Determining Where to Sell Online

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Amazon Gives Credibility

He recommends serious sellers be on both Amazon and eBay in addition to having their own search-friendly name (BusinessWeek, 6/20/08) that appears high in Google (GOOG) results. For small companies, listing on Amazon can also help reassure wary buyers about credibility. "There's a legitimacy and security factor there that helps get you over the hump," Krake says. "For a small business that's competing with these titans, that's huge."

That's why whatever grievances sellers may have against the e-commerce giant (BusinessWeek, 10/21/08), they're unlikely to leave eBay en masse for smaller marketplaces, because they have to go where buyers are. Startup e-commerce platforms are constantly popping up, but none so far looks poised to take significant share from the industry's leaders, says Sucharita Mulpuru, an e-business analyst with Forrester Research (FORR). While listing on free sites may be worth a try, she says, "if there's a fee associated with being part of these sites and they don't have a ton of traffic, it kind of begs the question, is it worth your time and effort?"

But some niche sites may indeed be worth it if targeting a narrower group helps you find more interested customers. For example, craft marketplace Etsy has become a popular destination for those selling handmade goods. "I think you need to explore who your customer base really is and whether eBay is going to deliver that," says Joyner.

Price is Key on Large Sites

Trying to sell on larger sites may also be counterproductive if you can't beat the prices that competitors list. "How many other people are out there selling what you're selling on that particular platform, and are they able to price it at a price that undercuts you?" Joyner says. If you can't offer a competitive price, trying smaller sites where you can highlight your product's unique features may be a better choice.

If all this sounds like a lot of work for a small business owner, that's because selling online isn't easy. "You can't run an e-commerce Web site half-heartedly," says Krake. And trying to do so can backfire on your brick-and-mortar business. "If you build a very thin, very unprofessional Yahoo! (YHOO) store, it's going to hurt your brand offline," Krake says. Some small business owners not ready to make the leap may be better off setting up a basic Web site that showcases their company and products, but directs buyers to visit in person to shop.

For a look at the pros and cons of 10 online marketplaces, flip through this slide show.

Tozzi covers small business for BusinessWeek.com.