Starting a new business? Get 40% off our accountancy services for 3 months! 😀


Forget a material world, we’re now living in a digital world. The vast majority of what we want to do, consume, buy and achieve can be fulfilled quickly and easily online. Online marketplaces such as Amazon and Etsy are a goldmine of potential for today’s business owners with a product or service to sell. We’re here to help you get to grips with all things e-commerce.

What is an online marketplace?

An online marketplace is a type of digital selling (e-commerce) platform where products and/or services are sold by any number of third parties.

Think of it like a local weekend market where you can go and pick up some flowers, fruit, and fresh bread from stalls of traders all in one place. Except online vendors sell their wares via the internet, rather than in-person.

Sales might be made via a website or through a mobile app and in theory, it makes the selling and buying process safe, streamlined and simple.

Some of the world’s most popular online marketplaces include Amazon, eBay, Etsy, and even Facebook Marketplace.
There are, of course, many more examples if you dig down looking for more specific categories, such as locality or a particular product or service niche.

How are online marketplaces different to a standard e-commerce site?

Though lots of businesses have their own website as an eCommerce platform, online marketplaces are a bit different.

online accountancy services for eCommerce businesses

The upward trend for moving businesses online

There has been a growing number of businesses choosing to take their business online over the past decade. It’s an upward trend which has been significantly accelerated by the COVID-19 pandemic during recent months.

As customers have been subjected to various levels of quarantine, social isolation and lockdown, online commerce has provided a crutch on which they could lean. Sadly, this has been at the cost of an increasing number of leading Highstreet stores and established bricks & mortar businesses, demonstrating the significance of the trend.

Post-pandemic, many experts are expecting this pattern of consumer behaviour to continue, which means the world of e-commerce and online marketplaces is only likely to balloon even further.

In fact, statistics shared by branding, marketing and design agency, (hug)London showed that only 6% of people will be making a conscious effort to shop in-person more post-COVID.

The (global) facts and figures:

Startup business accountancy services

How does an online marketplace work?

As with any venture, propelling an online business to success requires a clear plan of action.

Do your market research

Find out where your competitors are selling, and where your target customers are buying. You might be surprised at where the best sales figures will come from for your particular product or service.

Check out the costs

Research the platform’s pricing structures and plans to see whether or not they charge. Can you afford any associated commission and/or seller fees, for example?

Suss your shipping options

This may vary from platform to platform but it’s important that you establish what will be required of you in terms of shipping. Some will require you to self-send (Etsy), others will fulfil orders if you provide them with stock, some do both (Amazon).

Adjust your pricing accordingly

Sit down, crunch the numbers and be clear about what you charge the customers within that specific marketplace. When coming to these conclusions, make sure you consider where you pitch yourself against any competitors.

It’s also worth thinking about whether this means your pricing will be uniform in each place that you sell, or if some places will be cheaper to the customer, but have the same profit margin for you. Check out our article about gross and net profit which explains how costs affect your profits.

Get yourself set up

Again, this process will look a little different for each platform, and might require you to go through an approval system.

New Seller Tasks

What are the benefits of e-commerce on an online marketplace?

There are certainly benefits to selling your wares via an online marketplace such as Amazon or Etsy.

Low upfront investment

Unlike a bricks & mortar shop that would need stocking, dressing and staffing, an online marketplace won’t require you to invest into a large amount of inventory.

You’re also not having to invest in the creation of your own e-commerce website or CRM platform, nor are you needing to invest in the physical shop itself and all of the financial obligations that come with that. Lower investment means lower risk – an attractive equation for any business owner.

Takes the pressure off your marketing strategy

When you join an online marketplace, you inherit the benefits of the platform’s own in-house marketing and promotional efforts. Being able to piggyback off this not only lifts some of the weight off your shoulders, it also does wonders for your ecommerce brand reach.

What we mean by brand reach is how far and wide your business is being spread. If you sell through Amazon or eBay, you can reach the platform’s existing (and hopefully growing) customer base with very minimal effort on your part.

Your pool of potential buyers then becomes much, much larger than if you were relying on in-person footfall or people finding your website.

Much quicker launch to market

Finding a physical store, decorating the space, stocking it, finding staff, the relevant Health & Safety checks, establishing a customer base… and that’s just the physical store. You might also have a website to go alongside this.

It can be time-consuming, and demands a lot of commitment on your part. Generating sales through an online marketplace can be as quick as registering, and using their template to list some products or services. Minimal money, minimal hassle.

Drastically lower ongoing overheads

Opting for an online presence over a physical one dramatically lowers your ongoing expenditure. An online marketplace can be cheaper again, though this largely depends on what it is that you sell or provide.

Physical stores or offices cost money, and tend to mean paying more expensive town-centre rates, where the most footfall is. Being online means you have more options for finding a cheaper base for operations.

Open yourself to the potential for international sales

If overseas trading isn’t something you’ve ventured into yet, selling through an online marketplace could provide the perfect place to experiment. As a third-party vendor you will be given access to the platform’s international audience, which is a great way to test the waters before committing to it independently.

The beauty of selling internationally through an online marketplace is that it’s the platform that needs to register for VAT in other countries it sells to, not you as an individual. We explain this in more detail in our series of articles about the recent VAT changes as a result of Brexit.

Great competitor analysis and market research

Being part of an online marketplace means you will likely be sitting alongside some direct competitors but don’t let this deter you. Rather, see it as a chance to keep a close eye on the competition to monitor what is and isn’t working for them.

Plus, it’s in the marketplace’s own interests for you to do well, and they’ll try to support this. For instance, Amazon provides analytics information that you can use to inspire your strategy and development.
instant quotes for online accountancy

You become trusted by association

Registering as a vendor on an online marketplace gives customers a certain level of trust in your products or services. You won’t need us to tell you that customer trust is like gold when it comes to building a success business.

You’re always open

Even when you’re working on something else, sleeping, or eating, the store is open and receiving orders, and ready for your attention.

What are the cons of operating on an online marketplace?

As you can see from the list above, the benefits of operating your business via an online marketplace are vast. However as with most things, there are also other factors to be aware of.

Fees and commission

Many marketplaces will charge commission or seller’s fee on all sales, so make sure you fully understand the platform’s pricing structure before agreeing to sell on there. Once you know these figures, you can account for them in your own pricing.

Rules, regulations and restrictions

This doesn’t necessarily have to be a bad thing, or even impact you at all, but it is worth checking out what any platform’s requirements are. This might include reference to branding, how you communicate with customers, deadlines for shipping, and even what you can sell.

Just make sure this fully aligns with your own vision and brand identity so that you don’t end up doing yourself a disservice.

The pros of operating on an online marketplaceThe cons of operating on an online marketplace

Three top tips for boosting sales in an online marketplace

The most effective ways to boost sales when operating via an online marketplace include:

Outside of the online marketplace, you might explore in-person markets and events, or using stockists to boost your profile.

Side hustle or sole income: a common dilemma

You might use an online marketplace as an opportunity to test the waters for a fledgling business or a side-hustle. The great thing about these marketplaces is that it’s easier to switch your store on and off, with fewer repercussions.

Turning your side hustle into a full-time business is a topic we could discuss all day. The best way to resolve this dilemma is by being honest and realistic with yourself.

Answering yes to any of these questions might suggest it’s time to turn your side-hustle into a full-time gig. It’s also handy to keep in mind that if your side hustle is earning you less than £1,000 in a tax year, you might be able to use the trading allowance.

Accounting advice for sellers on online marketplaces

We couldn’t share our introductory guide to online marketplaces without also providing some pearls of wisdom on accounting for your e-commerce business. Here are a few tips so getting your products noticed isn’t at the expense of your profits (literally).

Learn more about our online accounting services for online marketplace sellers. Talk to one of the team via online live chat, call 020 3355 4047, or get a free instant quote to get started.

About The Author

Elizabeth Hughes

A content writer specialising in business, finance, software, and beyond. I'm a wordsmith with a penchant for puns and making complex subjects accessible. Learn more about Elizabeth.

More posts by this author
Inline Feedbacks
View all comments

Read more posts...

June 2022 Client of the Month: Manea Kella

This month we spoke to Adrian Manea, architect and director at Manea Kella, a London based RIBA Chartered architecture and interior design…

Read More

Succession Planning for Business Owners: What Comes Next?

When you own a business, it’s extremely normal to feel like you’re surviving one day to the next – ‘winging it’, as…

Read More

The Accountancy Partnership – Our Positive Reviews

Here at The Accountancy Partnership, we’re proud of our customer reviews The reviews we receive from our customers show how hard we…

Read More
Back to Blog...

Confirm Transactions

The number of monthly transactions you have entered based on your turnover seem high. A transaction is one bookkeeping entry such as a sale, purchase, payment or receipt. Are you sure this is correct?

Yes, submit my quote
No, let me change it

Please contact our sales team if you’re unsure

VAT Returns

It is unlikely you will need this service, unless you are voluntarily registered for VAT.

Are you sure this is correct?

Yes, the business is VAT registered
No, let me change it

Call us on 020 3355 4047 if you’re not sure.


You only need this service if you want us to complete the bookkeeping on your behalf.

Would you prefer to complete your own bookkeeping?


Call us on 020 3355 4047 if you’re not sure.