Sellers Use Online Marketplaces as Launching Pad to Gain Mindshare, Wallet Share

Don’t put all your eggs in one basket. Diversify — yes, it’s good investment advice.

And it’s also sound strategy for online sellers, who have to compete for share of consumers’ eyeballs, minds and wallets.

Those smaller companies jockey against one another for sales, and if they’re not already on Amazon, they compete with Amazon too.

The internet, you might say, is an unlimited pond in which smaller companies can find firm footing and be discovered by the audiences they most want to reach.

In doing so, to get scale and breadth, many small firms latch onto the ready-made launching pads that can help them solidify their digital presence — and then go on from there.

As PYMNTS found in “Online Sellers: The Future is Multichannel,” only 7% of firms operate through a single marketplace, which indicates that most business owners know that having multiple points of online contact with their intended audiences is a strategic necessity. Amazon’s attraction as a key channel stands out, as roughly 3,000 sellers joined the eCommerce giant every day in 2021. And yet PYMNTS data show many firms want to move toward other channels too.

The data show that while marketplace-reliant firms get up to 75% of their sales from marketplaces, marketplace-native companies get an even greater percentage of their top line through those online outposts. And a greater percentage of companies with sales up to $5 million are using more marketplaces, as of 2021, than they did in 2020, at a bit more than 52%. Even companies that are relatively concentrated, with one category product to sell, or a handful of categories of products to sell, are using several marketplaces.

Drill down a bit, and we can see that younger firms tend to be marketplace-reliant or even native, and older ones are, well neither — indicating that as time goes on and top lines grow, companies tend to move on to other channels.

All of this brings to mind, in a way, fledglings that eventually fly the nest. And for the marketplaces themselves, the competitive pressures loom. By offering a slew of services such as fulfillment, invoicing, tracking and the like, there’s better ability to keep sellers in place.

Switching costs are not all that high for companies that want to move beyond, say, Amazon and onto other marketplaces — or maybe beef up their own digital storefronts. And indeed, of the firms PYMNTS surveyed, 42% operate through four or more marketplaces.

The key here is that as companies gain some experience and critical mass in their competitive verticals, it does not take all that much time (or money) to set up concurrent “stalls” in the world-wide internet bazaar.