Top Challenges For Sellers On The Online Marketplace
From groceries to clothes and shoes to furniture and even cars- almost everything is available online. By 2026, the Indian e-commerce market is expected to be valued at USD200 billion. Brands looking to introduce their products online have to make the choice between setting up their own e-commerce website and selling through an existing online marketplace. The latter has many advantages- an existing customer database, wider reach, established SEO reputation, etc. However, there are some challenges too.
Financial Considerations
Selling products online offers a better profit margin to brands since their overheads including shop rentals, salaries for salespersons, etc. are reduced. However, if you choose to sell online, there are certain overheads that you will have to consider. For example, many websites charge a fixed fee to list products. In addition, they may charge a commission on goods sold. The fees vary depending on the type of product. These charges can eat into the profit margins of small business. Depending on the agreement, you may also have to take into consideration costs such as cataloging charges, packaging and logistics.
Staying Visible
Competition is fierce in the digital world. Each category has multiple sellers and new ones are added on every day. Therefore, sellers need to put in a lot of effort to make their products stand out. Products need to be photographed well, named correctly with SEO in mind, and described in a way that would make customers want to buy the product. Since there are no salespeople to promote the product, every word on the listing is important.
Price Wars
One of the downsides of having many sellers having to fightprice wars. Large brands can afford to offer bigdiscounts. However, the same can be challenging for smaller brands. If you cannot lower your prices, you need to convince your customers that your product is superior in quality. Also, it is not advisable to compete on prices because this will lead to compromises on quality of products, and that will be reflected in poor reviews and high return volumes. You should also note that there will always be someone who can offer a lower price.
Difficulty Building Relationships With Customers
Trading through an online marketplace limits the amount of information you can capture about your target audience. Communication between buyers and sellers is restricted, thus building a relationship with customers is difficult. This also keeps you from being able to make data-driven decisions for new product lines, marketing strategies, etc. And you will be not be able to add the customers to your mailing list, and hence cannot influence their purchases and loyalty.
Dishonest Customer Reviews
Reviews can boost product visibility, but not all reviews are honest and relevant. For example, a person may leave a bad review irrespective of the quality of the product because of a dreadful experience with an delivery agent. Similarly, a fraudster may leave a poor review only to drop your ratings. As a seller on an online marketplace, you have limited control over the reviews that are published, and cannot put forward your side of the story. Hence, your rating may drop for no fault of yours.
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Customer Returns
On an average, one out of every 100 orders are returned by buyers. The reasons for this may be genuine or fake. Customers do not incur a cost for returns but buyers must pay for reverse shipping and logistics. This can affect profitability and discourage online sellers. Some marketplaces offer sellers the choice between opting for a ‘replacement only’ policy. However, if you don’t have an established brand name, this can go against you, and make customers choose a competitive brand over yours.
Retaining Customers
Building customer loyalty is difficult in an online market. You cannot access their email information and hence can’t add them to your mailing list. For small brands, unfortunately, the purchase will always be associated with the marketplace rather than your brand. Branding opportunities on product pages are also limited. Hence, you cannot do much to influence customer loyalty.
Overcoming the Challenges
Despite all the challenges, many sellers choose to list their products on online marketplaces as it requires considerably less investment and gives you access to a much larger market than you would have been able to capture on your own. Succeeding on the online marketplace is all about how you handle the challenges and overcome them.
Start by finding the right marketplace for your product. Think about the audience they cater to.How your product will be perceived?The services offered to sellers and their policies. It is better to educate yourself about all the service policies and fine print instead of lamenting later. Understand their fee structure and price your products accordingly.
Getting into the price war is never a good idea. Rather, invest in good SEO for your product names and description so that it ranks well on the website. Make your product attractive with good photos. Showing the product in action is also a good idea. Alternatively, you can add a short video of how your product is better than your competitors. If your product is good, priced well and packaged properly, the customers will enjoy the experience and return for future purchases.
The online marketplace is showing no signs of slowing down, and listing your products on an online marketplace can help your business grow and generate revenue. All you have to do is plan carefully and anticipate the challenges to reap the benefits.