How can you maximize your sales and cash flow on marketplaces?

What is a marketplace?

A marketplace is an online platform that connects sellers of products or services with potential buyers. Examples include Alibaba, Amazon and Etsy.

Several sellers compete to sell their products and services on the same site. This distinguishes it from a traditional online store, where a single company sells its products.

A marketplace can be general practitioner like Amazon or Etsy or specialized in a specific sector, such as Airbnb for property rentals.

The advantages of selling on marketplaces

Selling on a marketplace offers many advantages:

Better visibility

If you're setting up a traditional online store, you'll first need to create an online sales site. Then you'll need to invest in SEA and/or SEO strategies to work on your brand awareness and visibility. This is the a long and costly process .

But by integrating a marketplace, you benefit from the popularity of the platform. So, for example, when you sell on Amazon, you're guaranteed to reach a large audience, given the platform's popularity.

You can even access an international clientele on certain marketplaces.

Simplicity

Une marketplace centralizes after-sales service, logistics and payment processes in return for a commission on sales. This allows online sellers to focus solely on optimizing their offers and managing their inventory, which offers simplicity and efficiency .

Low launch costs

We've seen that by selling on a marketplace, you can forget about the costs associated with creating a website and logistics. If you choose to sell on a marketplace, all you need to do is pay registration fees and commissions per sale. This allows you to limit financial risks related to the launch of your online store.

Marketplaces are also investing in advertising campaigns to attract more visitors. You benefit indirectly from these marketing efforts.

A better user experience

Marketplaces deploy technical efforts to ensure an optimal, fluid user experience, with personalized recommendations, a user-friendly interface and search functionalities. All these efforts increase your chances of conversion .

Integrated analysis tools

Marketplaces generally provide analytical tools that allow you to track and analyze your sales performance . This will enable you to adjust your strategies to optimize your sales.

The main players

Here are 5 of the best-known marketplaces on the market:

Amazon

The generalist marketplace the world's best-known . It offers a wide range of products from different sectors.

It is particularly appreciated for its logistics service, Fulfillment by Amazon, which enables sellers to store, pack and ship their products to buyers around the world.

eBay

A pioneer, eBay is also a historic marketplace in the e-commerce sector. Once known as an auction site, the platform has evolved into a generalist marketplace, now offering a wide choice of new and used items .

Etsy

Etsy specializes in handmade, vintage and artisanal products. ideal for designers and craftsmen. You'll find unique, personalized objects, decorative items, works of art, jewelry and more.

Alibaba

Known for being the world's largest B2B platform Alibaba is a marketplace based in Asia. It enables companies to buy from manufacturers based mainly in China and the rest of Asia.

It provides logistics services to facilitate transactions.

AliExpress

A subsidiary of Alibaba, AliExpress is also a generalist platform that mainly displays products of Chinese origin. It is renowned for its low costs and for its wholesale products.

How do I start selling on marketplaces?

Here's how to get started selling on marketplaces:

Steps for creating a seller account on a marketplace

Here are the steps to follow to create a seller account on a marketplace:

• Choosing the right marketplace . The first step is to select the platform that best suits your products and your target audience.

• Create a seller account by providing the information and documents required by the platform: personal data (name, address, telephone number), company information (company name, SIRET number, etc.), bank details, identification documents, etc.

• Customize your store by choosing a store name, logo, banner and description.

• Create your product list and product sheets including information on size, technical specifications, use, price and images for each product.

How do you choose the right platform for your product?

To choose the right platform, you need to consider :

• Your product type . You need to make sure that the type of product is accepted by the marketplace and, above all, that it is well represented. This is where the choice between a generalist and a specialized platform comes into play.

• Your target audience . You need to integrate a marketplace frequented by your target customer.

• Costs and commissions . To minimize your costs and maximize your margins, compare marketplaces according to their service fees and commissions.

Mistakes to avoid when putting your products online

Here are the mistakes to avoid when selling products on a marketplace:

• Vague or inadequate product descriptions . In distance selling, the consumer needs to be sure of the product's usefulness and characteristics. If the product is poorly described, or if the description is too generic, your chances of conversion will be reduced.

• Neglecting SEO . Since marketplaces involve many different sellers, you need to use SEO strategies to stand out from the competition. Using relevant keywords, tags and attributes, optimizing titles...these are just some of the strategies you can use to make it easy for buyers to find your products.

• Poor image quality . Once again, we're talking about distance selling. Images play a key role in buyers' purchasing decisions. Make sure you include high-resolution photos that highlight specific product details.

• Neglecting delivery deadlines . On-time delivery is a key factor in customer satisfaction. That's why 72 % of online customers believe that delivery is a decisive factor in an online transaction. If you don't take this into account, you run the risk of receiving negative feedback from users.

How to manage your cash flow as a seller on

une marketplace ?

Here are some tips to help you manage your cash flow:

Payment terms on marketplaces and their impact on your cash flow

Marketplaces generally collect payments from buyers, but do not immediately transfer them to the sellers concerned. They observe a certain payment period which can vary from one platform to another.

Payment times vary according to the payment processing cycle and the warranty and return period.

With these parameters in mind, some marketplaces have weekly, bi-weekly or monthly payments .

Amazon, for example, observes a 14-day lead time.

These delays naturally produce an impact on your cash flow This is especially true if you manage large inventories of products. The result is a time lag between sales and the availability of funds .

And yet, with every sale, you often have to commit funds for shipping costs, packaging or even the purchase of stock. In the meantime, you may find yourself short of cash to reinvest or cover ongoing expenses.

This is all the more problematic during periods of peak demand (Black Friday or end-of-year sales, for example), when you need to increase your inventory.

How can you finance your purchases and anticipate cash flow fluctuations?

There are solutions that can help you mitigate the negative impact of marketplaces' payment delays:

• Negotiate favorable terms with your suppliers . For example, you can negotiate payment terms that take into account the realities of payment on marketplaces.

• Finding the right financing solutions . Some marketplaces also offer financing solutions such as Amazon Lending or Paypal Working Capital, which take account of sales.

• Optimal liquidity planning . Adjust your budget to avoid cash shortages.

You can also adjusting your stocks to avoid tying up too much cash in the event of unsold inventory. Diversify your sales channels also enables you to limit the impact of marketplaces' payment deadlines.

Hero solutions to improve your financial management

Fintech created in 2020, Hero has been designed to meet the specific needs of small businesses selling their products/services on marketplaces.

Here's how Hero works:

• The platform pays for your net sales in advance (80%) the day after shipment. This gives you immediate access to the cash you need to get on with your business.

• Then, as soon as the marketplace settles the payment, Hero reimburses itself and even any surplus to you.

This system allows you to streamline your cash flow and not remain dependent on marketplaces' payment deadlines.

Optimize your sales on marketplaces

Here are our tips for optimizing your sales on marketplaces:

Strategies to boost your sales

Of course, selling on a marketplace offers many advantages. On the other hand, with so many sellers on the market, you need to use a number of strategies to stand out from the crowd.

For example, you can work on your SEO :

• By adding relevant keywords in your product descriptions

• Optimizing titles to make them striking and attractive

• By adding high-quality images.

You can also invest in paid advertising to increase your visibility. Most marketplaces offer this option.

How to manage customer reviews and maximize satisfaction

The merits of social proof in e-commerce are well established. Consumers are more easily convinced when other users have already attested to the quality of a product or service.

So remember to :

• Encourage your satisfied customers to leave a review

• Respond to comments with tact and kindness . Internet users appreciate it when their opinions are taken into account.

• Improve your products by negative opinions . Internet users are all the more appreciative of companies that are attentive to customer feedback.

Tools to automate sales and payment management

There are a number of tools you can use to automate your sales processes on marketplaces. You can use :

• Payment management tools like Stripe or Paypal

• Inventory and order management tools like TradGecko or Skubana, which help you avoid stock-outs or delivery errors

• Price optimization tools like RepricerExpress or Informed.co, which allow you to adjust your prices according to the level of prices on the market

Fees and commissions for selling on marketplaces

Each marketplace has its own commission and cost policy. So it's a good idea to find out more before joining a platform.

Understanding set-up and sales costs

Certains marketplaces facturent a fee for each product placed online, regardless of whether or not the product is sold . For example, eBay offers 150 free listings per month, and charges for any additional products placed online.

For its part, Etsy charges 0.20 euros for each product put up for sale.

Compare commissions by platform

This is the main cost to look at before selling on a marketplace. It is the percentage that the platform retains for each product sold . It may vary depending on the product.

For example, the commission for fashion and luxury goods is generally higher than for electronic products.

For example, eBay charges 10% on the final price of each item sold. Amazon, on the other hand, charges between 7% (for household appliances) and 15% (for books or shoes), depending on the product category.

How to minimize the impact of expenses on your margins

When they accumulate, the fees applied by marketplaces can quickly impact your margins. That's why you need to take action to limit this impact:

• Take out a monthly subscription if you have high monthly sales volumes

• Optimisez vos marges taking marketplaces' costs into account when setting prices

• Take advantage of promotions on fees that some marketplaces offer to attract sellers.

What is the average time it takes to receive payment on a marketplace?

Each marketplace has its own terms and conditions of use. On average, however, the time it takes to receive payment from a marketplace is of 15 days . eBay and Amazon are among the platforms with the shortest payment times.

How can you optimize inventory management for sellers on marketplaces?

Poorly optimized inventory management can lead to shipping delays, out-of-stock situations and therefore unhappy potential customers . Optimizing inventory management is one way of ensuring a smooth customer experience.

Here's how to do it:

• Using inventory management software such as TradeGecko or Ecomdash for real-time inventory tracking and time-saving stock management

• Anticipate demand and adjust stock levels accordingly . The aim is to maintain sufficient stock, with no surplus and no risk of stock-outs.

• Implement an alert system or set replenishment thresholds via your inventory management tool to avoid stock-outs

• Adjusting your stocks prioritizing best-sellers over other products

• Use marketplaces' warehouses to outsource inventory management, packaging and shipping.

What are the tax obligations of a marketplace seller?

Marketplace sellers also have tax obligations. They must declare and pay taxes on income generated on marketplaces .

They must also pay VAT if applicable.

Hero helps you optimize your cash flow when selling on marketplaces

Hero is a payment processor that allows you to receive your payments on marketplaces.

Thanks to this platform, you can say goodbye to the negative impact of payment delays. Why should you? Because it advances the amount of your sales on D+1 following the day of sale .

The result? You now have sufficient liquidity to adjust your inventories to cover your day-to-day expenses, etc. It's a fantastic opportunity for small businesses to optimize their cash flow.

In conclusion, sell on a marketplace allows you to sell without worrying about the constraints associated with setting up a merchant site, while enjoying optimum visibility. On the other hand, you need to take into account costs, choose the ideal platform, optimize stock management and cash flow to limit the impact of payment delays.

With Hero, however, you receive your payments immediately, so you don't have to worry about the payment times indicated by the platforms.