Catching the slipstream of eBay and Amazon

Why there's an opportunity

eBay

According to Forbes magazine, eBay has 97 million active users worldwide, approximately 200 million live product listings and more than 10 million new and deleted items daily. There are 100,000 new buyers joining their network across the world every day. in the UK they have 16 million visitors a month.

The result for entrepreneurs has in some cases been outstanding. According to eBay, in 2010, five businesses achieved turnover in excess of £1m in their first year of trading. They have also stated that they expect one in ten businesses to achieve a turnover of at least £3m.

Exports have been key to this growth, according to the figures, 98% of the millionaire businesses boost their takings through overseas sales. Over £446m were achieved by eBay's UK-based small businesses during the whole of 2010, with expectations that around 11 of the millionaire businesses will see over £500,000 of turnover come from exports.

Amazon

On Amazon, third-party sales (i.e. merchants other than Amazon itself) represents 29% of all sales. Amazon is growing at around 50% year on year, this is quite amazing if you compare Amazon with the world's largest retailer, Walmart. Amazon is fifteen years old and is far outstripping the results that Walmart reached at the same stage in its development.

Setting up an eBay or Amazon store is akin to taking on a franchise. A lot of support is provided, but you must remember that you have to play by the franchise rules and the spoils will be shared with the franchiser.

A big opportunity exists with Amazon, eBay to build and expand businesses, but it's critical not to be trapped in a way that reduces the longer term value of your business. Many merchants in addition to selling on marketplaces have their own E-Commerce web site for the benefit that having multiple channels brings. The challenge if often associated with managing stock and processing orders when they are coming from multiple places. Sellerdeck provides a solution to complement their E-Commerce platform called Marketplace Manager for this very purpose to synchronize stock and process order in one central location.

The anatomy of a business

Most people going into business have products or services they want to sell marketing them is often the challenge and this is where marketplaces come into their own. Tens of millions of people search on their platform for products every month. So if you can source the right products at the right price and deliver them promptly you should have a successful business.

The benefits of market places:

The reasons for using eBay and Amazon include the following:

  • Low start up costs as there is no investment in technology or marketing required
  • Captive market - prospective buyers are already searching on the platform
  • Payment options are already available
  • You can choose the most appropriate business model between auctioning products and making them available at a fixed price [eBay only]
  • There is additional support such as printed leaflets to go with orders and emails to encourage repeat business [eBay only]
  • Fraud protection is included
  • There is a helpful community of other merchants
  • Warehousing, picking and delivery service can be provided [Amazon only]

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