1.

Peer Competition

The biggest challenge that marketplace sellers face is peer competition.

The competition for a nice pair of shoes is not just the shoe store down the street anymore. Now
it's the shoe store halfway across the world.

Anyone can sell anything from anywhere.

Companies that can produce goods and services for less win out. That is good for the consumer
because increased competition drives down price.

It's also good for companies around the world that can produce things for less. But this could be
a problem for small businesses that cannot.

2. Pricing Volatility

In the good old days, the price of an item on the shelf might change every couple months if there
was a sale.

These days, the price of an item in an online market can change every few minutes.

Now computers monitor the price of an object on the internet and can automatically update your
price if a competitor has it for less.

While this can be a good thing for sellers, it also can present a challenge.

A common problem is that in their effort to undercut prices, sellers are actually not making any
profit.

Other factors, like computer errors, can also happen. In 2014, a common pricing software had a
glitch and accidentally dropped prices on thousands of items on Amazon to one penny.

In 2011, a glitch raised the price of a standard biology textbook to $24 million.

3. Branding Challenges

Another potential challenge for marketplace sellers has to do with branding.

When most buyers shop on a marketplace, they remember which marketplace they purchased the
item from. They could tell you if they bought it from Amazon, eBay, etc.

But do they remember the seller himself?

When was the last time you bought something online? Do you remember the seller? But you do
remember the website you bought it from.

Getting people to remember your brand on an online store can be hard. And when people don't
remember you, they won't be loyal customers.

4. Return Policies

Amazon has long been known for its awesome return policies. Customers can return any
Amazon product for nearly any reason, without a hassle.

Recently, Amazon changed their return policy to allow all consumers to return items not just
from their own store, but from all businesses that sell on Amazon.com.

This change, while good for customers, can be a challenge for marketplace sellers.

Sellers now have to deal with returns on items that are damaged or used. This can be offset by
restocking fees, but it can still be a burden.

5. Payment Delays

One big challenge for sellers in the marketplace is payment delays. Some marketplaces may not
pay out sales immediately.

With online shopping, getting a paycheck every Friday is not the norm. Sellers rely on
immediate payment and often live paycheck to paycheck.

Since they depend on prompt payment, if something goes wrong with a transaction, they could
be late on their car payment, for example.

This can present a challenge for many sellers, and often little can be done to prevent these
problems.

If a seller cannot handle such hiccups, they may need to adjust their expectations or create new
business procedures to compensate.

6. Inventory Tracking

Another problem for many marketplace sellers involves tracking their inventory.
Let's say a company sells shampoo. They have a local storefront in San Diego, and they're selling
their products through three different online marketplaces.

Keeping track of inventory in the storefront is fairly easy. You can track and update it manually
as needed.

When you have three online stores to keep track of instead of just one storefront, tracking your
inventory can be much more difficult.

Now, some marketplaces such as Amazon and eBay have technological solutions for this. They
can make the process smoother.

But many smaller marketplaces do not. In cases like these, sometimes it is easier to ask another
company to handle the inventory tracking for you.

7. Inventory Allocation

Allocating your inventory to different stores at different times can be challenging for
marketplace sellers, as well. You want to allocate your resources for the right time, portal and
price.

Let's go back to the shampoo example. Different sales portals in the marketplace can have
different times for having sales. The competition in one portal may have sales the first week in
June, while another portal may have sales running the last week in June.

Keeping track of your inventory across different portals can take a lot of work. Setting the
pricing correctly based on sales at different times is an undertaking that you may not have time
for.

Using an agency like Marketplace Valet can help with this.

8. Commissions and Fees

Marketplaces make money off commissions. If a consumer buys a product, one marketplace will
charge the seller a certain amount, and another will charge a different amount.

Marketplace sellers must be aware that each marketplace has their own fee structure.

9. Transparency of Fees

It's important for sellers to read the fine print when it comes to fees.
Some marketplaces slap on extra fees for certain kinds of purchases.

For example, legacy systems often apply fees to cross-border payments. This means that for
older systems if you buy a product in the US from a company in China, you'll have to pay extra.

Often fees go unnoticed until they are charged to your account. You may think that you'll get the
full $3.00 on an item only to discover that you actually only made $0.80 after extra charges are
accounted for.

10. Running Out

Sometimes, even though you do everything right, you run out of stock on certain items. While
this does mean that you're a popular seller, it also means that customers will go to other buyers
who have the item in stock.

This can hurt your image and limit your profits. But, you can adjust your inventory as needed to
ensure that you don't run out in the future.