How to start exporting with online marketplaces
Online marketplaces are an attractive way to start exporting. They include mass market, generalist sites such as Amazon and eBay, as well as specialized sites like Wayfair and Zalando. Their low cost and ease of entry are big selling points. With a few clicks, you can be in front of a huge, established international customer base, supported by powerful marketing and fulfillment infrastructures.
The sites also offer extensive, real-time data to optimize your product offering, ads and pricing. And you can use them for a wide variety of exporting strategies—from testing a new market or product to complementing other channels and clearance of unsold items.
But getting good results means more than just listing your products and expecting sales to roll in. “The allure of the easy set-up makes people think customers will automatically come, but if you don’t do your research you may not get the expected sales,” says David Girolami, a Senior Business Advisor with BDC Advisory Services who specializes in digital marketing.
“Success comes down to doing your research on the back-office aspects—fulfillment, margins, pricing strategy, advertising and more.”
Success comes down to doing your research on the back-office aspects—fulfillment, margins, pricing strategy, advertising and more.
Girolami says six steps are key for success in exporting via online marketplaces.
1. Decide on your objectives
Exporting on online marketplaces should be part of a bigger expansion plan. Here are some exporting goals that these sites can help you reach:
- Complementing other channels as part of a larger export plan in a new or existing foreign market.
- Testing a new market or product with a low upfront cost before you add other channels.
- Testing online export sales before you build your own e-commerce site.
- Using a marketplace as a clearance platform to sell products that you haven’t sold elsewhere.
- Selling limited collection items.
- Selling private label items that you can’t sell through your own channels (e.g. because you don’t want to compete with your retail partners).
2. Choose the right marketplace
The next step is to choose the right marketplace. The giants include Amazon, Alibaba and eBay, but there are hundreds of other marketplaces, including some that target specific regions, countries and sectors.
While the larger marketplaces are a good choice for many businesses, keep in mind that you will likely be competing there against a vast number of products. Depending on your offering, a more specialized site may help you stand out better. Some options include:
- JD.com and Tmall.com (focusing mostly on China)
- Mercado Libre (Latin America)
- Allegro (Eastern Europe)
- Flipkart (India)
- Shopee (Southeast Asia and Taiwan)
- Bol (Netherlands)
- Newegg (tech products)
- Wayfair (furniture)
- Zalando (fashion in Europe)
- Etsy (handmade and vintage items)
Keep in mind that on some marketplaces, you have to create a separate account and page for each country you target. “You may need to adapt your branding, products and price to each country,” Girolami says.
3. Choose the right product
Now think about which products you will sell. It’s crucial for the product to be one you can offer at a competitive price. Shoppers on marketplaces are highly focused on the best price. Having competitive prices is also key for ranking higher in search results when shoppers look for products.
“Being price competitive is super-important on online marketplaces,” Girolami says. “You don’t get much landscape to promote your unique value, unlike on your own website where you can weave a story about your efficacy or features.”
At the same time, you have to pick products that have a strong margin.
E-commerce is often more expensive than expected which is why it’s important to create a financial model before you start selling online. Be sure to factor in all your costs, including:
- monthly fees and sales commissions
- storage and fulfillment fees if you use the marketplace’s fulfilment process
- order processing, inventory management, shipping and returns if you take care of fulfillment yourself
This analysis will let you know if you can be competitive in your pricing and the volume of sales you need to reach to achieve profitability.
4. Choose your fulfillment process
Quick fulfillment is a critical component of ranking highly in marketplace search results. “Your ranking will degrade if delivery is slow, and that hurts your visibility,” Girolami says. “Amazon wants to offer the best customer experience, which means fast delivery and low price.”
You generally have two fulfillment options:
- using the marketplace’s fulfillment process
- taking care of fulfillment yourself or with a partner.
Opting for the marketplace’s process is often simplest for smaller businesses and those testing a new foreign market.
The DIY option can save you fees that marketplaces charge for storage and fulfillment. The downside is you have to do the leg work of order processing, inventory management, shipping and returns.
It may also take you longer to get products to customers than the marketplace process, which may offer same or next-day shipping. It’s hard to compete with that yourself.
5. Choose your advertising
Online marketplaces typically offer a variety of advertising services to boost product visibility. Amazon, for example, offers ways to advertise outside and within their platform. That in turn leads to improvement in the all-important search rankings. You can also use the ads to generate leads, maximize store performance and drive potential customers to your other channels, such as your website.
Review all your advertising options to fit your exporting goals. Make sure to consider those costs in advance when you budget your expansion project.
6. Monitor and improve
One of the greatest values of the marketplaces is data—bags of it. It’s up to you to take advantage of this treasure trove. You should continuously check your data on sales and ad campaigns to test and optimize your efforts. Also keep a close eye on what competitors are up to.
“Don’t make the mistake of listing your products, then just sitting back and expecting that customers will fly through the door,” Girolami says. “Monitoring data and optimizing your efforts can be the difference between success and failure.”