In the first part of this guide, we have provided a general introduction to online marketplaces and looked at how you can benefit from using them. In this second part, we will talk about how to actually sell on an online marketplace – starting with choosing a marketplace platform and deciding on your selling rules.
Prerequisites for selling on an online marketplace
In order to advertise your products appropriately and offer good service, it is important that you understand the conditions that apply to selling on each individual marketplace. Before you start selling, check whether certain fields need to be filled out in the item description or whether special terms apply under which items can be sold (e.g., expiration date, licenses). Also, look into whether are any costs associated with uploading and selling an item using the marketplace platform.
Once you’ve familiarized yourself with the prerequisites for selling on a certain platform, you need to establish clear guidelines within your company in order to avoid later disputes – especially if more than one person is involved in the sales process.
A good idea would be to set up standard operating procedures (SOPs) that specify who is responsible for what when it comes to advertising and selling items via online marketplaces. It may sound like overkill, but in most cases, these SOPs are only necessary for companies where several employees are authorized to handle purchases and sales independently of each other. If there is just one employee issuing purchase orders without having any influence on how they are managed in the background, you don’t necessarily need to bother with SOPs.
To create a clear and well-structured process when selling items via online marketplaces, we highly recommend creating an item listing sheet that every employee involved in advertising and selling items can access. This spreadsheet could list all prerequisites for uploading an item to eggshell buyers (e.g., photo quality or product warranty) as well as the technical requirements for each marketplace. In addition, it should link each item to one of your sales channels so that no information is duplicated across several documents. At Yatego our item listing sheet looks like this:
In order to keep our employees up-to-date on changes made by marketplace providers, we also send them a weekly e-mail with all updates and changes – which includes the addition of new marketplaces.
Pro tip: You can automatically collect your e-mails from various project management tools (like Asana, Basecamp, or Trello) and store them in a centralized location (e.g., Google Docs). For more information on how you can integrate Yatego into your favorite SaaS tool to manage your advertisement campaigns, head over here.
Setting up your marketplace strategy
When deciding which items you want to sell via online marketplaces and how many copies you should offer for sale, it is helpful to establish a clear product philosophy beforehand. The following questions will help guide you in this decision-making process:
How many items do we want to sell?
As a rule of thumb, you should offer at least 5-10% of the products that are available in your regular product range via online marketplaces. This way, your company can benefit from being active on marketplaces without overly relying on one particular sales channel.
Do we want to have an individual account for each marketplace or just one?
It is important to know what kind of turnover you expect from each marketplace so that you can decide whether to establish an individual account for each platform or just use one main platform with subaccounts. Sub-accounts reduce management costs but also limit the number of items that you can manage under them – which means that it is more difficult to accurately track profit and loss per item. We would recommend establishing sub-accounts for marketplaces where you only expect to generate a small amount of turnover.
How should we organize orders?
Depending on the size of your company, you may want to use different warehouse solutions to process incoming orders. For example, if you are just starting out and don’t have many goods in stock yet, your employees can simply create purchase orders whenever they see an interesting marketplace item. Once the item has been shipped out these purchase orders will automatically be converted into sales orders which are then stored together with all other sales orders via Yatego’s Warehouse Management module. Alternatively, you could also decide that every single order is sent directly to your product team where it is later processed manually. This would allow you to maintain full control over all incoming purchase orders and ensure that your employees don’t need to manually create sales orders for every order they receive.
Now that we have answered some of the key questions related to our product philosophy and subsidiary accounts, let’s take a look at how we can determine which marketplace provider is best suited for our business model:
The most important question:
Are we primarily looking for traffic or do we want to generate revenue?
Depending on whether you are looking for additional exposure (traffic) or whether you want to make money (turnover), there are different marketplace types that you can opt for:
Marketplaces with a free listing option:
If you just want more exposure, this may be an interesting platform choice as it allows you to enter keywords so that buyers can find the products they are looking for. However, you should be aware that marketplaces with a free listing option often offer very limited customer service, so you shouldn’t expect to get paid if your item is not shipped on time or does not match the description provided on the marketplace’s product detail page. For this reason, we would recommend checking each marketplace provider’s official terms and conditions before establishing an account on any of them.
Marketplaces where items are sold on consignment or on FBA:
If you want to generate revenue without having to maintain stocks of all listed items yourself, it is best practice to choose either “item on consignment” or “item fulfilled by Amazon (FBA)” as your sales channel type. The advantage of selling items on consignment is that you don’t need to keep any stocks, whereas the downside is usually much lower margins. FBA, on the other hand, means that Amazon handles storage and shipping for your goods – making it easier to scale your business. This comes at the cost of very different revenue sharing rates though (between 15% and 50%) so this really depends on how much turnover you expect from each marketplace provider.