From inexpensive eBay to high end HEWI London, third party platforms are used by many public and private sellers to boost their revenues and sales volumes.
But why sell through a third party when you can sell products on your own branded website?
Despite the benefits selling through a third party brings there is still the question of whether it’s worth selling through a third party. Let’s walk through the pros and cons of selling through a third party.
Advantages of selling through a third party
Selling your products through a third party can increase the sales of your business massively by attracting new customers.
Customers who have never heard of your brand before or have never shopped from you will have the opportunity to try out your products, which in the long-term can lead to repeat purchases once they become aware of you.
Third party platforms are also very cost effective as all costs are covered, like advertising, promoting and other services to drive traffic. Businesses will benefit from the existing structure of an established third party with checkout and fulfilment support as well as built-in customer services and shipping.
There are no limits or restrictions as to how many third party platforms you sell your products on so you can spread the risk. If something doesn’t go to plan with one platform, you can withdraw your account as you will have more than one source of revenue.
This also gives you the opportunity to test how well your products sell on each platform as you can put them on websites such as eBay, Amazon and Groupon without spending money on a big launch and then you can assess how quickly and how well your products sell.
Disadvantages of selling through a third party
Third party fees and costs can vary depending on which platform you choose to sell with. Fees are usually deducted as a percentage of the sale, some of which include shipping and some that exclude it. Other related costs for the use of facilities and services consist of payment services, listings and participating in extra ads and promotions.
Some platforms charge excessive fees that leave you with a small amount of profit. For example, Groupon deduct 50 per cent of the sale made.
Another disadvantage of selling through a third party is that you may lose your identity as a seller. This is because third party marketplaces do not take the sellers into consideration; their focus is on the products you are selling.
So, the ways in which you establish your presence in the market is limited as you are unable to deal with customers – sometimes they even restrict you from selling certain items.
If you place your brand on more than one third party platform you may face the challenge of keeping your quantities up-to-date especially if you are running your own site too. It becomes more complicated to track your stock as well as stay in stock. There could be potential clashes between the various websites with one stating you have something in stock and the other stating you are sold out, so conflicts could arise with customers.
Selling through a third party automatically puts you out of control and potentially at risk. This is because, if you are relying on only one third party platform and if they go out of business, you are also put out of business temporarily. In effect you’re making losses as you’re missing out on sales.
Your business could also suffer from any new changes to the policy that the third party have in place. Lastly, you could be making lower profits if the third party decide to raise their prices from which they may receive more than you do as a seller.
Selling through a third party platform has its pros and cons and may not be for everyone. If you are an established business with your own platform and clientele, selling through a third party may not be as harmful as it just acts as an extra source of revenue.
However, if you are a start-up business, selling through a third party platform may not be the most appropriate way to sell your products as you may struggle to cope with the costs of doing so.