Small Retailers Score in Online Marketplaces

You might think that only the largest and most sophisticated sellers can succeed on online marketplaces, but you'd be wrong.

A new study out from NetElixir fuond that 60.2 percent of small to mid-sized businesses are seeing more than half their ecommerce sales happening on marketplaces and 26.6 percent see a 50/50 split from their websites versus marketplaces such as Amazon, and eBay.

Of course, if 60 percent said advertising on marketplaces is effective, that means 40 percent did not. 

Of those who believe Amazon's ads are ineffective, 23.7 percent cited the lack of knowledge on how to use the platform, which suggests the marketplace when it comes to adequately training small business product sellers on how to use the ad platform.

Also worthy of note is that 60 percent of SMBs said their biggest challenge was acquiring new customers, while 17.9 percent said it was retaining customers and 15.3 percent said it was converting customers.

In an attempt to meet this challenge, 27 percent of those surveyed plan to invest in paid search within the next five years. More than 60 percent of these retailers attribute half or more of their ecommerce sales to Amazon, yet 68.4 percent of the same retailers are not advertising on the platform.

About 45 percent note lower margins when selling on the marketplace; 29 percent say they do not own the end customer, 9.5 percent cite commoditization of their brand, and 8.2 percent lack the access to data from the transaction. Nearly 24 percent said they lack the budget and about 21 percent admit Amazon just isn't the correct channel for their business.

Despite the pitfalls, 52 percent note increased sales volumes as the biggest benefit to selling their products on Amazon. Some 32.6 percent cite increased brand exposure; and 11.3 percent cite a solid infrastructure.
"Having worked closely with retailers for over 10 years, we have always known that Amazon is a strong ecommerce contender that can both help and hurt retailers," said Udayan Bose, CEO of NetElixir, in a press release. "It seems that 2017 is the year that this understanding became mainstream, and as a search marketing agency specializing in retail, we felt it was important to have a way to quantify small and mid-size retailers' experience with the ecommerce giant."

"Our results clearly demonstrate that Amazon has a huge influence on SMBs and is an integral part of their business strategy. However, our results also indicate that most businesses aren't sure how to navigate marketing on Amazon, with a majority of SMBs not marketing on it at all," stated Bose in the release.