Cons:

• Fierce competition from millions of other sellers. You will probably need to invest in marketplace sponsored ads to achieve visibility for your products at the beginning
• Lower margins as prices are squeezed by the competition, with the lowest price often winning the buy box. This is especially true when you do not have a unique product with its own EAN number

• Lower brand visibility as you are not allowed to customise the platform (e.g. links from your Amazon listings to your own website are not allowed)
• Reduced customer loyalty as the buyers are not your direct customers
• Generous refund and returns policy which you cannot influence, reducing overall margins (quite challenging for certain categories such as fashion and jewellery which have relatively high-return rates)
• You are not in full control, which is fine when everything goes well. If your account is blocked for poor performance/bad reviews, it can be very difficult to appeal and get reinstated

Once you have decided to sell on a marketplace, selling online is a simple 4-step process:

Step 1 – Listing your offers for sale: Once you are registered to start selling, you can upload your inventory using listing tools provided by the marketplace. In some cases, you may have the option to outsource the listing creation to pay-per-use services which can help you create a high-quality product catalogue for your offers.

Step 2 – Customers can view your products online: Once you have successfully listed your products, they will be published in the Marketplace’s catalogue and thousands -if not millions- of potential customers will be able to view them online. Most marketplaces allow sellers to customise offers by adding promotions and special offers.

Step 3 – Delivery to customers: You will be notified when an order has been placed. You simply pick, pack and deliver your item to the customer or you have the option to outsource fulfilment to an external service provider. In some cases, marketplaces offer fulfilment services to their sellers as well.

Step 4 – You get paid: Payment for the products sold is deposited regularly into your bank account following deduction of the standard selling fees which the marketplace charges. Some marketplaces e.g. Amazon will take care of collecting the payment from the customer without you having to set up accounts with a third party payment provider. Ebay, on the other hand, will require you to have a Paypal account to be able to start selling.

3 – Ensuring you can provide excellent customer service:

Customer satisfaction and excellent customer service are key to being successful and a prerequisite for keeping your account in good standing.  Marketplaces are determined to keep their large and loyal customer base extremely satisfied and they expect their sellers to do what is necessary to ensure that poor customer experience is kept to a strict minimum

This also works to the advantage of the successful seller who is very customer-oriented and has put in place the support mechanism to ensure his/her products and orders are always well received by customers

Some specific things to bear in mind are:

• Ensure that you pack your items really well. Nothing destroys confidence like broken items arriving at the customer
• If you are handling fulfilment yourself, think about adding a personal note e.g. a postcard or stickers. People love free gifts, especially when they are unique
• Respond to customer queries and orders as fast as you can and ensure all items you list for sale are in stock or can be procured within a very short timeframe
• Be very realistic about the delivery timeframe you quote as you are setting an expectation which the customer will expect you to meet. Most customers will expect a very fast delivery and in many cases free shipping which have become the almost defacto standard for internet sales. Find a good and reliable carrier who can collect proof of delivery or leave a card when people are not at home
• Find an easy way for the buyer to track his package without having to reach out to you

4 – Optimising your logistics and delivery:

Great service very much stems from how well you have set up your logistics and delivery mechanism. This means dispatching items quickly and making sure they arrive in good condition and within the advertised delivery timeframe.  This starts with keeping a close eye on stock levels across all channels

If you are taking care of delivery yourself, ensure you use an appropriate carrier balancing the criteria between cost, delivery time, delivery certainty and quality. This includes the appearance and condition of the parcels when they are delivered, the persistence of the driver in getting hold of the recipient and the follow up to reschedule the delivery at a convenient time when the person is at home

If you have concerns about your operational capacity or know-how to fulfil online orders, you should consider outsourcing the fulfilment of all or part of your products. This will also free up valuable time so you can focus on the strategic parts of your business. There are several companies and some marketplaces offering such services for large as well as small online retailers. Outsourcing fulfilment also reduces the initial investment needed in both staff and warehousing space and allows you to easily scale your business as sales grow or during peak periods like the festive season

5 – Scaling your business and growing further – at home and abroad:

As you grow and see which products sell best, and where there are unfilled niches for other products, it is quick, easy and relatively low risk to test and to continue to expand your product portfolio on the marketplace

You should also consider taking advantage of the continued strong growth in internet sales by expanding into additional international markets

Want to sell globally?

Amazon has Marketplaces around the world in the United States, Canada, China, Japan, India and Brasil. You can check out Amazon’s global selling manual for more details about the different international seller programmes on offer.

The same goes for Ebay who has 23 international sites and a wider presence in over 100 countries worldwide.

It will come as no surprise that China is the largest consumer market in the world and its e-commerce sales are about 3 times bigger than in the USA. If you feel you have international markets such as North America covered and would like the challenge of taking on Asia as a next step, there are a few things you should bear in mind.

To sell online in China on your own you will need to

• Incorporate a company in China
• Open a bank account in China
• Ship from within China
• List and invoice in Chinese

Several service providers offer support to Western sellers to overcome these hurdles. If you would like more information, our Luxembourg Trade and Invest offices around the world can answer any questions you may have about doing business in their region. You will find details in the Meet the team section at the bottom of this page.

However, two of the largest Chinese marketplaces have set up programmes to help Western sellers do business on their marketplaces in China.

Alibaba’s Tmall Global was opened in 2014. Western sellers have a customisable storefront and the ability to fulfil orders outside of China and be paid in Euros.

China’s second largest marketplace Jingdon (JD.com) offers 3 options to cross-border sellers.

• JD Direct sales – JD sources products from international suppliers
• JD Marketplace – principally for sellers registered in China
• JD Worldwide – for cross-border sales

As competition on these very large marketplaces is high, after checking product fit you should also foresee quite a sizeable budget for marketing in order to get visibility for your products.

In Japan, Rakuten is the largest e-commerce site with over 100 million customers. Both Rakuten and Amazon write that they can help cross border sellers target the Japanese market.

• Encourage buyers to leave positive reviews (can be requested when forwarding the invoice) to improve your ranking and seller rating
• Have a clear returns process to improve trust and encourage repeat sales
• Offer different shipping options, including standard free shipping. Customers appreciate choice
• Deal with negative feedback by contacting the buyer and trying to address the complaint (small discount, replacement product) and ask the buyer to remove the feedback as it will have a direct negative effect on your seller rating which buyers will see when reviewing your products
• Input a compelling company description in your marketplace account with your values and what makes you stand out from the competition

If clicked, the cybercriminal may be able to gain access to the seller account, place false listings and payment information and even redirect proceeds destined for the seller.

To mitigate this risk, Two Factor Authentication (TFA) must be enabled wherever it is possible. If your marketplace does not propose it, you should consider choosing another one.

From your own side, you should take 2 additional precautions:

1. The device you will use to access the marketplace must be clean and regularly updated. This way, you will avoid that any un-patched vulnerability allows the criminals to access your account.
2. Accessing the marketplace through a VPN is the best way to make sure that nobody can read the data you send and receive from the marketplace. This is important to protect yourself, and also to protect your client’s personal data.

Advice available from SECURITYMADEIN.LU. Visit our website www.securitymadein.lu for more information and to contact us.

You or your accountant can then make your monthly VAT declaration based on sales volume online. If you use the Amazon European selling account, there is a sales threshold established for each country, after which you will need a local VAT number for that country e.g. in France, Italy, Spain etc. Your accountant should be able to provide more details.

 

Companies have the option to use APIs or dedicated marketplace software packages to integrate this information into their own ERP system. Some of the available software packages will have their own reports and analytics. It really all depends on the size of your operations and your requirements to effectively manage your business.