The Pros and Cons of Using a Third Party to Run your Fashion E-Commerce Business

Global retail and sales have evolved dramatically ever since the rapid expansion of online shopping in the previous decade. A lack of an online presence can harm a company's ability to compete. Businesses, especially small and medium-sized enterprises (SMEs), must take advantage of the numerous advantages that e-commerce has to offer.

There are instances when it is tough to determine the optimal e-commerce strategy to increase revenue and profitability. In this article, we will try to help businesses understand the benefits of employing third-party e-commerce platforms in their sales strategy.

Third-Party E-commerce Platforms

What is a third-party e-commerce platform? Amazon and eBay as examples. To put it simply, third-party platforms, also known as e-marketplaces or e-commerce marketplaces, take on the responsibility for managing and hosting online sales for firms and charge for this service.

E-marketplaces or third-party platforms have seen a marked increase in popularity in recent years, in part due to their accessibility to enterprises of all kinds. E-marketplaces are still an excellent way for businesses to offer their products and services on the internet.

Pros and Cons of Using the Third-Party E-Commerce Platforms

It is important to make sure you're aware of all of the benefits and drawbacks of third-party selling platforms before you get started with your small business. Both public and private vendors use many third-party, e-commerce platforms like eBay to increase their sales. While selling through an intermediary may be more convenient, it's also more expensive.

Although selling through a third party has many advantages, the question of whether selling through a third party is profitable persists.

Advantages

1. Increased company revenue

Selling your products through a third party can greatly enhance your company's revenue by bringing in new clients to your company. In the long run, customers who have never heard of or bought your brand before will have the opportunity to check out your products, leading to repeat purchases.

2. Cost Effective

Furthermore, third-party platforms are particularly cost-effective because they cover all costs associated with generating traffic such as advertising and promotion. An established third-party platform with built-in checkout and fulfillment assistance, as well as customer care and shipping, can benefit businesses.

3. Less Risk

You can sell your products on as many third-party sites as you like, to distribute the risk. Having many platforms means you can withdraw your money if something goes wrong with one of them. If you want to test how well your products sell on each platform, you may place them on sites like eBay, Amazon, and Groupon without launching a massive marketing campaign, and then see how your products perform.

4. Exposure

Millions of people utilize Amazon and Alibaba, two of the most popular online marketplaces. Selling on these platforms will allow you to reach new customers who have never heard of your brand before. In addition to increasing the visibility of your business, third-party e-commerce platforms can lead to additional sales.

5. Revenue

Using numerous third-party platforms doesn't need a total commitment, so you can spread your network even wider. It's possible that if you want to sell internationally, you'll need to use a local marketplace that has the customers you're looking for. Your firm will be able to diversify its internet revenue streams, minimizing the risks associated with doing so.

6. Popularity

Consumers all over the world are enamored with e-marketplaces. Shoppers can rapidly search for products and compare prices among possibly thousands of businesses using these services. Many consumers are more likely to buy from an e-marketplace than a company's website because they have more faith in established marketplaces.

7. Logistics

It's common for third-party platforms to handle shipping and returns for you if you decide to sell through them. Third-party platforms are useful if your company lacks the resources to hire customer care professionals because this is typically already included in the service you sign up for.

8. Marketing

Selling online directly can also eat into profit margins due to the high cost of marketing. Marketing (particularly SEO) is often integrated into third-party platforms. It’s best to draw up  a careful review of the marketplace's pricing structure before signing up.

9. Global

Many of the largest e-marketplaces operate on a global scale, serving millions of customers around the world. Increasing your exports will be easier if you make use of third-party e-commerce platforms.

Disadvantages

1. Additional cost

Your third-party fees and expenses can vary according to the platform you choose to sell on. As a percentage of the sale, some fees include delivery and some don't, depending on the vendor. There are additional costs associated with the usage of a facility or service, such as fees for payment and advertising. Some platforms impose exorbitant fees that leave you with a paltry profit margin. Groupon, for example, deducts 50% of the sale price.

2. May lose individuality

If you sell your goods via a third party, you run the risk of losing your individuality as a merchant because third-party markets do not focus on your products. Instead, they focus on the sellers. You have fewer options for getting your name out there in the market because you can't deal with customers, and customers can even restrict what you can sell.

3. Difficult to track inventory

It might be difficult to maintain track of your stock levels across multiple third-party platforms, especially if you're also running your website. It gets increasingly difficult to keep track of your inventory and to keep it stocked. It's possible that buyers could be confused by the conflicting information on multiple websites, which could lead to misunderstandings.

4. Little risky

Whenever you sell something through a third party, you give up control and put yourself in danger. Depending solely on one third-party platform puts you momentarily out of business if that third-party platform goes out of business. You're losing money because you're not getting any sales. The third party's policy changes could also hurt your firm. Finally, if the third party decides to raise their prices, you may lose money as a seller because they may receive more money than you do.

Many companies view 3rd-party e-commerce platforms as a strategic partner in brand management. An outside party can achieve certain objectives like paid advertising outcomes, spreading brand messages, or getting a company on the first page of search engine results. Customers, who are always on the lookout for the best deals will be exposed to your business this way. Your time and effort will not be required in any way. These platforms can act as a conduit between a brand and its intended audience, ensuring that the brand's main messages are effectively communicated.

Conclusion

Third-party E-Commerce platforms can be a source of a new income stream for you. Selling on third-party e-commerce platforms is not an easy decision to make, and you need to do your homework before making a final choice. A successful e-commerce strategy needs to be developed before opting for them. Fashinza can guide all fashion brands and designers on reaching out to the best suppliers and manufacturers to take their fashion business to the next level.