You’ve probably heard of it – wholesale marketplace websites – and probably even thought about joining, but you’re not quite sure what to expect from these kinds of opportunities.
Are they worth it? How much can you make from them?
In this blog post, we’ll answer all your questions and more so that you can weigh the pros and cons of this particular kind of business opportunity.
What is a Wholesale Marketplace Website?
A wholesale marketplace website is a large online portal where buyers and sellers meet to make transactions. Large-scale examples include Alibaba, Amazon, and eBay. Sometimes referred to as B2B marketplaces, these sites allow brands to both buy directly from manufacturers or other brands in bulk quantities at discounted prices, or sell their products directly to consumers.
Some of these are online portals that can take care of everything, including warehousing inventory if needed. Most wholesale marketplaces take a fee off each sale that’s made through their platform while others offer zero commission rates on products sold through their website, however, there will still be fees associated.
It’s worth mentioning that wholesale marketplace websites are different from wholesale directory platforms, as they offer different types of service. Wholesale directory platforms allow businesses to create business profiles or pages with business information displayed to website visitors. Wholesale directory platforms do not offer transactions between businesses directly on the platform, which means they don’t take a commission on the sales you make.
Are wholesale marketplace websites worth it?
The truth is, it depends on what your goals are. If you don’t have an online store or don’t want to go to the lengths of creating one, then wholesale marketplace websites would probably be a good place to start.
However, if you are wanting to make an entry into the market with a strong brand launch and strategies, then an online wholesale marketplace isn’t going to be for you.
The best thing to do is check out as many sellers as possible on these websites to find out which ones might be better suited to your products and brand image.
The other thing you could do is to register and test out the platform first hand and see if you gain any sales through them and if the costs associated are manageable.
How much can brands make from joining a wholesale marketplace website?
One of many questions people have about what wholesale marketplace websites can do for their brand. There’s not straight answer, it will vary depending on various factors. These factors include the product price, product demand, and promotional methods used.
One of the main factors that impacts how much money brands can make from joining wholesale marketplace websites is the product price. The more you charge for your products, the more money you’ll likely earn. This means that you’ll want to carefully consider what price point to set when selling your products via wholesale marketplace websites.
Another factor that impact how much money brands can make from joining wholesale marketplace websites is product demand. This means that a brand’s revenue will vary depending on how popular it’s products are. For example, if you sell lemonade in summer, when it’s warm outside and people are buying lemonade all over town, your business will likely earn more revenue than if you sold lemonade in winter when it’s cold outside and not many people want to buy lemonade.
Then there are promotional methods. Like any business, regardless of the type and sales channel you use, you will need to promote it. If you solely rely on existing wholesale marketplace website visitors then you are limiting your business to those people only. To increase the likelihood of sales, you will need to promote your business to your target audience and direct them to your shop page on each wholesale marketplace website that you are a part of.
Is a wholesale marketplace better than having your own website?
Maybe. That depends on your product. If you have a unique brand, it’s more difficult to get traction with big retailers, so these websites are sometimes your best bet to get your brand out there. But if you have something that will appeal to large groups of people or can easily be mass-produced for retailers and small businesses, creating your own website might be a better choice – and much less expensive, thanks to Shopify and other providers who can help you set up an online shop.
A wholesale marketplace website can be both an expensive and inexpensive way to get your product into retail stores. The major benefit of some of these large websites is that they streamline product listings. They take care of the entire transaction, shipping, customer service, and returns on behalf of sellers. On top of that, they offer several benefits specifically for business owners who don’t have an e-commerce platform of their own.
Then there are marketplace platforms where they only offer space for you to create an online shopfront, allowing you to add products and store terms, etc. With these type of marketplaces, you still have control of storing your own inventory and setting your own terms. However, you will still have to pay commission for each transaction you make through the wholesale marketplace website.
Pros and Cons of Wholesale Marketplace Websites
When trying to decide if joining a wholesale marketplace website is right for your brand, you need to evaluate both sides of your decision. Every option has its pros and cons, and as such, you need to weigh those factors carefully before making a final decision.
Reach a wider audience
The biggest pro of joining wholesale marketplace websites for your brand is that it allows you to reach a wider audience and potentially make more sales, this means more customers and more profit.
Whether you’re selling handcrafted goods or handmade candles, wholesale marketplace websites can be a great way to get your products out there.
Test the market
By joining a wholesale marketplace website, it will allow you to test the market to see how well your products will sell.
This is a great option for makers of handmade products such as candles, bath & body products, custom-made goods, etc. By testing the market with small batches first, you lower the risk of the initial outlay and allows you to identify any challenges and make any necessary tweaks before heavily investing in products that may not have expected turnover.
Commission fees can be high
Most wholesale marketplace websites will charge anywhere between 5% – 25% of each transaction. For well establish wholesale brands and businesses, this is manageable and won’t cut in too much from their profits. However, this can be challenging for small brands or new businesses trying to break into the market.
More work for your business
If you are using a wholesale marketplace website as an additional sales channel, it can be become challenging if you are a sole trader with no staff. This means you will have to manage your wholesale marketplace website store as well as your own online store or physical storefront.
Bigger brands have more leverage
Like any large platforms, the bigger brands tend to do better as they get priority over newly established brands. Bigger brands have more staff and bigger advertising budget, which allows them to negotiate and pay what is necessary to be listed first. However, this is a common issue that all businesses will face at one point or another.
How to maximise sales on wholesale marketplace websites?
Unfortunately, there’s no magic formula that will miraculously generate you endless sales, but here are some simple tips that will help.
Put your best foot forward
Unlike having a wholesale showroom or storefronts, customers can’t walk in to see, touch, and feel your products. You’re also not there in front of them to easily answer questions on the spot or give a few pointers to push that sale through. So the best thing to do in this situation is to have amazing photos of your products, as photos are what the customers have to go by. Keep in mind that retail customers will only purchase products from brands that align with their business image and target market.
So images are the number one most important aspect when it comes to selling anything online, regardless of the platform.
Require minimum order quantity
Depending on the products you sell at wholesale, you can implement either a minimum order quantity (MOQ) or minimum order value (in dollar amount).
No matter how big or popular the wholesale marketplace website is, don’t just rely on the website getting sales for you. They’re not going to go out of their way to promote your business or products unless you’re paying for it – this can be in the form of banners or featured ads. So it’s up to you to advertise on other platforms such as Facebook to drum up more business and drive them directly to your wholesale marketplace products.
Try to stay ahead
Remember the times when people in business used to say “stay up to date”? Well, nowadays you have to be ahead. Staying up to date just doesn’t cut it anymore. Up to date now means you’re well behind the eight ball.
Simply put – Don’t do what others are doing. Do better.
Research your competitors
Researching is a must, not just at the beginning of your wholesale business venture but also during the life of your business. Research your competitors, especially ones that have joined the same wholesale marketplace website as you.
It doesn’t hurt to broaden your research to international markets as well. Australia can be a little behind when it comes to certain trends, so it’s wise to take a look at what’s making a hit in other countries like the US and UK. This may open up opportunities for you to introduce certain trends here in Australia and help you get ahead.
International wholesale marketplace websites are a great place to start your research as they will likely have new and exciting products not yet available in Australia.
Like anything in life, there are no guarantees. A wholesale marketplace website might be a great option for one brand but not another, so the best you can do is gather as much information as possible so you can make an informed decision.
Remember that wholesale marketplace websites are not the same as wholesale directory websites. Depending on your goal and budget, a high-quality wholesale directory could be the better option if you find that wholesale marketplace websites are not working for your business.