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The Ultimate Guide to Setting Up Your Business on an Online Marketplace

The Ultimate Guide to Setting Up Your Business on an Online Marketplace

Though the pandemic has affected many businesses, it is always a silver lining. The largest Online marketplaces have taken over the traditional brick-and-mortar stores or malls drastically after the pandemic. Consumers have now become super comfortable with making purchases online.

Online marketplaces have appeared as the most powerful means of doing business online and generating revenue. Being successful in an online marketplace is just not about money and the size of the warehouse or the quantity you own at the warehouse. Being on an online marketplace is all about choice and the number of products you can make available to the end consumer.

Have you heard about Collaborative commerce?

Many retailers have jumped to the conclusion that they can offer more variety of products, thus adding more value to their end-users through collaborative commerce. And the best example of collaborative commerce is an online marketplace.

What is an Online marketplace?

An online marketplace is an electronic online store, in other words, an e-commerce store that facilitates shopping from different sources. It came into existence in 1995. It is a platform that brings various categories of buyers and sellers together with the customers, thus managing the demand and supply. Like malls, supermarkets, or retail stores housed in a building, online marketplaces conduct business through the digital storefront.

An Online marketplace allows the buyers and sellers to find each other, facilitate the transactions and generate revenues through the marketplace fees. It’s all done by the sellers, and the marketplace owner charges a percentage on sales completed through his marketplace. The way mall owners are not responsible for storing any inventory or managing any orders etc., online marketplace owners are also not responsible for storing any inventory or managing any inventory.

The best online marketplace is Amazon, Nykaa, Ebay, Airbnb, and many more. Their business model is usually a win-win for buyers, sellers, and marketplace owners. Wondering How? Here is how they benefit.

A finding by wpforms in 2022 states that around 24 million ecommerce sites are available across the globe.

The benefit for buyers is that they browse and shop from multiple categories in one place with various brands. The choice is endless! Sellers access buyers across the world or region within minutes with minimum investment.

For a marketplace owner, the benefit is the commission on each sale. The best recent example is Amazon, the multi vendor marketplace.Amazon states that their global selling partners which includes small and medium-sized businesses have sold 7,400 products per minute in Amazon’s store. Amazon sells more than 12 million products from different sellers across the globe.

It is estimated that by 2040, a major percentage of purchases ,say around 95% will be through ecommerce

Today in this blog post, we shall guide you on what you need to consider while setting up an online marketplace, the right approach and the pros and cons of an online marketplace.


These days consumers do not like to download many applications of single brands. They prefer an application that houses many brands with various product categories, doing their search and ordering easy.

So this is why one must set up their business in an online marketplace. Along with this, let’s have a look into other benefits as well:

Minimized marketing costs - Creating an exclusive online e-commerce store can be expensive and time-consuming. Operating from an online marketplace platform requires minimal investment and marketing costs as one utilizes an already established platform.

Wider Reach - When starting online, reaching a wide range of audiences becomes difficult. Online marketplaces become platforms to connect you to a wide range of target audiences. Customers trust and build credibility with those businesses that sell on these largest online marketplaces.

93.5% of global internet users have purchased products online.

Less technical hassles - Selling your products in an online marketplace has minimal technical issues rather than building your ecommerce platform. The largest online marketplaces have a good technical team to solve the technical issues and handle the traffic at any given time. It saves your time and money otherwise spent on hiring a technical expert.

High-income revenue stream - As an online marketplace is designed to cater for hundreds of sellers, it is often well managed. Our qualitative products benefit us from being chosen over other sellers when customers compare the products across the platform. This becomes your primary source of income and helps you gain more and more customers with time.


Losing brand identity -In an online marketplace, you lose the benefit of showcasing the brand the way you want amidst other hundreds of brands. This happens due to limited options in marketplaces for customization.

Highly competitive place - The best online marketplaces are highly competitive due to many vendors selling the same product category. In such a scenario, keeping affordable prices while getting positive customer reviews is very important.

Fees percentage - The largest online marketplaces charge a percentage of fees from businesses to connect you to a larger pool of target audiences globally. This fee is for the growth and expansion of your product.

Key points to consider while setting up your business on an Online Marketplace.

Every business has a positive and negative impact. But here are some key points to consider when setting up your business

Clarity on strategy

It is important to have a clear strategy to deal with sales volumes and avoid negative reviews before entering the online marketplace. Research your competitors, look into the due diligence, risk assessments and what customers like.

Focus on a niche marketplace

If you choose a marketplace such as Amazon, eBay or Sephora, remember that they are highly competitive. Also, consider the type of marketplace.

For example, if you belong to the cosmetic industry, Sephora would be the most appropriate online marketplace rather than Amazon.

Integrating the existing sales channel with the current channel

For timely order and inventory management and accurate sales, it’s important to integrate the current sales channel with the new marketplace sales channels. This will ensure timely and seamless stock, sales and delivery management.

Setting up your business on an online marketplace proves useful in increasing your sales channel and revenue. Grow your business exponentially by entering into an online marketplace.