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Online marketplace

An online marketplace is a website or app run by one company on which many other sellers offer their products and shoppers buy from them.

How it works

EU consumer law defines an online marketplace as a service run by a trader that lets consumers conclude distance contracts, such as online purchases, with other traders or consumers. The operator runs the site and brings the shoppers. Sellers pay for that traffic: a commission on each sale, fixed fees or paid promotion.

For a store that also runs Google Ads, a marketplace is two things at once:

  • A sales channel. Its shoppers find your products without your ad spend and order on the marketplace’s site. Google Ads measures website conversions with the Google tag on your own site, so those orders never reach that tag. From marketplace to your own store covers what this means for your first campaign.
  • An advertiser. Marketplaces can send their sellers’ products to Merchant Center from their own accounts. Prom, for example, has its own specialists set up a Merchant Center feed, and only products in an active ProSale campaign can get into it. The same product can then enter a Shopping auction twice.

Marketplace or your own store compares when each route pays off.

Example

Example store, not client data.

The tableware shop spends 40,000 a month on ads and gets 300 orders with an average order value of 600. Its ads cost 40,000 ÷ 300 = 133 per order, or 22% of the order value. A marketplace taking a 15% commission would keep 90 of the same 600 order. Before comparing 15% with 22%, add what the marketplace charges for promotion.

Not to be confused with

  • Price comparison engine — lists offers from many stores, but the shopper buys on the store’s own site.
  • Retail media — advertising a marketplace or retailer sells to the sellers on it, not the marketplace itself.

Right and wrong readings

  • Wrong: “The commission is all a marketplace costs.” Right: promotion is often paid on top. On Prom, top sellers who switch on the Turbo mode pay a higher commission; on Etsy, orders from offsite ads carry a fee of 12% or 15%.

Sources