Marketplaces: Allies to Boost Your Ecommerce
Estimated reading time: 6 min
In 2020 alone, marketplace sales in Latin America grew 36.7%, recording the highest growth compared to regions such as North America (31.8%) and Central Europe (29.1%). In 2021, the leading marketplaces worldwide reported sales of $2.67 trillion, representing 62% of total global ecommerce.
This shows great potential for a sector that keeps growing year after year, representing an opportunity for ecommerce businesses to expand their sales channels, especially in Mexico and Latin America, where marketplaces have not yet reached their full potential.
These large online stores have become a gateway into the world of ecommerce, both for those selling products and for those buying them. Marketplaces or virtual malls connect sellers with buyers and are an open space for both large companies and entrepreneurs, who in both cases must meet certain rules to offer their products on the platform.
In this article, we cover how marketplaces work and how they can help you boost your ecommerce, key points to evaluate, and standout players. Don't miss it.
Marketplaces: A good option for ecommerce?
Amazon, Walmart, Mercado Libre, eBay, Linio, Costco, Coppel—have you visited these and other marketplaces? You are part of the 90% of internet users who have browsed or purchased a product on this commercial showcase. A pretty good figure for ecommerce.
Why do buyers choose these platforms? Their decision is largely influenced by guarantees regarding security and shipping conditions, combined with better benefits and promotions—all related to the main drivers of online purchases. Let's look a little more into the topic.
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Logistics as a driver of satisfied customers
As we have discussed, logistics is a key point in online store operations. To a large extent, customer satisfaction and the shopping experience depend on it.
Generally, marketplaces offer buyers different logistics solutions, such as better delivery times, more affordable or free shipping rates, and tracking on order status, thanks to their partnership with fulfillment providers that deliver this service. Logistically, this becomes a differentiator and hook to attract customers.
Added to this is the topic of exchanges and returns. This differentiator increases purchase rates, since one of the main fears of online buyers is not having this benefit in case of product dissatisfaction.
Who doesn't want to receive their order as quickly as possible, paying little or nothing for shipping? These are attributes that marketplaces offer their customers—attributes that not all ecommerce businesses can match, especially when they are just starting out.
Security and trust
According to AMVO figures, among users who still do not buy online, 80% do not do so out of fear of being victims of fraud. This is a barrier to online purchases, where marketplaces, thanks to their big name and recognition, are synonymous with trust for the buyer.
It is not the same to buy a product on a new online store with few references as it is to buy from a marketplace giant that is not only widely recognized but also offers all guarantees regarding the purchase.
By selling your products on marketplaces, you directly benefit from the security and trust their name inspires in buyers, which becomes a gain to boost your sales, especially if your brand does not have much recognition.
Large-scale advertising
It is no secret that marketplaces invest millions of dollars in advertising campaigns that promote their brand, giving them great worldwide recognition. This is a huge advantage for ecommerce businesses that use them as a sales platform, because without making direct advertising investment, they can benefit from these actions and become known to thousands of users, increasing their probability of sale.
For sellers—in this case, ecommerce stores—it is also possible to pay for advertising within the marketplace to give greater relevance to their product in buyer searches. However, the difference in investment value is abysmal compared to what the marketplace invests to attract more users to its platform.
These are three important characteristics that have led many ecommerce businesses to choose marketplaces as one of their sales channels, for the differentiators and benefits they can generate. So far, we have covered three key points for online sales. However, when choosing to sell your products on these platforms, you should evaluate other aspects that we will look at next.
Additional considerations for selling on marketplaces
Deciding whether a marketplace is or is not a good sales channel for your ecommerce depends on various factors worth sitting down and analyzing. Get your pen and paper ready! Let's talk about them:
- Marketplaces are especially a good option for small businesses that do not have much recognition or large capital for advertising campaigns. Appearing on these platforms allows them to introduce their products and name to potential buyers—all, of course, under the conditions the marketplace requires to provide these spaces, which we will discuss in the following points.
- All marketplaces charge a sales commission, generally between 15% and 20% of the sale value. Something you should take into account in the price you charge for your product, trying not to affect your profit margins.
In this case, you should also consider that your product price must be at or better than the competition to be attractive to the buyer.
- In addition to the sales commission, marketplaces such as Amazon and Mercado Libre charge a fixed monthly fee for platform use. A cost similar to what ecommerce businesses pay to the platforms that support their online store.
Read also: Your ecommerce is not selling: 3 possible causes
- Regarding product inventory, some marketplaces buy inventory, others receive it on consignment and pay the ecommerce when they sell it. In this case, it is important to know that if the product does not turn over, you may receive penalties from the marketplace that can increase your storage costs.
Before making a decision, get properly informed about the negotiation conditions with the marketplace and evaluate whether they align with your business strategies.
- When you sell directly on your ecommerce, you obtain buyer data firsthand, which allows you to include them in your marketing strategies. You also have a customer you had to invest in acquiring, but whom you will not have to acquire again, because if the customer was satisfied with your service, they will have a high likelihood of repurchasing.
The above does not happen on marketplaces. Customer data goes directly into the platform's database, and for every sale you make, you must pay a commission, regardless of whether it is the same buyer who had already purchased your products.
Based on the above points, you can make a more informed decision and decide whether participating in these sales channels is what you are looking for for your ecommerce. As an interesting point, many ecommerce brands start in the world of marketplaces, testing different platforms to build brand awareness while positioning their own .com. After all, the customer who already knows your brand through the marketplace may also search for your store directly, which will be beneficial for your acquisition process.
The key is to test, evaluate, and make the best decisions for your business.
Major marketplace players
In Mexico, there are truly relevant marketplace players such as Mercado Libre and Amazon, followed by Walmart, which has been growing strongly in recent years. Far behind these three giants are others such as Liverpool, Claroshop, Coppel, and Elektra.
This year, players such as Shopee promise to make quite a splash. Shopee started operations in Mexico in 2021 and offers benefits such as 0% commission for sellers and free shipping on small products, becoming a major challenge for its competition. Its name will not go unnoticed.
Without a doubt, the growth trend that marketplaces bring will continue to evolve exponentially. Taking advantage of this boom will depend on each ecommerce. Just remember that the more you diversify your sales channels, the more opportunities you have to become known and reach those potential customers who increase your sales level.
Looking for a partner to boost your delivery process, fulfillment, and customer satisfaction? Do not hesitate to contact us—we are the best fulfillment center for ecommerce in Mexico, Colombia, and Brazil. Just click here.
During 2021 at Cubbo:
* Our clients recorded 21% savings in operating costs
* 97.1% of products received were processed and ready to sell within 24 hours.
* We achieved a 99.7% shipping fulfillment rate
* We recorded order preparation accuracy of 99.9875%, that is, 1 error every 8,000 shipments.
* 60% of our deliveries in CDMX were completed the same day
* We completed nationwide deliveries in an average of 1.3 days
Information sources
Marketplace White Paper 2022 - AMVO
