E-Commerce – Choosing a marketplace or Website
As a company whose primary product is a reasonably priced eCommerce software solution for online retailers of all sizes, we at Linn Systems are in constant communication with businesses with varied business requirements. Quite regularly we are asked:
“What marketplace would you recommend?”
We specialise in Order Management & Software Solutions, so unfortunately we are not qualified to directly answer such a request. The best option depends on your business, your target market(s), and your plans for growth. We can always advise on what we work with, and the number of different websites and marketplaces available are so great, if we were to cover them all in any amount of details, this article would take a long time to read properly. So instead, we thought we’d look at some of the more common selling channels we have experience working with.
Amazon and eBay have marketplaces in most regional markets, and therefore offer certain advantages with market penetration and their own advertising, in exchange for fees. Meanwhile Magento and BigCommerce are platforms that allow you to build and target your own websites/stores, but you need to promote the store yourself, and you will be paying for hosting, support etc.
It can be daunting trying to decide what marketplace to list your products onto. There are many factors to take into consideration. Taking some time to brainstorm and evaluate your most compatible marketplace is always recommended. Your products and target markets may be so niche that leading marketplaces such as eBay & Amazon may not be as advantageous as targeted platforms, or there may be a perfect space waiting to be exploited.
If you are considering moving onto either the eBay or Amazon platforms it may be wise to do your homework. What products do you sell? What fees are involved? Are you able to account for these fees in your margins?
When listing your product on eBay, there are various fees that can be applied that you need to take into consideration. First and foremost there are ‘Insertion Fees’ which will vary dependent on the type of listing (Auction or Fixed) and the starting price of that listing, along with other options.
On top of insertion fees you also have the ‘Final Value’ fees that are applicable to both styles of listing. These fees are percentage based. This is generally a 10% commission to eBay on most categories – but varies from 5-12% on specific categories such as Tech, Parts, Media, Collectables and Clothes, Shoes & Accessories, the latter being the most costly category. However if your item doesn’t sell, you won’t pay a final value fee and could be eligible for credit on the insertion fee if your item sells upon the re-listing of your product.
eBay also charge for listing upgrades such as Listing Designer and an Item Subtitle. Calculate the estimated fees you will be charged for listing your item on the eBay Seller Fees’ page.
Amazon structure their pricing scheme a lot differently. Primarily they offer two pricing plans. ‘Sell a little basic’ & ‘Sell a lot PRO’. If you are selling fewer than 35 items a month then the basic plan is for you, above 35 and you will be categorised under a Pro account. You are also limited to the amount of categories you can list in. So consider this when choosing a plan. Unlike eBay you only have to pay Amazon when you sell something, there are no listing fees involved.
Pricing for ‘Sell a Little’ consists of three different fees;
- Referral Fee – this a fee Amazon charge for referring the buyer of the item to your business. This fee is variable on the category that you list too and generally ranges from 7%-15%.
- Fixed Closing Fee – This is the equivalent of eBay’s Final Value fee. As a ‘Sell a Little’ customer, you pay £0.75 per item sold.
- Variable Closing Fee – This is a fee that Amazon charge for the administration of the transaction – again this is variable on the category and also the destination of the order. This is capped at £1.32 per item.
‘Sell a Lot Pro’ enable you to list in more categories, the fees involved are basically the same, except instead of a Fixed Closing Fee of £0.75 per item, you pay a subscription fee of £25 per month. However the Referral Fee & the Variable Closing Fee are still the same. Amazon provide examples of how each plan affects the Amazon charges on 2 different listings, you can view this for yourself on the Amazon Plans & Pricing page.
Magento is a very popular Open Source eCommerce platform, featuring strong back-end processing, a good overall customer experience and good cart functionality.
The Magento platform also has an interesting piece functionality known as ‘Multi-Store’. This advanced feature allows for management of multiple websites and stores within one installation. In effect, you can have two web-stores within one Magento Website.
It gets even better, as one store within a website can have multiple ‘store views’ like an English, French and German view of your store.
Magento Connect Extensions
Magento Connect is Magento’s official extension marketplace, in which you can browse and find extensions to customise your Magento stores. Similar to WordPress, you are able to purchase and integrate plug-ins to make the most out of your website, ranging from marketing analytics and SEO extensions through to CRM and accounting extensions, Further enhancing personalisation and utilisation. Be aware that you should always allow time for testing before making an extension live to ensure there are no unexpected consequences, especially when applying multiple extensions or interfacing with external software such as our own Linnworks package.
Packages & Pricing
The Magento platform primarily has three packages;
Magento Community Edition – FREE
Magento Go – From £9.99 – £79.99 per month.
Magento Enterprise Edition – From approx. £10,000 per annum
Magento Enterprise ‘Premium Edition’ – From approx. £32,000 per annum
Magento offers a free download of their open source software, this comes in the form of Magento Community Edition, a solution that sits on a web server of your choice. If you have some development skills or consider yourself to be tech savvy you are able to alter the core code and add features/functionalities by installing extensions from the Magento Connect marketplace.
With this free version of the software you are not entitled to Technical Support from Magento, but you do have access to documentation and user forums. If you wanted more functionality and support for your website you can consider looking at the Magento Go Package. You are able to agree flexible monthly arrangements for ongoing support if you deem it necessary, this is normally paid on a ‘Support Hours spent per month”
Magento Go is a hosted cloud based solution designed for merchants that are new to eCommerce or don’t want to retain separate development and support for Community Edition. The Magento Go edition boasts a customisable environment equipped with a robust set of tools designed to help you create, manage and grow your online business.
This edition gives you the opportunity to completely customise the look and feel of your stores, product catalogues and even have control over SEO functionalities. All of this can be utilised to optimise your customer engagement, increasing interactivity and the potential of repeat business.
The Magento Enterprise Solution is the package designed for businesses working with large volumes of data and orders across multiple stores, optimised for high end servers. This package offers full functionality of the software and a highly customisable solution, providing you with a list of features at your disposal, enabling you to completely tailor your site to your business preferences with 24/7 extensive support. If you still wanted more Magento offer the Enterprise ‘Premium Edition’ which would entitle you to a Premium suite of services to help large Corporate businesses to build and manage dynamic eCommerce sites.
Custom development to get your site launched will come at a cost, for the standard packages, themes and features generally starts at around £500 and can rise to around about £3500 for highly customised site. You are able to agree flexible monthly arrangements for ongoing development support if you deem it necessary, this is normally paid on a ‘Support Hours spent per month” Basis. It is a flexible arrangement and gives customers full control on monthly development costs.
Off-Page SEO work ranges from around £300-£550 per month, On-Page SEO ranges from £300-£1000 at a one off charge. The SEO costs are for Magento Community & GO sites, prices for Enterprise Editions may be considerably higher.
BigCommerce is a well-supported and highly popular paid for eCommerce solution that also allows owners to set up an online store and sell their products online. This platform comes with a range of customisable templates to help you design your web-store, but similar to Magento, allows web designers to tweak at the HTML and CSS of their sites too. Unlike Magento, there is no free version, it consists of a hosted and supported platform you subscribe to.
Packages & Pricing
The BigCommerce pricing structure is different to that of Magento’s, the price ranges from approx. £16 – £193 per month. The starter plan allows for you to sell 100 products and provides you with 1GB of server storage for your products, images, videos and more. As your business grows you can upgrade your subscription level to provide your website with more server storage and a higher product limit.
The ‘Gold’ plan is deemed as the most popular at a reasonable £50 per month and gives you the added functionality of an ‘Abandoned Cart Saver’ – this helps to recover an average 15% of sales by sending a series of customisable emails to shoppers that left your cart without buying, you can even include a coupon code in the emails. Regardless of the level of subscription you wish to purchase, BigCommerce will also throw in a £65 Google Adwords Voucher. BigCommerce operates as a ‘pay as you go’ service without contracts which is often appealing to a business owner. On top of that you can save yourself 10% on any package by paying for an annual subscription.
- A full Content Management System (CRM)
- Advanced SEO options
- E-newsletter integration with services such as iContact, Interspire and Mailchimp
- Abandoned Cart Saver
- Discount Coupons and Gift Vouchers
- A variety of template designs
- The ability to tweak CSS and HTML
In Summary of this analysis of the options, it seems that for a start-up online retailer who wants their own website, BigCommerce may be a more of a justifiable option, with lower package costs, template designs and a relatively user friendly interface. There are no contracts involved, no commissions or transaction fees which would be more appealing to a relatively new business starter.
On the other hand, the Magento system is highly customisable and has the capacity to facilitate more functionalities, however this does come at a higher price – again you are able to opt out of Magento Go as these plans are offered on a month-to-month basis, in parallel the Premium Enterprise includes a Platinum Level Service License Agreement.
As regards marketplaces, both have their attraction depending on your product area and the level at which you’re planning to start trading. As always, assess your listing fees and other costs to ensure your overheads will be covered by revenue earned after fees. We’d especially recommend adding in overheads for currency conversion when looking at trading in overseas markets.
If you’re already trading online, be it on eBay or Amazon, a Magento. BigCommerce or other site or marketplace, then it’s always worth starting by checking if you’re already selling to customers outside the UK – You may find you’ve got indicators of the best markets and a platform to test your wares on already!