Online Marketplaces Help Small Businesses, But They Need To Tread Carefully

Small business sellers are finding incredible value in selling their products via online marketplaces like Amazon, eBay, Walmart, Etsy, and Target, plus many smaller ones, according to a new study commissioned by the Connected Commerce Council (3C). In a survey of 1,000 small and medium-sized sellers (SMB Sellers) nationwide, nearly two-thirds (64%) of respondents that use online marketplaces reported that the marketplaces help their business compete with larger retailers, and half (50%) report significant savings ($20,000 or more annually) from using marketplace-provided integrated tools.

The survey found a majority of SMB Sellers use more than one online sales method. For example:

    58% of SMB Sellers that sell on online marketplaces also sell through a business owned web store (e.g., hosted by Shopify)
    75% of SMB Sellers that use an online marketplace use more than one, with the most popular being Amazon (83%),eBay (59%), Walmart        Marketplace (36%), Etsy (30%), and Target Plus (20%).

Online marketplaces help small businesses compete with larger retailers by:

    making it easier to bring new products to market (64%)
    increasing access to new markets (59%)
    lowering the barriers to connecting with new customers (46%)

In addition to saving money, online marketplaces’ integrated tools help small sellers with:

    shipping (78%)
    payments (70%)
    order fulfillment (69%)

    storing inventory (51%), and
    managing returns (50%).

“Online marketplaces like Amazon break down barriers and create opportunities for small sellers by helping us sidestep middlemen and retail ‘buyers’ who control access to store shelves,” said Joel Roodman, Managing Partner at Logic Products and a 3C Advisory Board Member. “Online marketplaces and their integrated tools empower small rural companies like ours to find customers, sell products, and deliver them quickly, easily and“Legislators’ eyes get big when they target large digital platforms, but they are missing how online marketplaces like Amazon help small sellers compete with the biggest brands in retail,” added Rob Retzlaff, 3C Executive Director. “Small businesses don’t need Congress to target their digital partners;  they need Congress to tackle broad economic issues like inflation, gas prices, and ongoing supply chain issues.”

The study, conducted from April 14-25, 2022, with a sample size of 1,000 business leaders of 500 employees or less and sell physical products, with a margin of error of +/- 3.1% for the overall sample, can be found here.

Some small business leaders however, warn some marketplaces offer oportunities for larger competitors to analyze sales and offer lower priced knockoffs that can eventually severely harm enterprises.

The Connected Commerce Council is a non-profit organization with a single goal: to promote small businesses' access to digital technologies and tools. 3C provides small businesses with access to the market's most effective digital tools available, provides coaching to optimize growth and efficiency, and cultivates a policy environment that considers and respects the interests of today's small businesses.