The Data Catalyst Institute provided research support for this report published by the Connected Commerce Council. 

New Research Shows Small Businesses Benefit From Third-Party Seller Tools and Marketplaces That Increase Sales, Save Money, and Help Grow Businesses

Our recent research “Super Selling” found that small- and medium-sized businesses that sell physical goods (“SMB Sellers”) use many channels to reach consumers wherever they shop: online and offline, wholesale and retail, direct-to-consumer and selling through marketplaces. That research found that 51% SMB Sellers use a combination of both online and offline sales channels, while 34% are online-only sellers and 14% sell offline-only, and concluded that options for sellers and competition among and within sales channels are abundant. This competition does not take place in isolation, of course: Independent research shows that contemporary shoppers enjoy both digital and physical experiences and are seeking seamless buying options that allow them to “shop whenever, wherever, and however they want.”

Here, we detail new research on SMB Sellers that takes a deeper dive into how they sell online, and specifically how they use and value (i) online marketplaces (e.g., Amazon.com, eBay, Etsy, etc.) generally, and (ii) marketplaces’ additional tools and services that help with business operations like fulfillment, warehousing, product delivery, customer service, and payments (“integrated tools”).

The main takeaways are: 

Online marketplaces help SMB sellers scale, save, and grow: Why are online marketplaces so popular amongst SMB Sellers, and how can there be so many marketplaces? (Research company Digital Commerce 360 tracks over 100.) The top three ways SMB Sellers say online marketplaces help their business compete with larger retailers are (i) the ability to bring new products to market easily (64% of online marketplace sellers), (ii) increased access to new markets (59%), and (iii) reduced costs of inventory and warehousing (56%). SMB Sellers also reported that online marketplaces give them the ability to scale fast (47%) and lower barriers to connecting with new customers (46%). 

Online marketplace “integrated tools” save small businesses money: Of those SMBs using integrated tools, majorities say they are important because they help with shipping (78%), payments (70%), order fulfillment (69%), storing inventory (51%), and managing returns (50%). They also save small businesses money; half of SMB Sellers report saving over $20,000 annually by using integrated tools (some SMB Sellers report saving hundreds of thousands and even millions of dollars annually). 

Small businesses sell through many diverse online marketplaces: A majority of SMB Sellers (58%) use an online marketplace, and of those, three-quarters use more than one at the same time. Amongst those that use online marketplaces, the most popular is Amazon (83%) followed by many other options that include eBay (59%), Walmart Marketplace (36%), Etsy (30%), and Target Plus (20%). SMB Sellers also reported using other marketplaces such as Poshmark, Houzz, ASOS, Mercari, OfferUp, Newegg, and Discogs. 

Most online marketplace SMB Sellers also sell through other distinct sales channels: A majority (58%) of SMB Sellers that use online marketplaces also sell through a business-owned web store (e.g., hosted by Shopify, Squarespace, etc.), and about one-third sell directly through social media (37%) and delivery apps (33%) that connect customers to both stores and delivery drivers (e.g. DoorDash for food, Drizly for alcoholic beverages, NowRx for prescription medication). None of these are exclusive; in fact, our earlier research estimated that the average SMB Seller uses five distinct sales channels. 

Amazon.com marketplace is very popular, yet Amazon SMB Sellers have many options and also sell through other distinct sales channels: We know from previous research that 100% of SMB Sellers using Amazon’s Online Marketplace also use at least one other sales channel. Here, we found that a majority (63%) of SMB Sellers that use Amazon.com’s marketplace also sell through a business-owned web store (e.g., hosted by Shopify, Squarespace, etc.), and just over one-third sell directly through social media (40%) and delivery apps (37%) that connect customers to both stores and delivery drivers (e.g. DoorDash, Drizly, etc.). 

In summary, we found that SMB Sellers that use multiple sales channels value online tools and marketplaces highly. SMBs frequently sell using more than one marketplace. This affirmed our previous research that SMB Sellers tend to sell in as many places as they can connect with buyers, with the typical seller using five sales channels, both online and offline (other research shows this also benefits shoppers). We also found that additional “integrated tools” offered by online marketplaces are incredibly popular and deliver real value to SMB Sellers in the form of simplification and cost savings.