What is the marketplace?

Simply a marketplace is a website just like a shopping mall does in real-life. Where the products offered come from multiple sellers. The variety of assortment a marketplace offers is exactly what attracts customers.

Setting up your store on most marketplaces is simple some even let you sign up with your Facebook account. 

Process of selling on a marketplace?

There are three parties involved – the vendor, the customer, and the marketplace administrator.

Let’s take the popular arts and crafts marketplace Etsy as an example 

The company maintains the website, invests time and money in attracting potential clients, and offers a safe shopping and payment process. However, once the sale is finalized, the products aren’t shipped by the marketplace – all items are stored and sent by the seller.

Now, how do marketplaces make money? As you’ve likely guessed, they either charge a commission for each transaction, a flat membership fee, or offer a combination of the two. 

An exception to the rule is the British marketplace Flubit, which doesn’t charge any of the above, but earns money if they can sell the product for a higher price than what was requested by the seller.

The commission’s size greatly varies from marketplace to marketplace and can be anywhere between 0% (Flubit) and a whopping 50% (Germany’s second-biggest e-commerce Otto). However, in eBay, Amazon, or Etsy, the commissions span between 5-15%.

The benefits of selling on marketplaces speak especially strongly to sellers taking their first steps in sales and those who love the convenience of never worrying about website performance, maintenance, and on-site shopping experience. They are also the first choice for those whose sales aren’t big enough to make building their own online store an appealing perspective.