Why Your Business Has No Future On A Marketplace Platform

Sophia Sunwoo
Oct 30, 2019 · 5 min read

Etsy, Upwork, Fiverr, Amazon, eBay ….

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By Danny Owens

When you’re first building out your business, selling your services on a marketplace platform makes launching so much easier by connecting you to potential buyers right away.

The fees that these platforms charge are also so much lower than investing in a marketing and sales campaign and it feels like you’re getting a steady stream of constant leads — is this lead heaven? It sure feels like it.

Although these platforms feel like you’ve hit the lead jackpot and gives you a real opportunity to generate monthly sales very quickly, relying on these platforms for the majority of your sales for the long term is a big mistake.

If more than 20% of your business’ revenue comes in through a marketplace platform like Etsy, Upwork, Fiverr, Amazon, eBay, and more, it’s time to open your eyes to the reality of an inevitable marketplace dead end.

Here is the reality of marketplace platforms and why your freelance, product, or service business needs to change course —

The Algorithm Will Change On You

The algorithm of these platforms are not set up to benefit you.

Even if the algorithm is benefitting you now, when the time comes (and it always does), the algorithm will transition to benefit the platform’s profits first.

That means, if your business is not consistently making the platform a lot of money, your business profile will be de-prioritized until you’re back on the leader board.

But how do you get back on the leader board if the algorithm isn’t making your profile and products more visible? The platform does not care, it’s your problem, not theirs.

Why does this affect you if your business is constantly delivering top-notch products and services?

Because 100% positive reviews, excellent customer service, and consecutive, perfectly-executed weeks are impossible to keep up past a few months or years.

You will have weeks where everything goes wrong with your shipping for reasons out of your control, you will have customers who leave you a bad review after a small misunderstanding, you will have months where you just want time off and take that hard-earned vacation.

Unless you’re a robot, doing everything you need to do to always be in favor of the platform’s algorithm is impossible.

Every business makes mistakes throughout the year, and when your business’ revenue is completely reliant on an algorithm that wants perfection, you end up working for the algorithm rather than your business.

Amongst A Sea Of Competitors, You’re Just A Transaction

Marketplaces are designed to present competing products and similar alternatives to shoppers so that they leave the platform with a purchase. Whether that purchase is with your brand or a competitor’s, the platform does not care.

Even if your product represents the exact design that your shopper was looking for, she may end up buying a competing product that has a few features off from the exact design they want, but is $20 cheaper.

If this same shopper saw your product outside of a marketplace platform, they would be delighted that they found the exact design they were looking for and purchase it right away. They would not think twice about looking for an alternative because of the excitement of finding exactly what they’re looking for.

When shopping on a marketplace, buying a product purely becomes just a transaction where price and the number of features you can get for that price becomes paramount.

Your brand and its products are reduced to how much you can give for a price rather than your quality, expertise, and craftsmanship.

Ideal Customers Don’t Fall In Love In A Crowded Marketplace

Marketplaces are great for acquiring new customers and one-time purchases, but the relationship ends there.

Studies show that marketplaces like Amazon do not help capture long-time customers who will eventually buy directly from your brand on your website.

If you build the majority of your business on a marketplace, you will end up on a never-ending hamster wheel where you’re constantly looking for new customers, rather than reaping the benefits of repeat customers who want to continuously buy more from you.

When you don’t put in the effort and time to cultivate a real relationship, you will only get one-purchase customers who are already on to the next brand and have long forgotten about you, and probably don’t even know your brand’s name.

How To Transition Out Of A Marketplace

If you’re currently pulling in the majority of your business through a marketplace platform, start investing your time and money now in building a marketing and sales funnel that you own.

Even if it’s only 20 minutes a week, start now so that you can start planning your exit from your marketplace.

Build your own audience and create an environment where you can constantly build a relationship with potential customers through your own content.

You should essentially be creating your own marketplace where you source new leads, sell to them, and keep in touch with them afterwards.

After investing a little time every week on building your marketing and sales funnel, you’ll need some time to test it, and really figure out which combination works for your business. This combination will help you craft a marketing and sales formula that’s fruitful enough so that it’s producing as much, if not more business as the marketplace you used to be on.

Once you’ve nailed this formula down, start transitioning off of the marketplace platform, or keep it around as an added “nice to have” money generator (more about that below).

The Right Way To Use Marketplace Platforms

There’s nothing wrong with using a marketplace platform, in fact it can be easy, automated money if you set it up correctly.

However, I want your marketplace platform to positioned so that it’s “nice to have” money for you. Marketplace money should be that 10% sliver, or extra money that’s nice to have, but wouldn’t make or break your business if it were to disappear tomorrow.

If you loved this, I send weekly action plans every Friday to help startups like yours grow their business. Sign up here if that’s your jam.

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Sophia Sunwoo

Written by

I create moneymaking brands with womxn entrepreneurs who refuse to settle for mediocre. www.ascent-strategy.com

The Startup

Medium's largest active publication, followed by +755K people. Follow to join our community.

Sophia Sunwoo

Written by

I create moneymaking brands with womxn entrepreneurs who refuse to settle for mediocre. www.ascent-strategy.com

The Startup

Medium's largest active publication, followed by +755K people. Follow to join our community.

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