The Hidden Costs of Marketplace Dependence for Merchants: Navigating a More Profitable Path

2 minute read

The hidden costs of marketplace dependence for merchants: Navigating a more profitable path

In the bustling digital marketplace, micro merchants and small business owners have found a safe haven in platforms like Etsy, Not On The High Street, and Eventbrite. These platforms offer unparalleled exposure to vast audiences, providing a launchpad for businesses to showcase their unique products and services. However, a critical oversight often undermines the financial health and growth potential of these small enterprises: the habit of directing their self-managed audiences to purchase on these marketplaces, unaware of the steep costs attached.

The marketplace paradox

Marketplaces like Etsy are invaluable for visibility, offering a ready-to-buy audience for niche and artisan products. Yet, the convenience comes at a significant cost. For a £20 product sold on Etsy, merchants face a total fee of 11.5%, combining sales fees, payment processing fees, and listing charges. Similarly, Eventbrite's service and payment processing fees can eat up nearly 10% of a £20 ticket sale. These fees, while justified by the platforms for the services they provide, significantly diminish the profit margins of micro merchants.

The misstep of misdirected traffic

A common misstep for micro merchants is the practice of directing traffic from their own digital channels, such as social media, directly to these marketplaces. This strategy, while seemingly straightforward, results in a substantial financial giveaway. The merchants not only pay for the marketplace's service through fees but also lose the opportunity to build direct relationships with their customers. This oversight is particularly poignant for merchants who invest time, effort, and resources in cultivating their followings on platforms like Instagram or Facebook and TikTok, only to divert potential direct sales back into the arms of fee-collecting marketplaces. It’s this accumulation of merchant traffic that has driven the growth of such marketplaces, inadvertently increasing the power and influence they hold over the merchants themselves, and often the fees they charge.

Understanding the true cost

The fees incurred on marketplace sales are merely the tip of the iceberg. Beyond these overt costs lies a multifaceted issue of concentration risk, which many micro merchants may inadvertently overlook. This risk stems from an over-reliance on single marketplace platforms for the majority, if not all, sales. Such dependence not only subjects’ merchants to the policies and potential whims of these platforms but also poses a significant business risk. In instances where a marketplace decides to off-board a merchant—due to policy changes, misunderstandings, or compliance issues—the repercussions can be severe, endangering the entirety of the business's revenue stream overnight.

Additionally, the inherent nature of marketplaces fosters intense price competition and heightened awareness of competitors. By directing customers to a marketplace, merchants inadvertently increase the likelihood that these customers might be drawn to competitor products, driven by better pricing, promotions, or visibility. This competitive environment not only squeezes profit margins but also dilutes brand loyalty, as customers navigating marketplaces are bombarded with alternative options and suggestions.

The concentration risk, compounded by the competitive pressures of marketplace sales, underscores the critical need for diversifying sales channels. The true cost of marketplace dependence encompasses not only the financial burden of fees but also strategic vulnerabilities that can impede long-term business sustainability and growth. Marketplaces, while offering a sales venue, often limit a merchants' control of customer ownership or the customer experience itself, restricting personalised engagement, and diluting brand identity amidst a sea of competition. This scenario highlights the importance of developing a direct sales strategy to mitigate risks, maintain customer loyalty, and build a resilient brand independent of marketplace ecosystems.

Stored: Empowering marketplace merchants to sell directly with speed and simplicity

In the dynamic digital marketplace, Stored stands out as a revolutionary platform that offers merchants a fast, simple, and effective way to sell directly to their customers. Recognising the challenges faced by small business owners in navigating the complexities and costs of both marketplaces and traditional e-commerce storefronts, Stored provides a simple and seamless solution.

With Stored, the process of setting up an online presence is astonishingly straightforward. Merchants can get up and running in minutes, not weeks or months. The platform's user-friendly interface allows merchant to drive direct sales from their audience, particularly those they've cultivated on their own social channels. This direct approach eliminates the need for developers, coding, or any of the usual technical hurdles associated with launching an e-commerce site.

Stored doesn’t just eliminate the technical barriers; it also reduces the financial burden on merchants. By enabling sales directly to followers, Stored significantly cuts down the cost of sale that merchants typically incur on marketplace platforms. Without the hefty fees that eat into profits, merchants find more room to grow their business and invest in what truly matters – their products and their customers.

The essence of Stored lies in its ability to provide merchants with a platform that is both powerful and accessible. It democratises e-commerce, allowing small business owners to leverage the power of direct selling without the delays, costs, and complexities that have traditionally hampered their progress. In doing so, Stored not only opens up new avenues for growth but also reinforces the connection between merchants and their customers, ensuring that every sale is an opportunity to strengthen this bond.

In summary, Stored empowers micro merchants to bypass marketplace fees, engage directly with their audience, and to start taking payments immediately, offering a straightforward path to digital sales success. For merchants looking to take control of their online sales strategy, Stored is the solution that brings speed, simplicity, and cost-effectiveness to the forefront.

The advantages of direct sales with Stored

  • Maximised profits: By eliminating marketplace fees, merchants retain a larger share of their sales revenue to grow their business.
  • Enhanced customer relationships: Direct sales channels allow for greater ownership and personalised engagement, fostering loyalty and repeat business.
  • Data insights: Access to customer data enables tailored marketing strategies and product development, aligned with customer preferences.
  • Brand autonomy: Merchants can shape their brand narrative and customer experience without marketplace constraints.

For merchants thriving on platforms like Etsy, the journey towards financial and operational independence begins with embracing direct sales channels. While marketplaces play a role in the broader sales strategy, the value of cultivating a direct-to-consumer channel cannot be overstated. In an era where consumer loyalty and engagement dictate success, the ability to connect directly with your audience is paramount.

Stored offers a seamless transition to this empowered sales model, ensuring that merchants can enjoy the fruits of their labour without undue sacrifice to marketplace fees. By choosing Stored, merchants’ step into a future where their businesses grow on their terms, nurtured by direct connections with their customers.