The shop-com boom: Which ecommerce marketplace is the best for small businesses?

Business has boomed for digital shopping platforms in 2020. We take a look at the pros and cons of the top options available for SMEs.

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Perhaps the biggest winner of the global coronavirus pandemic has been the ecommerce industry.

As stores closed and restrictions on footfall were introduced, online shopping thrived with consumers instead turning to the keyboard to find their products.

All this has led to a huge surge in demand for ecommerce marketplaces and with it, tons of new opportunities for startups and small businesses. In June 2021, Etsy, one of the biggest ecommerce companies in the world, purchased the shopping app Depop for a huge £1.16 billion – reflective of the growing consumer interest.

But as the marketplace becomes saturated with brands, it’s difficult for new small business owners to know which platform offers them the best audience, user experience, and value for money.

In this article, we take a closer look at the rise in social shopping post-pandemic, as well as the pros and cons of the top platforms – to save time, we think the best for small businesses is Etsy.

What are ecommerce marketplace platforms?

Ecommerce marketplace platforms are online shopping platforms that allow users to upload products to sell, and buy, easily.

The apps are usually free for consumers, but charge fees for sellers to list items. This has made them a popular choice for launching small businesses. Although anything can be sold using ecommerce marketplace apps – popular products include technology to original artworks – they are predominantly used to sell second hand items.

The biggest ecommerce app, and the one that comes first to everyone’s mind, is eBay. Founded in 1995, it was one of the first success stories of the dot-com bubble. However, eBay was originally set up for basic side hustles, and to help people get rid of unwanted clothing. The market has since developed and grown much bigger.

thredUP’s annual report into fashion resale found that 33 million people bought second hand apparel for the first time in 2020, and estimates that the industry will grow 11x faster than the broader retail clothing sector.

Why are they so popular?

Part of the reason that ecommerce marketplace apps have become so popular among consumers is the drive for sustainability.

Fashion is one of the most pollutive industries in the world, and accounts for around 10% of all global emissions. The past two decades has seen clothing production ramp up to create ‘fast fashion’, a manufacturing trend built on poor quality, mass-produced textiles that is incredibly environmentally unfriendly.

These brands help consumers to buy products while still contributing to the circular economy. A study by popular app, Depop, in collaboration with Bain and Co., found that 75% of consumers used the platform to reduce consumption, citing the fact that buying a used item can reduce its carbon emissions by 82%.

Other, popular reasons for using ecommerce marketplace apps, as cited in the report, are for cheaper prices, and a desire for one of a kind items. In the wake of the pandemic, there has also been a huge drive to support local businesses, which is another trigger for the ecommerce marketplace boom.

Why are ecommerce platforms good for small businesses?

Because they are aimed at supporting newly-established businesses, marketplace apps are highly-favoured by SMEs and startups. Most of them already have established audiences, making them great for brand building. Some sellers have made more than £210,000 from selling clothes on Depop.

As you become more established, it makes sense for you to build your own ecommerce website, which you can do easily with website builders like Wix or Shopify. But if you are running your small business alongside another job, or just as a hobby, then ecommerce marketplaces are a good way to reduce pressures, as they can take away time-consuming areas of business management, like marketing.

Another obvious benefit to selling online is that you don’t have to spend money renting a retail property. Under the government’s Expanded Retail Discount scheme, business rates on most non-domestic properties have been slashed to 66%, in order to help the high street recover post-Covid. However, this relief will end on 31 March 2022. So, if you’re a startup looking to set up shop, it’s best to do it digitally.

Which is the best platform for UK small businesses?

Below, we’ll give a quick breakdown of some of the top platforms available for UK SMEs, as well as information about their pricing.

Pricing

The majority of ecommerce marketplace apps charge both a listing fee for any products uploaded to your online shop, and a transaction fee. This is usually a percentage of the sale that goes to the platform.

How much you are charged can differ greatly depending on the platform you choose. Here’s a chart comparing the prices:

 Etsy DepopAmazon MarketplaceNot On The High StreeteBay Wakuda
Transaction fee5%10%£25 a month25%12.8%10%
Listing fee15pFreeFree£199 to joinFreeFree

Enna Tomlinson is a Content Marketer at The Audit Lab, a content marketing agency, and a fan of all things Vinted and Depop. Tomlinson says: “Doing your research before heading to marketplace apps goes a long way. If you end up selecting the wrong platform, your items could get lost amongst a sea of those with higher relevancy.

Always consider your buyer’s journey before releasing your brand to the public. Have you made the process easy for them? Do they have plenty of payment methods to choose from? And most importantly, what is the main selling point for your business that sets you apart from the rest?”

Amazon Marketplace 

Amazon’s best offering is its huge exposure. As of 2021, the platform currently has over 200 million global subscribers to its Prime membership deal, so it’s a guaranteed way to ensure people will view your products.

The site is trusted among customers and is also very simple to use. Thanks to its subscription based listing transaction fees, Amazon can also be a great economic choice – depending on the number of items you sell.

Want to know more about becoming a small business retailer on Amazon? Read our guide to learn how to start selling on Amazon Marketplace.

Depop

First launched in 2011, Depop has had a meteoric rise to success. The app allows users to connect with friends and role models to browse what they are selling, liking and buying, bringing a social media dynamic to shopping.

Its main target audience is Gen Z shoppers, with an estimated 90% of its users under the age of 26. One of the app’s biggest selling points is its excellent protection against scammers for both buyers and sellers. However, as one of the most expensive online shopping platforms, Depop has also been heavily criticised by users for its 10% transaction fee.

Not On The High Street

Not On The High Street – one of our Startups 20 businesses – is the top marketplace in the UK for curated and bespoke goods – meaning its sellers can take advantage of the platform’s excellent reputation and very strong marketing.

Sellers need to be quite far along in their business journey, with a logo, brand and product range pre-established. Fees are also expensive, with an initial sign-up fee of £199, meaning established SMEs will find this platform the best value for money.

eBay

eBay might not be as sexy as the younger platforms in this list, but it is still the biggest player on the market. The marketplace recorded a 237% rise in new small businesses joining the platform since the start of the pandemic – averaging out to a new business registering every 2 minutes.

Its impressive 24/7 customer support services and business help packages make it a good option for growing small businesses – as reflected in its more expensive transaction fees.

Find out more about using eBay to set up your business.

Etsy 

Etsy’s unique selling point is that it only hosts independent sellers on the site, so that its products are one-of-a-kind. As a well-known and trusted site, Etsy has a huge audience – plus, very generous fees for sellers. However, it is specifically for vintage-style, handmade goods, so it’s definitely not for every small business.

Find out more about setting up a shop with Etsy

Tomlinson adds: “Etsy is the perfect place to scout out small businesses, featuring plenty of new, unique handmade products by the day. In contrast to eBay thrifters hungry for a quick bargain, Etsy buyers often don’t mind paying a little bit extra for unique items. This platform is also brilliant for first time sellers, as the whole process from setting up your brand to selecting payment options, and then finally generating shipping labels is (thankfully) completely trouble-free.”

Wakuda

Wakuda is an online marketplace that is designed to help shoppers discover and purchase from UK black talent and businesses. Sellers from all sectors are welcome – amongst the platform’s huge range of products are homemade soaps and hand woven headwraps.

Its transaction fees match Depop, but Wakuda is most similar to Etsy for hosting independent, exclusively black-owned businesses – supporting an underrepresented, and often underfunded, group.

As a newcomer to the market, Wakuda has the smallest user base in this list. However, its integrations mean SMEs can easily list their products on multiple platforms, so you can still target a broader range of consumers.

Nathaniel Wade Wakuda

Nathaniel Wade is co-founder of Wakuda. Wade tells us: “Whilst Covid-19 has been damaging to a lot of high street retailers, it has allowed many customers to discover the benefits of shopping online. The rise of the marketplaces are giving brands with limited resources a space in which to be seen with minimal risk.

Black-owned businesses have historically been underrepresented in the UK. Factors influencing this range from access to funding, social capital to household income. We were often frustrated by the lack of representation and it often being a struggle for us to access black-owned businesses. Wakuda was created as a means to transform access to black-owned businesses and the creative talents of the black community. We aim to empower wider society to create a positive impact as well as taking them on a journey of discovery.”

Conclusion

The huge ecommerce boom, triggered by the COVID-19 outbreak, has served shopping platforms well. Online marketplaces are one of the fastest-growing industries and have been taken to quickly by customers eager for a more sustainable and personalised shopping solution. Because of this, today’s retailer SMEs have plenty of options to choose from for where to host their online shop.

Selling through an online marketplace is therefore an excellent way to build a consumer base and sell your products – but it’s worth doing your research. Each provider has its own unique features, such as pricing, audience and product range, all of which should be tailored to your business’ specific needs and selling points.

Helena is from Yorkshire and joined Startups in 2021 from a background in B2B communications. She has previously written for a popular fintech startup covering everything from money-saving tips to cultural reviews.

She is particularly interested in project management software and the films of Peter Jackson.

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