The Cost-Benefit Analysis of Selling on Multiple Marketplaces
If you’re an ecommerce seller (or gearing up to become one), you know that the most visible marketplaces include sites like Amazon, BestBuy.com, WalMart.com and the like. Heck, if you’re a consumer you know that, too! And you also know that shopping on multiple marketplaces is natural. For your electronics, you hit up BestBuy.com. And maybe you buy all your books on Amazon. Maybe your clothes come from WalMart.com.
As a seller, though, does it make sense to be on multiple marketplaces? And if they’re not all big name marketplaces, does it make sense to sell on at least a couple of the “biggies” and then on some niche marketplaces, too?
There are a lot of marketplaces you can sell your products on. But decisions like this one have to be made strategically, because running a successful business ultimately comes down to a good ol’ cost-benefit analysis! That’s the best way to know whether opening several ecommerce storefronts will really expand your reach or stretch you too thin.
We believe that this particular cost-benefit analysis comes down to three key factors: your brand’s footprint, your available time, and your product data. Let’s dive into how you can analyze the values of each!
The End Game: A Bigger Footprint
This is the pay-off you’re looking for if you’re considering selling on multiple marketplaces. Sellers who diversify their brand presence and sell on three or more channels average 156% greater sales volume when compared with their single-channel counterparts, according to Research Gate. This is no surprise, considering not only the boom in ecommerce but the growing trend of channel loyalty.
The question these days, it seems, is not so much “should I sell on ecommerce marketplaces,” but “how many marketplaces should my brand be on?”
But then…there’s the cost. You have hard and soft costs involved if you sell on more than one marketplace. Let’s look at each to see whether this end game is “worth it” for you.
You Got the Time?
Do you have pets? How about multiple pets? Let’s imagine you have multiple dogs. You want to snuggle with each one of them, right? You want to spend hours of the day scratching each one behind the ears. You want to shower each of them with love.
But sometimes, one fur baby is in need of some extra attention.
Can you imagine walking eight dogs at once?
Yeah, that’s a bit much.
Just like being an owner of a pack, to be a successful seller on multiple marketplaces, you have to start by devoting a significant amount of time to each platform while always being prepared to spend more time on a storefront in need. Sales don’t happen due to luck. Each shop requires work.
There is a caveat, though. Managing multiple marketplaces will only be worth it if you manage your product data right, including enriching the data for each storefront. We offer data enrichment services for that very reason. We’ll get more into the importance of your data down below, though, so let’s power through this bit about time.
Taking on multiple marketplaces at once can be dangerous because you might not realize how much time one platform could require to get solid footing and build your brand on that site. So, while selling on multiple marketplaces is the desirable end-game for most sellers, adding new marketplaces one at a time is generally the best way to do it. Your mid-term plans can include rollout to several ecommerce marketplaces, that’s doable. Just consider rolling them out in segments, or the cost-benefit here will tip downward to a heavy cost with very little payout.
If you do have the time to promote multiple storefronts and manage multiple promotions and brand campaigns at once, we still suggest you do one more “sanity check” and ask yourself what your time is worth. If your game plan right now is all about ecommerce, and you do have the bandwidth, then get your product data ready in your PIM and get ready to go! You’re in great shape to launch on multiple marketplaces right away.
Absolutely Smashing Product Data
Let’s say you do have the time to do everything we described above. And let’s say that rolling out on multiple marketplaces is part of your strategy for this year and next. That’s great!
To know whether your investment will be worth it, we now have to look to your product data.
The purpose of building your brand on multiple marketplaces is to maximize your product visibility. Right? The benefit here is huge, but only with the right pieces on the board. Otherwise, managing your product data for multiple marketplaces will turn into a headache of spreadsheets and bad information and an endless manual undertaking as you find inconsistency after inconsistency after inconsistency…
The cost-benefit analysis here does start to look favorable if you have a PIM.
Today’s ecommerce customers have a more complex purchase journey than any customers before them. Sure, maybe Grandma had to trudge to the market in the snow—uphill both ways—to buy bread and eggs way back when. What we mean by “complex” today is that 87% of retail searches start from a search engine, which later points users to multiple marketplaces where the product is for sale. This opens the floodgates for consumer “due diligence” where they search for the best deal. The consumer is empowered to shop around before pulling the trigger.
And you know what this means? It means that you almost have to be on multiple marketplaces to maximize your product visibility. Why settle for your product showing up on one link of Google’s first-page results instead of several? Oh, right. You might settle for that if you have inconsistent product data.
Getting the most out of your product listings—whether on one marketplace or multiple—requires special care and attention to your product information management. Careless data management can lead to:
- More returns and unhappy customers
It can be hard to keep your data not only accurate but optimized for each platform if you’re selling products on multiple marketplaces. And if you have a field filled out for one platform that sort of matches a specs field on another site, but not quite, you could end up with information on product listings that’s just plain wrong. And that, in turn, will lead to unhappy customers and a nasty trend of returns.
- Overselling
Along with trickier inventory management, inaccuracies between the sales listed in your CRM and the inventory in your ERP can also lead to overselling. Since marketplace A doesn’t talk to marketplace B, you have to be ready with your own internal controls and automate as much of your inventory tracking as possible.
- A whole lot of time for nothin’
Dedicating too much time to selling on multiple ecommerce marketplaces without the product data to be successful on each will mean you spend a whole lot of time for naught. Don’t focus on opening multiple channels at the cost of accurate, complete and compelling product data.
The cost-benefit analysis we’ve come to is pretty clear. You need time and you need great product data for selling on multiple marketplaces to be “worth it.” Fortunately, our PIM software was designed to save you time (months of time, in fact) and manage your product data for multiple channels.
Now, knowing how many or which marketplaces to sell on is another story altogether!
If you’re ready to reach for a bigger footprint, schedule a demo today of our PIM solution to support you on your way.
Eddie Porrello
Director of Product Management at Amber Engine
A seasoned SaaS and e-commerce team lead who leaves lasting impacts on early-stage technology companies. His expertise has taken him across roles in product marketing, performance marketing, and technical aspects of e-commerce. He currently works with Amber Engine, a software company whose fast and simple PIM software gets sellers, distributors and brands to Amazon and other online marketplaces in weeks instead of months.