Which online marketplace should you sell on? A guide for small firms12 min read
Online shopping has grown faster than ever this year in the coronavirus pandemic, driven by necessity as people were told to stay home
But people aren’t just spending money to get goods delivered to their homes or collect because of Covid-19 restrictions, they are also opting to do so as popular high street stores close and small businesses up their online selling game.
Small businesses are increasingly pivoting to sell online but often find that just selling directly through their own website doesn’t give them nearly as much reach as they might like
As a result, many are turning to online marketplaces to secure more sales without going down the difficult route of fighting to come top of search engine results. By being on Amazon, eBay or Not On The High Street they can get a virtual shop window and high street effect.
Success! Most British SMEs (58%) sell their products through an online market place even though most (75%) have their own website
A Royal Mail study showed that in 2019 almost six in ten (58 per cent) of UK small and medium sized enterprises sell their products through an online marketplace while 75 per cent have their own website.
A similar study conducted by the Royal Mail in 2020 showed that the majority of the UK SME sector, at 62 per cent, aimed to increase their international sales revenues.
According to another Royal Mail study conducted this year, 72 per cent of SME retailers have their own websites.
However, for the vast majority of small businesses, selling through established marketplaces is still one of the best ways to get noticed and promote products. These online giants have already done the hard work of building popular websites and apps and securing customers for the small businesses who sell there.
Online marketplace players vary in size and reach, and the sector is changing with new entrants jostling for position. US giants Amazon and eBay still dominate but UK marketplaces like Not On The High Street (NOTHS) and OnBuy are gaining market share.
Potential sellers need to know that not all marketplaces are the same. They all have different cost structures, different customer bases, and there are pros and cons to using them.
Here we compare the some of the best known marketplaces and highlight how some small businesses have made the most of using these platforms to sell their products.
Amazon helped me sell online after my office sales fell by 95%
Tracey Hogarth is the founder of Scotland based Nudie Snacks, which produces plant-based snacks.
In March this year, the business’ sales dropped by 95 per cent after it could no longer supply offices directly due to the lockdown.
Tracey says: ‘Business-to-business trade evaporated for me. If you’re in grocery retail you’ve got it made, but it’s been a nightmare for independent food service and hospitably businesses.
Tracy Hogarth, founder of Nudie Snacks had to act fast and sell online when her business’ sales dropped by 95% in March
‘The pandemic made us sit up and reassess how we were going to adapt and survive. We had to think quickly and find a solution and moving online selling through Amazon helped us to put our products in front of a huge audience.
‘Looking ahead, we are hoping to continue to grow on Amazon so that we can expand into the European Market and offer our products to more customers outside the UK.’
She admits that Amazon is not the easiest route to market but adds: ‘There is a lot of administration because I imagine they’ve been burnt in the past and sometimes you have to be a legal expert to figure out their internal systems.
‘It’s also not the cheapest platform but it gives you a global platform. You have to have all your paperwork in place and rightly so.’
Amazon is best known for selling through its own platform, but it’s a hugely popular marketplace too. Many small businesses and sole traders successfully use it.
In its ‘Amazon 2020 SME Impact Report’ Amazon revealed that from March to July 2020, SMEs accounted for more than 60 per cent of sales on Amazon’s stores.
The platform is also ideal for small businesses that want to export goods abroad. In the UK, more than 60 per cent of SMEs selling on Amazon exported around the world and achieved more than £2.75billion in export sales in 2019, up year-on-year from £2billion.
We had to think quickly and find a solution and moving online selling through Amazon helped us to put our products in front of a huge audience.
Tracey Hogarth, founder, Nudie Snacks
Amazon is currently supporting small businesses through the Amazon Small Business Accelerator which offers them the ability to access free training, advice and bootcamps, as well as guidance on how to sell on Amazon.
Fees: Amazon has two types of plans. The professional plan allows sellers to sell an unlimited number of products for a £25 (excluding VAT) monthly subscription.
With the basic plan, individuals pay no monthly fees but instead pay £0.75 per item sold.
Amazon says: ‘FBA is an Amazon solution that helps third party selling partners reach more customers with benefits like fast Prime delivery and easier selling across Europe. The selling partners send Amazon their products, and they take care of storage, delivery to customers, customer service and returns handling.’
But this again also comes at prices varying depending on the product. To get an idea of the exact charges that apply Amazon do have a fee calculator that provides an overview of the average fee charges as well as possible revenues when selling through the platform.
Shipping: Additional fees do apply such as referral and shipping fees. These can vary depending on the product sold.
For example, the referral for selling wine is 10.2 per cent, while a referral fee of 7.14 per cent applies to computer sales on Amazon’s UK platform.
You can also get orders packaged and sent by Amazon’s warehouse through its FBA (Fulfilled by Amazon) offering.
Returns policy: If a customer returns an item, the seller has the opportunity to accept or reject the return and subsequent refund.
Amazon says there is a small refund administration fee, so if sellers refund a customer for an order for which they have already received payment, Amazon will refund the amount of the referral fee sellers paid for the item, minus the applicable refund administration fee.
Ebay’s Pay As You Grow scheme waives the insertion of final value fees for the first 100 items businesses list or sell each month.
eBay is another multinational platform giant that sellers can use to sell locally and abroad.
Anyone can sign up to start selling goods on eBay. An eBay spokesperson says: ‘If you want to sell in large quantities, have items that you have manufactured or bought to resell, or have a business outside of eBay you should register with a business account.
‘Businesses on eBay are required to follow all government regulations. This includes registering as a business on eBay, providing sufficient contact information and having a returns policy.’
Fees: In normal times, eBay applied two main types of fees – a listing fee and a final value fee when an item sells.
A spokesperson explains: ‘Listing fees are non-refundable, and the amount depends on if you have a Shop subscription and also the level of Shop you have.
‘After you sell your item you will also pay a final value fee, which will vary by category and is calculated as a percentage of the cost of the final transaction including postage.’
Our dedicated team is also here 24/7 to provide assistance as challenges arise – such as delivery issues or trouble meeting a deadline – to help the seller’s shop stay in good standing during this challenging time
Isabella Diaz, community education manager at Etsy
To help sellers during the pandemic, eBay launched the Pay As You Grow scheme, which means that businesses who have registered on eBay.co.uk between 13 July 2020 and 31 December 2020, won’t have to pay insertion or final value fees for the first 100 items they list or sell each month.
A spokesperson adds: ‘The following 200 items they sell will also be discounted, for up to 90 days after their registration date or until the end of this year.’
Shipping: You can either ship the item off yourself or take advantage of eBay’s delivery service which offers exclusive rates to eBay sellers through delivery services like Hermes and UPS.
Rates vary depending on whether you drop off the item, send it off for collection or do next day drop off. There are also add on costs such as 90p of you want proof of delivery.
Returns policy: If items are damaged or don’t match descriptions then customers can return them for a refund.
Etsy was founded in 2005 and currently has around 3.1million active sellers and 60.3million active buyers.
It focuses predominantly on selling vintage or handmade goods and supplies for craftspeople.
Isabella Diaz, community education manager at Etsy, says: ‘Now more than ever, the world needs small, creative businesses, and we are supporting our community by providing sellers with the resources to keep them selling and thriving, including sharing tips for navigating shifting schedules, operational changes, and customer concerns during the Covid-19 crisis and outlining new and modified government assistance programmes.
‘Our dedicated team is also here 24/7 to provide assistance as challenges arise – such as delivery issues or trouble meeting a deadline – to help the seller’s shop stay in good standing during this challenging time.’
Fees: Sellers are charged $0.20 for each item that they list on sale on Etsy.com or Etsy’s mobile apps.
Etsy says that you will be charged a transaction fee of 5 per cent of the price you display for each listing plus the amount you charge for delivery and gift wrapping.
Shipping: Etsy Postage Labels lets you ship orders with USPS, FedEx and Canada Post. Etsy says sellers can save up to 30 per cent on postage through its relationship with these companies.
Returns policy: Sellers on Etsy are responsible for their own returns policies regarding refunds. Etsy does allow consumers to open up a case with them if they’re not happy with a product and a seller refuses to take back an item and a refund.
Etsy helps me sell my maps
Debbie Lee, a graphic designer based in Sevenoaks launched her illustrated map business Debbie Draws Maps this year and started selling on Etsy in September 2020.
She says: ‘Overall, Etsy has been a very positive experience – I was able to set up my shop quickly and test the market with just a few products (initially).
Debbie Lee is the founder of Debbie Draws Maps and sells her creations through Etsy
‘Etsy enabled me to reach people that were stuck at home during the pandemic, unable or unsure to head out to the shops but looking to buy unique and locally made products.
‘The advantages are that it is relatively straightforward for someone with little (to no) retail experience to set up their own online shop.
‘There are additional options to market and advertise your shop to a wider audience for an additional cost. There’s a good online Etsy community with forums to discuss any issues or queries sellers may have.
‘The disadvantages are that with 2.5 million sellers on the platform it can hard to get your shop noticed! Most of my sales have been driven by marketing pushes on social media accounts (Facebook and Instagram) leading people to my Etsy shop.’
Classified website, Gumtree, is another firm favourite among small firms owners and ad hoc sellers. It was launched in 2000 and is now owned by eBay.
Anything from cars, and property to secondhand furniture and services can be sold or promoted on the platform.
Fees: Listing and selling on the platform is free but if you want to promote your advert you do pay. The company says that the boost features help sellers to ‘jump to the top of listings, speed up sales or reach out further to audiences.
There’s no obligation to boost adverts when using the site and Gumtree encourages sellers to trial the ad without the features initially. Boosts can always be added on at a later stage if the free version proves unsuccessful.
Prices vary depending on whether you want to boost the advert for three, seven or 14 days and on the type of product you’re selling.
Shipping: Large items can be shipped with AnyVan, which currently offers a 15 per cent discount for Gumtree users over the festive season. Gumtree sellers can also use Parcel2Go for smaller items.
Returns policy: There’s no official returns or refunds policy on Gumtree.
I had to work 70 hours a week to keep up with online orders
Sheffield based ex-teacher Charlotte Taylor-Frape started doing embroidery after being diagnosed with cervical cancer at just 30.
This led to a successful business, Modern Floss, which specialises in embroidered items and customised clothing with empowering slogans.
During lockdown her orders skyrocketed and she had to work 70 hours a week out of her spare room turned studio to keep up with the demand.
She says: ‘I chose Not On The High Street because it was a good fit for my brand and it stuck quite well.’
Charlotte Taylor-Frape says she listed her embroidery business on NOTHS and that it was a good fit
Not On The High Street
Not On The High Street is an online curated marketing place founded in 2006 by Holly Tucker and Sophie Cornish.
The platform has around 5,000 small businesses listed on it from all over the country selling to over three million customers.
The site has proved popular during lockdown. In September, Not On The High Street announced it had seen a 78 per cent increase in the number of applications from small business wanting to sell with them since May.
It adds that the platform has seen a boom in its home, food and drink categories since lockdown with Christmas searches already double what they were in 2019.
Fees: There is a £199 joining fee to pay once you have been approved by Not On The High Street as a partner.
There are no listing fees but it will take a 25 per cent commission before paying out from the sale.
Shipping: Postage is paid for by either the customer or the partner – it all depends on the particular partner or the product
Returns: Customers have 28 days to return items. Then they have another 14 days on top of that to send it back.
Many other online marketplaces have sprung up recently including the UK’s own rival to Amazon, OnBuy.com.
The Dorset-based company was established in the UK in November 2016 and while it’s nowhere near as big as Amazon it now ranks as Britain’s number one fastest growing e-commerce company.
It welcomes around 500 new sellers a month.
During the second lockdown it reported £2.75million in sales and boasts nearly 1.5million users browsing its site. It predicts a £2billion run rate in the next three years.
Fees: OnBuy’s sales fees range between five to nine per cent depending on the products sold, plus PayPal’s payment fees, which is either your existing rate or 1.9 per cent to 3.4 per cent + 30p per transaction.
Shipping: OnBuy works with Royal Mail, DHL, Parcel2Go, SmartFreight and many more, with additional domestic and global solutions due to be launched in the first quarter of 2021. Delivery costs will vary from seller to seller.
The company says a large number of its sellers offer free standard delivery by absorbing the costs themselves, and many also offer free priority delivery.
Returns: OnBuy asks sellers offer a 30-day return window (rather than the standard 14 days) to give buyers more flexibility.
We saw a 507% increase in sales through OnBuy
Online book wholesaler Paperback Shop experienced a whopping 507 per cent increase in sales through OnBuy between June and September 2020, compared to the same period in 2019.
Georgina Pursch, business development manager at Paperback Shop, says: ‘OnBuy has proven to be a vital additional sales channel for us during the height of the pandemic.
‘It has helped us to ensure that our products appeared in search engine results, which was ideal when so many buyers moved online to seek out products.’
The Paperback Shop has listed several books on OnBuy which helps it appear high on search engine results
Yell is another platform that helps to connect consumers with business online and over 100,000 businesses currently advertise through it.
Almost anyone can list their business on Yell – the only restriction is no adult-themed businesses.
Through its recent collaboration with Amazon, Yell offers an extra perk.
Once a company registers a listing, information is passed onto Amazon Alexa and other major networks such as Apple (Siri & Maps) and Bing.
Yell says this helps businesses listed on Yell.com to be found by millions more potential customers beyond its own platform and Google. Amazon’s Alexa and listings are updated weekly.
Fees: Businesses need to register to use Yell, but it’s free to do so through the website or the Yell app.
SMEs can opt to use a paid service which provides advertising prominence for specified business categories and geographical areas, alongside other digital solutions including websites, videos, PPC and social advertising.
Shipping: Yell doesn’t have a shipping agreement set up, so sellers have to pay for shipping themselves or pass this cost on to the customer.
Returns: There’s no returns policy on Yell so businesses are left to set their own rules.
Small Business Essentials
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