We analyze the pros and cons of working on marketplaces for sellers and managers, and also suggest how to choose your first platform and what nuances are important to consider.
What is a marketplace and how does it work?
Pros and cons of working with marketplaces
What products are profitable to sell
Which marketplace to work with
How to start working on the marketplace
Expert advice
What is a marketplace and how does it work?
Table of Contents
For a seller, a marketplace is a sales channel that allows selling goods throughout Russia without unnecessary expenses on maintaining warehouses, additional personnel, creating a website and advertising. A marketplace is a huge online showcase, a virtual trading platform where the seller lists goods and pays a commission for using the platform.
Schematically, the marketplace’s work process looks like this:
1. The seller registers and posts products on the online storefront.
2. The marketplace shows the products to potential buyers, promotes them, places the sellers’ products in its warehouses and delivers them to buyers.
3. The buyer searches for the desired product, compares offers from different sellers and places an order.
4. The marketplace earns on commissions, delivery and additional services, the seller – on the sale of his product.
To successfully sell products on marketplaces, you need to be able to find popular niches, calculate unit economics , test business hypotheses and raise cards in the search results. These and other subtleties of the work can be mastered in the course “Marketplace Manager”. The basic program is designed for 5 months of training, the extended one – for 9. You can start learning for free.
Read Also:Analysis of product demand
Pros and cons of working with marketplaces
Pros
Cons
✅ Quick start
You can register within a day, place a product, and receive your first orders the next day. If you create an online store from scratch, the website development alone will take two months, and you will also need to spend resources on advertising and promotion.
✅ No need to rent your own warehouse
The seller can send goods for sale to the marketplace warehouse. This is a paid service, however, this scheme works easier and cheaper than if you search for and rent a warehouse yourself, pay for the services of a realtor, make repairs to the premises, pay salaries to storekeepers.
✅ Simple process of launching advertising
Any user can understand the settings of advertising accounts and enable basic ones. If you create your own website and launch an advertising campaign on the Internet, you will need specialized knowledge to set it up correctly.
✅ All payments are made online and are displayed in the seller’s personal account
You don’t need to communicate with the client yourself, issue an invoice and wait for the payment to go through – the marketplace does this: all payments go through its system.
✅ Access to analytics tools
In the personal account, the seller can view the balance of goods, sales report and other data.
✅ A large number of order pick-up points
Ozon has 45,000 points, Wildberries – 30,000. The seller does not need to send the goods themselves, plus it is convenient for potential buyers: they can pick up the purchase near their home or work, as well as order delivery by courier from the marketplace.
✅ Marketplaces are a growing trend
More and more people are starting to use them: Ozon alone placed more than 950 million orders in 2023. As the audience grows, so does the number of sales.
✅ Minimum staff
You don’t need many employees to service a store on the marketplace, one or two managers are enough. For comparison: an offline store must have an administrator, sellers, buyers, a cleaner, etc.
✅ Opportunity to enter the CIS market
Marketplaces are actively developing in the CIS. The sales territory is expanding.
✅ Additional financing
Experienced sellers who have been working on the site for a long time and have proven themselves well can receive additional financing. It is enough to leave a request in your personal account and receive, for example, a loan from a partner bank or daily payments. Of course, the site will take its percentage.
✅ Remote format
You can work online from anywhere in the world, without being tied to a specific location.
❌ No direct contact with buyers
The seller will not be able to get buyers’ contacts and form their own customer base: the contacts remain with the marketplace.
❌ Commissions: up to 25% in certain categories
Marketplaces regularly raise commissions for sales on the platform.
❌ Fines
Marketplaces have a complex system of fines, and requirements change frequently. In order not to lose money, it is important to study the offer and follow updates.
❌ High competition and price dumping
If a seller sells goods from the mass market segment, sooner or later he will face competition and price dumping. When prices are reduced by sellers or managers who do not know how to calculate unit economics, they sell the goods at zero or at a loss – and reduce the price for all sellers. It turns out that no one makes money: the rest also have to reduce the price in order to sell at least something.
❌ Variable terms of the offer
The marketplace can unilaterally change the rules in its favor and dictate the terms. The seller can either agree with them or not work with the platform.
❌ Low quality of support and feedback
It is difficult for the seller to get quality advice and an answer to their question. Technical support is heavily robotic: either a bot answers, or no one answers at all.
❌ Difficulties with delivering goods to the warehouse
Queues at the reception often arise. In addition, marketplaces are constantly increasing the number of requirements for delivery and labeling. For example, earlier the goods had to be packed in light film, now – in dark, earlier it was necessary in a bag, now – only in a box, etc. For failure to comply with the requirements, the seller will receive a fine.
❌ Weak control of autostocks
This is a situation when the seller has handed over the goods to the marketplace warehouse, but they have not yet been accepted, the acceptance has been delayed, the goods are stuck somewhere and as a result have not appeared on sale. The goods are unavailable, the seller cannot influence the situation and suffers losses. It is also necessary to take into account possible traffic jams at the acceptance of goods – they can stand for two days or even a week.
❌ Payments for sales
They do not occur daily, but approximately several times a month. If the seller wants to receive money every day, he will have to pay a commission.
❌ Buyer terrorism
Occurs due to weak control at collection points. Marketplace employees at the collection point often do not care what kind of goods the buyer brings for return: buyers can return damaged items, and the collection point accepts them. The seller receives such goods as defective and incurs losses: in addition to the damaged goods, he has to pay for their return and movement from the collection point back to the warehouse.
❌ Paid pickup of goods
If the seller wants to remove goods from the marketplace warehouse that are not selling or are simply being moved to another warehouse, they will have to pay.
❌ Inventory
On marketplaces, inventory is not done by the seller, but by the platform itself. At the same time, it is not always clear what is happening with the goods. For example, the goods can remain in the “In transit” status for months. The seller cannot remove or dispose of such goods, they simply hang in the system. Often, this goods are written off as losses.
❌ Imperfect product accounting system
The control system on marketplaces is imperfect due to the huge volumes of goods, losses occur regularly.
Read Also:Who is a director and what skills does he need?
What products are profitable to sell
To find out which product is more profitable to sell on the marketplace, you need to conduct a market analysis and understand what is currently selling best. This is easier to do with the help of specialized marketplace analytics services, for example:
● MPSTATS ,
● Mayak (Beacon) ,
● Shopstat ,
● Moneyplace ,
● SellerFox .
Marketplace analytics services will help you find out the maximum and minimum cost of a product, sales dynamics and seasonality for specific categories, price segmentation, sales volumes of market leaders, fast-growing categories and other information important for starting and developing.
You can see the most popular categories in the reports of the platforms themselves or in independent studies. Thus, according to the Data Insight study , in December 2023, the top 3 categories on Ozon and Wildberries included “Clothing, footwear and accessories”, “Household goods”, “Beauty and health”.
Once the seller understands which categories and products sell well, it is necessary to:
1. Choose an interesting category,
2. Calculate unit economics,
3. Based on unit economics, collect hypotheses and assumptions about which products can be tested,
4. Start selling products.
It is important to understand that even perfect adherence to this plan does not provide a 100% guarantee of success, because marketplaces have a huge number of hidden algorithms and factors that the seller cannot influence.
Which marketplace to work with
Globally, the scheme of work and principles of interaction with the seller and buyers are approximately the same on all marketplaces. It is easier to choose the platform that the seller uses himself and which he likes from the user’s point of view. For example, if a person often orders something on Wildberries, it would be reasonable to start trading from there.
You can first figure out how one platform works, and as sales grow, move on to other marketplaces. According to a study by Tinkoff Data , about every fifth seller who started trading in 2021 and 2022, a year after starting work, entered an additional platform.
How to start working on the marketplace
Technically, the process of registering on the marketplace and starting sales is simple:
Step 1. Registration
available online, you will need a phone number and a bank account, a few minutes to fill out the form.
Step 2. Payment of the warranty fee
optional. Relevant for Wildberries: here the fee is 10,000 rubles. There is no such fee on Ozon.
Step 3. Creation and design of a product card
A well-prepared card helps to increase sales.
Step 4. Shipment of goods to the warehouse
your own or the marketplace, depending on the chosen form of cooperation.
Step 5. Launching advertising and promotion
optional. They help bring the card to the top and increase profits.
