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What Are the Advantages of an Online Marketplace Over a Traditional Business?

Jul 4, 2020

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When I was wondering about starting my own business I thought about going with a traditional business with a store. But, since the internet came along and found it better to just do business online. So, I put together this helpful article to explain the advantages of an online marketplace over a traditional business.

So, what are the advantages of an online marketplace over a traditional business? By selling online you save on rent, utilities and indirect costs of maintaining your physical store. An online marketplace gives you lower overhead. Overhead are the business expenses that are required for your business to function. By selling online you save much more money.

Although this the key reason, there are many other reasons as well. So, below I will list the advantages, as well as, some other helpful tips.

When you’re done, check out this article that shows you how to earn an extra $1000 a month.

What are the advantages of e-commerce over traditional ways of conducting business?

The advantages of ecommerce and using an online marketplace over the traditional way of doing business are:

An additional marketing source

When selling your products you want to maximize the amount of customers who buy them. This can best be achieved through marketing. Having another place to market your products will increase sales. Making your business grow faster.

Therefore, you should add as many e-commerce websites as you can, to grow your business as fast as you can. The good thing is with the first listings set up, it is easy to post them on other websites.

Some people opt to create their own website as well. This is a significant undertaking and can cost about USD$10,000+ and require full time developers to maintain it, according to Website Builder Expert.

There are a range of pre-built websites from companies such as Shopify. They do require a significant learning curve to implement, and most people need to hire a specialist.

Lower marketing costs

The cost to have a listing on an e-commerce website is largely free if you list them on already established websites. As we already mentioned, the cost to set up your own ecommerce website can be quite high.

So, it is the logical next step once you have found success with using a 3rd party online marketplace.

Once the website is created, however, the ongoing costs tend to be relatively minimal at a small scale. As your sales increase you will need to bring on a web developer more frequently. But, it is an investment back into the business.

More international sales

If you have a physical store only in a location, then you are limited to selling only to those who are local to your area, or are willing to travel. With an online store though, people can access your products from anywhere within the world.

If you have unique products that are famous from your region, you can ship them internationally and further nationally. This increases your overall sales.

Customers love them

E-commerce is so convenient for consumers that people will buy more. It was famously stated in 2015 by Fox News that ‘clicks beat bricks’, during the Black Friday weekend. Meaning that online sales overtook the sale made in physical stores. It has become embedded in international culture now, that people start their purchasing journey online.

Online marketplaces increase trust for vendors

When you are selling on a reputable online marketplace people trust your business. This is because you can show customer ratings, and testimonials which show you are established on the website.

When the online marketplace has a good reputation and many people use it, it shows that you are the cause of what makes the marketplace so trustworthy. It is common sales wisdom that people like to buy from people they know, like and trust.

Click here to learn more on the advantages of marketplaces versus to classified sites.

They operate 24/7

Online stores and marketplaces never close. The internet is on 24 hours a day seven days a week. Although their customer support can take time to respond, you can buy products whenever you need to.

This makes the buyer and seller schedules more flexible. This makes your business run more efficiently. When people are buying from a physical store, they will have to wait until it is open. This is a major headache especially during public holidays. With online marketplaces you don’t have any of these issues.

Transparency

Because of the many sellers on an online marketplace, customers can compare the ratings, prices, and products.

This helps you further increase the trust of your brand, because you can show them right upfront customers that have bought from you and what they thought. With a physical store, however, you must rely on word of mouth advertising, and people that happen to walk past.

This website you are on sheepbuy.com is an online marketplace. We pride ourselves on being completely free on our basic tier. We encourage you to sign up and take advantage of our excellent website.

Though we are just beginning there is an advantage to being one of the first sellers. This is because you get a leg up on the competition by gathering more reviews and feedback before them.

Leading to increased sales down the line. We are offering up to three free listings on our website, with very low fees if you want to sell more than that. Click here to go to the registration page now.

What are the disadvantages of online marketplaces?

The disadvantages of ecommerce and using an online marketplace over the traditional way of doing business are:

Commissions

Online marketplaces charge a commission. You also pay a small fee for credit card transactions. They are an integral part of how online marketplaces operate, together, with advertising.

You should do some research to find a commission percentage that works well for you. This is unique to the product you are selling. Most will be under 5%.

Sheepbuy has zero commission fees if your items do sell. All transactions are strictly between buyers and sellers via paypal.

Another way to move away from commissions is to create your own website. But, once your business is set up and making consistent money, you should reinvest back into your business.

If you have your own website you should consider selling online resources such as an ebook. These together with a sales page, provide more revenue for your business.

Click here to learn more about Sheepbuy.

They may have restrictive terms and conditions

Some online marketplaces may restrict what you can and can’t sell. The other factor with them is that they have full control over closing your listings.

This is why it is recommended to use as many e-commerce listing websites as you can do comfortably. You can set them up so that you get notified once a product is sold.

So, you rarely have to check it. This is also an advantage of a commission structure over a subscription based service.

Therefore, take time to nurture your listings but be aware that one day all your hardwork will disappear overnight. This is the key reason to diversify your listings.

Why do wholesalers not sell to the public?

The reason is because of the special discounts provided for buying in bulk. Wholesalers do large transactions of orders. More than 100 to 1000 at a time. They also have only a few locations, and aren’t as widespread as the retailers.

It is a topic known as economies of scale. Which is the phenomenon where factories can produce products cheaper when they produce a lot of units in a day.

The large amount of units of the product made during a day allows the company to buy in bulk. When you buy in bulk you can get the products cheaper because you are guaranteeing work for the other company for a prolonged period.

The other company is willing to discount for the ability to have a lot of work guaranteed for the future.

Conclusion

The advantages of an online marketplace over a traditional business is that it is another marketing stream, it is cheaper to market on them, you can reach international buyers and sellers, it is easy to compare pricing and look at reviews of the stores and products, they run at all hours of the day and night.

If your thinking about selling online for free try Sheepbuy.