Helping Small and Medium Businesses Achieve Their Full Marketing Potential | Digital Marketing Expert
The Pros & Cons of Selling Through Third-Party Marketplaces
If you are a brand planning on selling online, chances are you’ve considered third-party selling with retailers like Amazon, ASOS Marketplace, and Farfetch. They can be quite tempting as they come with a large, built-in customer base, which can be a massive benefit if your goal is to expand your reach quickly.
However, if you are wondering, yes, there are some pros and cons to selling with such platforms that you should be aware of. While these can provide you with instant visibility, they can also pose some challenges in terms of brand control and profit margins.
From a digital marketing perspective, we say the key is finding the right balance. Get that visibility you are looking for, but always maintain brand integrity to ensure a healthy ROI.
To do this effectively, you need to understand the ins and outs of selling through third-party retailers. That’s where our team of experts steps in with the key pros and cons you need to know about.
The Pros of Selling Through 3rd Party Retailers
Access to a Wider Audience
Possibly the biggest advantage of third-party retailers is the massive audience they can offer you. Big players like Amazon, Zalando, and Farfeth can make your brand visible to millions of people who visit their websites every month. It’s like plugging into an existing ecosystem where your potential customers are already browsing. For emerging brands, this is a powerful incentive to gain the exposure you desperately need without the heavy lifting of trying to build traffic from scratch.
An Instant Trust & Credibility Boost
You know it. Trust is a huge factor for conversion, and when you are a newly emerging brand, it can make all the difference. Listing your products on sites that are already trusted by millions means you’re tapping into their credibility. Consumers will automatically trust you because why else would you be there if you were not a credible brand? Such trust by association can save you months or years of building your own.
Simplified Logistics (Most of the Time)
A lot of third-party retailers have streamlined logistics and fulfilment options. So, if you are a small team or even a solo entrepreneur, outsourcing tasks like shipping, returns, and customer service can be a game-changer. Bear in mind that not every platform offers this. But those that do can take a lot off your shoulders, so you can focus on what really matters to you: product development and a digital marketing strategy.
More Data, Faster
With third-party selling, you get immediate access to market data. This means you can observe and very quickly learn which of your products perform best, gather reviews, and better understand pricing sensitivities. For marketers, this is pure gold. You can get creative and test messaging, positioning and demand without burning your ad budget. Take it as a testing ground where you can play and learn before scaling on your own channels.
The Cons of Selling Through 3rd Party Retailers
While the pros paint us an alluring picture of third-party selling, remember that it can come at a price. Here are some of the challenges you should be aware of before committing to selling through third-party retailers.
Lack of Brand Control
You simply don’t have a say in how your brand is presented. Most of these platforms offer some standardised product pages, restricting your customisation of visuals, tone of voice, and storytelling. Your brand personality takes a backseat, and opportunities to build an emotional connection with your audience are few and far between.
High Fees & Commission Cuts
To sell your products through the marketplace is not free. Unfortunately, the costs can very quickly add up. Third-party retailers like taking a significant commission on every sale you make. Then, add the listing fees and fulfilment charges. It’s getting steep now, isn’t it? These fees will basically squeeze your profit margins. From a marketing perspective, it means you are working harder for less return. And that’s just not fun. Not at all.
Customer Data Isn't Yours
This might yet be the most frustrating aspect of selling through third-party platforms: your lack of access to customer data. No email addresses. No behavioural insights. No meaningful information to help you retarget or further those buyers. Therefore, it will be incredibly difficult for you to build long-term loyalty or run effective CRM strategies.
Risk of Platform Dependency
Your relationship with third-party retailers can put your business at the mercy of their algorithms, policies and fee structures. If the platform changes its rules, features, or anything else (and believe us, they often do), your sales can take a hit overnight. It’s a fragile setup. Don’t rely on it too much.
When Does It Make Sense to Use Third-Party Retailers?
With all of this in mind, there are clear benefits to working closely with third-party retailers, though, these may vary from business to business.
If you are a new brand, you need exposure and social proof. Third-party retailers will help you with that immediately. Before you know it, you will have built legitimacy and gained valuable visibility.
Another opportunity to partner with them is if you want to test international expansion. Amazon and Zalando will help you explore new markets without any risk or cost of setting up a separate eCommerce presence. It’s a safe way to dip your toes without having to plunge overseas alone.
Finally, if you are overstocked, third-party platforms are ideal for moving your excess inventory there while keeping your main site focused on premium products.
Maximise Marketplace Without Loosing Control
In the end, it is undeniable that third-party retailers can do wonders for your emerging brand: boosting visibility, expanding into new markets, testing product performance and more!
However, our advice from a digital marketing perspective is to use them to complement and not replace your direct brand presence and audience-building strategies. Maintain a strong eCommerce strategy alongside marketplace sales, and you will be sure to achieve long-term sustainability and customer loyalty.
Treat marketplaces as stepping stones, but always remember your ultimate goal: owning your brand, your customer relationships, and your data.
Got questions about eCommerce or anything else in digital marketing? Do not hesitate to contact our team. We are here for you.