The pros and cons of e-marketplaces for small businesses

Shannon Coward

The popularity of e-marketplaces like Etsy, Storenvy and eBay has slowly but steadily been rising in recent years – both as a place for small business owners to make a start and for the consumer to pick up a quirky bargain. But while there’s been plenty of praise from those who ventured into e-marketplace success, there are still a few negatives you should be aware of before taking the plunge with your business. Here’s a run-down on the pros and cons of e-marketplaces for small business and what you need to know before making the decision.

Pro: They provide an online shopfront without you having to have a technical background

Having an online presence that your customers can easily find is vital in today’s internet-dependent commercial world, but how do you achieve this when you don’t have a background in tech or web development? E-marketplaces present an easy solution, allowing you to create an accessible online shopfront without all the technical know-how. All you have to do is make an account, upload your products and start getting the word out, making it the perfect option for the small business owner without deep pockets.

Pro: They provide exposure to a larger customer base than you normally would have

As well as providing a space for the customers you attract in your local community to browse at a later date, a successful e-marketplace store can draw customers from all over the world. Just ask any profitable Etsy-store owner, they’ll be happy to tell you how their loyal customer base spans as far as India and Sweden. E-marketplaces are great if you’re planning on digital expansion – just make sure you’ve got a solid groundwork in Australia first as international popularity can be fleeting.

Pro: They foster a community of like-minded small business owners

Websites like Etsy and Storenvy are more than just digital marketplaces, they’re also a community of small business owners all trying to turn their passion into something they can live off. It’s the ultimate dream, right? With this in mind, e-marketplaces often have forums where you can seek guidance from this already established community. They also usually have some form of community-specific marketing strategy – generally implemented through email newsletters – which is ideal if you’re struggling to get your name out there.

Con: Your products can easily get lost among other, more established stores

Let’s face it, e-marketplaces are huge and while your super-unique idea might be popular in your immediate area, it could get lost once you post it online. With thousands of products to choose from, you’re going to have to have something truly outstanding in order to get people to click and stay on your digital storefront. This is where a combination of physical sales, through weekend markets or by having your products sold in independent stores, and online sales comes in handy. This way you know you have a steady customer base to depend on and you can ride the rollercoaster of online success as it comes.

Con: Factoring commission percentages into your price can sometimes make your products more expensive than the competition

E-marketplaces don’t offer their services out of the goodness of their heart – they take a percentage of every sale you make. While this is understandable, and certainly a lot cheaper than paying for web hosting and hiring a graphic designer, it can also make the price of your products more expensive than those sold on independent websites. This is definitely not ideal in a competitive marketplace, so make sure you carefully consider whether the benefits of having an e-marketplace store outweigh the cons in your particular situation.

E-marketplaces are undoubtedly not perfect for every type of small business, but if you’re just starting out, they can offer a positive boost you’d have to work twice as hard for anywhere else.

Shannon Coward

Shannon Coward is a Brisbane-based freelance journalist who spent her formative years surrounded by small business owners. In her free time she bumbles her way around the globe, which you can find evidence of on Instagram, @ofthosewhowander.