Online marketplaces help innovators hitch their wagons to new audiences
Digital presence no longer viewed as optional
Joining an online marketplace made a lot of sense when Christina Crowe was starting her fledgling business 6½ years ago.
“From there, we grew pretty quickly,” said the Vancouver- based founder of Plum Polka Dot, a customized party and wedding favours business, which started out on Etsy, an e- commerce website focused on handmade and vintage items and craft supplies. “We were in the top one per cent of shops in no time.”
As business grew, she also registered her business on Amazon Handmade, the online giant’s site that helps the artisan community reach customers.
“Amazon helped me reach a different type of customer,” Crowe said. “It was a logical next step, because it has a lot of traffic.”
Each online marketplace has its own advantages, she said, noting that using Etsy is more profitable, but Amazon drives a lot more traffic so she gets more sales volume, though the fees are higher.
Not content with using those channels, Crowe three years ago launched her own site using Shopify Inc.’ s e-commerce platform.
“I’m active in all three channels now,” she said. “Customers have so many views. Some like to shop on my own site. Others want to buy through Etsy or Amazon, because they want the protection for their purchases.”
Many small- business owners are now looking to establish an online presence as the pandemic takes its toll on in-store shopping, and online marketplaces are playing an important role in helping them test market interest, expand their customer base or simply relieve themselves of the work of managing a site on their own.
A June 2020 study by the Business Development Bank of Canada ( BD C) found that businesses that derive more than 50 per cent of their sales online outperformed others during the lockdown period; and 39 per cent maintained or increased their revenues compared to “less engaged” businesses ( 16 per cent). Even more telling is that during the first four months of the pandemic, e- commerce sales exceeded those of the 2019 holiday season.
BDC business adviser Tyler Lockyer said a large reason business owners turn to online marketplaces is to off- load the resources needed to run an e- commerce operation.
“A lot of the infrastructure is taken care of for you. The audience is already on those sites as well,” he said. “The right platform can increase your rank and visibility, particularly if you encourage customer ratings and reviews.”
Lockyer added that online marketplaces are a different approach to online sales than traditional e-commerce, but the direction business owners take toward such sites can be very general or focused depending on their strategy.
Online marketplaces are an emerging part of omnichannel strategies that are effective in bringing more customers to a brand, said James Boyd, founder and chief executive of Treasure, a San Francisco company specializing in marketplace businesses
“It’s really about reaching customers where they are and understanding the types of products that exist in those markets,” he said. “Today, there’s a high degree of need for convenience, with retail stores largely shut down.”
Hundreds of thousands of products have been launched through online marketplaces, Boyd added.
“The potential for success is enormous if you do it right,” he said.
But Crowe cautions it’s not easy to be successful online, even though it’s easy enough to get listed on a marketplace.
“Success is a direct result of the work you put into it,” she said. “You can’t just throw things up online and hope they sell. You have to keep up with search optimization and sales data, and you have to make sure you always have great pictures and copy. It’s a culmination of many things.”
Online marketplaces can be a good place to test an idea, too.
Tiffany Dasilva, founder of Flowjo. co, an online retailer of card decks for people’s bucket lists, said Amazon Marketplace was the perfect jumping-off point for testing her concept’s appeal three years ago. She later joined Etsy and Uncommon Goods, a wholesaler platform, as well.
“It was an easy way to test the idea to see if people would actually be interested,” she said. “I could step back and see if it was viable.”
Dasilva, who is a consultant specializing in marketing and search engine optimization, started with 500 units for her first round of sales. This year, she’s shipping 10,000 units for inventory.
She only recently managed to get enough time to focus on launching her own site. But she said the time she spent with online marketplaces has taught her a lot about the ins and outs of supply chains, such as inventory management and fulfilment.
There are a variety of online marketplaces for businesses to choose from, some of them well- established such as Amazon, Etsy and Wish, some of them brand new.
This September, startup veterans Ryan Corry and Serene Yew decided to create their own online marketplace called Local Shops to support small businesses in the Calgary community.
“Even those who do their own e- commerce struggle getting traffic to their sites,” Yew said. “We wanted to make it easy for them to reach a wider audience.”
An eclectic mix of businesses have jumped aboard, ranging from traditional retailers and artisans, to breweries and farmers markets, but what binds them together is that they are small businesses that are locally run and operated.
The concept has taken hold beyond its Calgary base. In the first month, Local Shops logged 45,000 unique visitors and the site has now amassed 800 merchants from across Canada and features more than 60,000 products that can be searched by category and/or region. Plans are to launch the concept in the United States, starting with Boston.
Part of the site’s appeal is that it only takes a minute for a vendor who has an existing e- commerce site to import their inventory onto Local Shops. There is also a manual input option for those that don’t have an e-commerce site.
For now, Yew said the partners have not taken any revenue for operating the site.
“Our initial goal was to help small businesses in Calgary get more visibility online,” she said. “We didn’t want to mess with payment processing. As we grow, we’re learning more about how people want to use this site.”
Pilot concepts in the works include partnerships with local Uber- style delivery services that allow shoppers to add items from multiple merchants to their cart for a single delivery. Yew said they are also starting to white label their platform for specific regions, as well as expand into online marketplaces for festival events.
“We’re working to keep money in our local communities,” she said.
AMAZON HELPED ME REACH A DIFFERENT KIND OF CUSTOMER. IT WAS A LOGICAL NEXT STEP.