on different online platforms, often involving some (or significant) geographic overlap

  • Multi-geography involves selling in different countries, whether on a global platform or mixing it up between regions

For example: selling pet supplies to American customers on Amazon.com and Chewy.com is a multi-marketplace strategy. Selling to US customers on Amazon.com and UK customers on Amazon.co.uk would be a multi-geography approach.


Multi-marketplace and multi-geography are not mutually exclusive; the same pet supply brand could sell to US customers on Amazon.com and reach South American audiences on Mercado Libre, combining multi-channel and multi-geography strategies.


We’ll go into multi-geography eCommerce and hybrid strategies in a later post.



Store Structure


Horizontal marketplaces like Amazon and eBay are industry-agnostic, with sellers competing in the same arena. You are responsible for building your brand as a seller, but what you sell is up to you.


Vertical marketplaces like Etsy and Chewy, focus their offering in one industry, often with deeper product levels. Airbnb focuses on holidays, Etsy on arts and crafts, Chewy on pet supplies.


Building a brand on Amazon means fighting for attention, generating reviews, and potentially ending up in the same basket as a pillow with Danny DeVito’s face. Retailing on a vertical marketplace, on the other hand, could mean more competition in your niche; however, that niche has the consumers’ undivided attention.


Why You Might Consider A Diverse Selling Strategy


Competition in online retail is fierce. Customers know they have the luxury of shopping around for the best deal, be that the lowest price, fastest shipping or flexible returns.

At the same time, the plethora of online selling platforms grows unabated. While Amazon remains the biggest player by market cap, they are far from the only online marketplace. Savvy online sellers can set up multiple storefronts, meaning multiple income streams (which double as safety nets).


However, the flip side is you might spend so much time managing those storefronts that you can’t focus on growing your business. So before you go rushing off to set up a new store, weigh up whether it’s worth it long-term.


Pros And Cons Of Multi-Marketplace Selling

Pro's

Con's

Create more sales channels

Requires time, energy and resources

Leverage vertical marketplaces that focus on your audience’s interests

Each platform has its own rules for sellers

Reach diverse and minority customers

Managing multiple stores can quickly become overwhelming for solo entrepreneurs

Strengthen your presence within a competitive niche

Competition may be more acute on special-interest platforms

Avoid fees and restrictions on certain platforms

Different specs required for images and promotional material

Dilute platform risk (in case sales stall on one platform)

Brand recognition may decline on vertical marketplaces

Test different promotional material

Gather customer data from different sources


Online retail is steadily gaining ground. eCommerce now accounts for 13-14% of all retail sales in the US and more than double that (28.1%) in the UK. In the last year alone, online retail growth averaged 27.6% around the world.


Diversifying into different marketplaces can potentially set up several lucrative income streams to get a piece of the growth.


And as the buying power among minority groups continues to rise, multi-channel selling strategies can be the key to diversifying your customer base or reaching underrepresented buyers.


But, as with any expansion decision, diversifying into multi-marketplace selling is not always going to be smooth sailing. Managing inventory and operations becomes increasingly complex. Simultaneously, your marketing spend goes up, and you have less time to monitor whether any of these things are actually working.


We’re certainly not saying don’t expand (we love watching eCommerce brands flourish), only that you should consider your readiness for growth.


Brand Loyalty


Amazon FBA brands and eBay sellers establish authority by generating positive reviews. In turn, this helps to feature above the competition in search results. In addition, brands who build a community can translate this investment to a social media following or website (and vice-versa from external sources to their Amazon store), which keeps customers coming back.


Operations


Managing multi-channel supply chains can be complex and time-consuming, but there are services that lighten the workload. For example, Amazon FBA (Fulfillment by Amazon) allows sellers to leverage the eCommerce giant’s logistics, shipping, and returns network. Amazon MCF (Multi-Channel Fulfillment), is a similar service for multi-marketplace sellers.

Increasingly, similar fulfilment services are popping up, for instance ShipBob, FedEx Fulfillment, Rakuten Super Logistics and eFulfillment for eBay sellers.


Whether you enlist these services or handle shipping and logistics by expanding your operations team (or some combination of the two) depends on your business strategy.


Growing Platforms


Amazon might be the largest online marketplace by market cap, but not gross merchandise value (GMV). That title goes to Taobao, owned by Alibaba. And Pinterest recently overtook eBay’s market cap, while the fastest-growing platforms are mostly food delivery apps.

Keep an eye on the growing platforms in your region. We’ll expand on this when we dive into multi-geography eCommerce structures, but it’s worth noting that Amazon is not ubiquitous.


Quick Tips For Testing A Cross-Platform Selling Strategy


Multi-marketplace selling looks different in every industry. Pet food eCommerce brands have other considerations to baby clothing stores, while home and garden stores compete in a different arena again.


So there is no one-size-fits-all approach to diversifying online sales platforms. As you establish a brand on one platform like Amazon, monitor your market fit, traffic statistics, audience demographics and other signals that might indicate whether it’s time to scale up or sell to an Amazon FBA aggregator.


If you do decide to grow, here are some tips to get started:

  • Start small: Open one new channel at a time

  • Track your data: Spend 3 to 6 months analysing your results from each new channel before scaling

  • Build rapport: Encourage customers to sign up to an email list so you can stay in touch and cultivate a community around your brand

  • Be open-minded: Expanding is experimenting, which means surprising things fail while others succeed

  • Do your research: Read seller forums - or better still, speak with sellers who are active on the platform you want to test

  • Have a plan: eCommerce business strategies don’t appear overnight, so give your brand time to grow

The nature of eCommerce is that platforms (and brands) come and go over time. Our final tip is to stay focused on your long-term goals - your “north star”. Multi-channel expansion requires extra resources and marketplace expertise. For most entrepreneurs, this is where the business quickly outgrows one person’s ability to manage an increasingly complex operational and financial nexus, and they are faced with the decision to stall growth, scale their team, or sell to an Amazon FBA aggregator like Heroes.


Our global team and multi-market expertise are perfectly aligned with brands that are ready to expand. If you’re interested in exploring the possibilities of selling your FBA business (soon or in the future) then reach out to Heroes any time.