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With a year that has thus far been defined by interest rate hikes, layoffs and skyrocketing prices, the word “recession” continues to plaster media headlines. Amidst so much economic uncertainty, it is more important than ever for entrepreneurs to leverage business models that provide stability and support, and for government to protect their right to do so.
If you are looking to grow your access to a stable customer base, look no further than online marketplaces, which many entrepreneurs have found to be fertile ground for innovation, access, and an expanded economy that helps businesses affordably reach a global audience. These sales channels account for the largest share of ecommerce retail purchases worldwide, contributing to the United States economy with annual sales of $792 billion.
Here are a few reasons you should consider expanding your business from a storefront or a standalone website to an online marketplace.
Related: How Online Marketplaces Are Changing the Face of Entrepreneurship
Low barriers to entry
Rather than paying for a physical store or building and managing your own website, online marketplaces offer a relatively inexpensive way to “set up shop” and keep your virtual doors open. The built-in infrastructure online marketplaces provide also makes it easy for brands to scale by providing search, shipping, return and customer support features in-house that allow entrepreneurs to focus on their business.
With this in mind, it’s no wonder that the online marketplace model is particularly fruitful for smaller and newer businesses — fostering opportunities for entrepreneurs to start, grow and reinvest. All of these digital economies and platforms are basically giant entrepreneur creation machines. If you are a digital entrepreneur, there’s never been a better setting or a better time to start a business.
Larger customer pipeline
Perhaps the most appealing aspect of online marketplaces is that sellers not only introduce their brands to new audiences, spanning all corners of the virtual globe, but that online marketplaces inherently enhance their promotion through SEO and high web traffic. Amazon alone receives 2 billion visits a month from U.S. consumers.
This is one reason why recent data shows that, despite looming recession fears, online marketplaces are actually growing. In 2022, U.S. consumers conducted 46% of their online shopping through marketplaces, a 10% year-over-year increase from 2021. Globally, more than 75% of consumers believe marketplaces are the most convenient way to shop online.
Related: Marketplaces Are Taking Over Ecommerce. Here’s What Retailers Can Gain by Joining the Movement Now.
Better customer experience
Not only are online marketplaces beneficial for small business growth, but they have also become stalwarts of consumer experience and safety. The Organisation for Economic Co-operation and Development found that about 50% of participating marketplaces have signed up to a public commitment to enhance consumer protection beyond their legal obligations. For instance, Mercari reported that “it offered training/education sessions for school students” on how to shop safely and avoid selling scams.
The government has also done work to further strengthen the safety of these marketplaces. Last year, Congress passed the Integrity, Notification and Fairness in Online Retail Marketplaces for Consumers (INFORM Consumers) Act, which was an important step in furthering the work online marketplaces already do to keep retailers and consumers safe. However, there were also harmful bills introduced in Congress that could have wreaked havoc on independent online sellers if enacted.
This year, it will be important for legislators to keep the best interests of small online businesses and consumers in mind. Any future policy proposal should ensure that entrepreneurs can continue to enjoy the existing benefits and support of online marketplaces, including by protecting our unfettered access to customers worldwide without bogging us down in red tape, unwarranted litigation or unworkable compliance standards.
Related: The Dominance of the Online Marketplaces in the Retail Industry
No matter what products you sell or which customer segments you court, online marketplaces can and should be an important part of your growth strategy. They’re important to entrepreneurs as individuals and our economy as a whole — and they deserve to be protected.
