The idea behind multi-vendor sites is to allow people, or companies, to create profiles and post their products for sale.
In today’s world, where e commerce giants like Amazon, and Shopify boast huge third-party marketplaces online, just about anyone can become an entrepreneur. For sellers, starting up on an online marketplace is easy: There’s no storefront, no need to buy tons of inventory right away and they reap the benefits of an already established online infrastructure. The consumer demand for these marketplaces is also skyrocketing. Nearly all (97 percent) of “avid” online shoppers — customers who made at least seven online purchases in a three-month period — purchased from e commerce marketplaces in the past year, up from 85 percent in 2016, making digital marketplaces one of the best places emerging retailers can start growing their businesses.
These marketplaces offer ambitious business owners unique opportunities that traditional retail can’t match. First and foremost, sellers have instant access to billions of global consumers, a firm retail framework driving more efficient transactions, a wealth of customer analytics and useful data points and software tools to assist sellers with inventory management, advertising pricing, fulfillment and more.
There are also unique challenges they must face. For example, sophisticated algorithms, like Amazon’s “buy box,” prioritize certain sellers and make it more difficult for some retailers to capture potential customer eyeballs. Disparate marketplace rules, seller metrics, additional fees and longer payments terms that measure in weeks instead of days can also hinder sellers’ success.
So, what are some things sellers can do to boost their likelihood of being successful?
Look to new, specialized markets for niche customers and opportunities. While the big name players like Amazon, Jet.com and Walmart still dominate the online marketplace discussion, the proliferation of niche marketplaces has increased dramatically in the last year. The most strategic sellers have taken advantage of these new markets and the more targeted consumer audiences they offer.
In addition to the operational inventory management that comes along with selling across multiple marketplaces, sellers also face the challenge of keeping enough inventory to consistently meet demand. But, investment in inventory requires capital, which can be difficult to access when payouts are delayed by marketplace terms and conditions or cash flow remains unpredictable as new businesses are being established.
While traditional financing might not be available to these new entrepreneurs, there is a burgeoning crop of financial technology (fin tech) companies looking to support digital sellers’ unique needs. With the growth in number of online sellers, fin tech companies looking to support this new class of entrepreneurs are able to use big data based on sales history and sophisticated algorithms, fueled by seller performance, to make more informed decisions around lending and financing. These new financing options are designed specifically for e commerce sellers and provide them with capital and cash flow that allow sellers to keep up with demand in a more flexible way.
Online marketplaces are changing the retail landscape, and in turn creating a new vertical of unique entrepreneurs. As this retail trend continues to grow, fin tech companies will continue to innovate to support the unique needs of online sellers. Here are the tips and more opportunities for online market place.