The Fall of - The Danger of Using an Online Marketplace | EP 146

podcast Jan 03, 2024

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An online marketplace that connects buyers with sellers with a HUGE reach and the potential to sell a lot of products without having to spend time or money building your own audience? Sounds almost too good to be true, doesn’t it? And for thousands of sellers on it ended up being exactly that. The collapse of highlights important lessons all small business owners need to learn. 

How did work and why was it so attractive to so many sellers? To sell on, small businesses had to submit an application and meet certain requirements. They had to: 

  • Have an active website.
  • Have proven sales for a minimum of three months.
  • Be a unique vendor, providing samples and pictures of products.
  • Have a minimum of 100 pieces on hand per item (50 pieces if handmade). 

Sellers set their own shipping prices and were expected to pack and deliver items to customers within six days of purchase. collected payment from the customer, kept 20-25% of sales and distributed the remaining funds to the seller. had tens of thousands of sellers. There was always a good variety of products available to customers. A big part of what made so attractive to buyers was their flash sales. Every three days, they ran 72 hour flash sales. promoted these sales through multiple channels including email. Sellers would sell hundreds to thousands of products in only 72 hours. 

Small business owners who sold their products on didn’t have to build an audience - they used’s audience. All they needed to do was provide product at a great price and deliver it quickly. This feels like a huge win to small business owners who know how hard it is to build an audience. 

So what happened? 

On November 17th - one week before Black Friday - the website abruptly shut down. At that time, owed sellers over $10 million dollars for products sold. Not only were thousands of sellers owed millions of dollars for selling and fulfilling products, they had also heavily stocked up on inventory in preparation for’s upcoming marketing promotions for the holiday season.  

Had there been signs of trouble? 

There had been issues, but no one would have guessed a company doing $250 Million a year in revenue would come to such an abrupt end. According to an NBC news article I read, sellers started receiving payments inconsistently. Instead of receiving payouts every business day, they started receiving payments once a week then found themselves waiting several weeks for payment. When questioned, blamed payment issues on an employee being on leave. 

As weeks and months of payment issues went on, larger sellers pulled their products off, but those who solely relied on’s marketing channels had no choice but to stick with them. 

At this point, sellers may never get paid for their products and services. Some sellers are owed more than $100,000. Sellers are also left with a dilemma when it comes to their customers. Countless customers paid for products they never received. Products that never paid the sellers for. So what is a seller to do? 

The fall of and what it means to these sellers shines a bright light on three things all small business owners MUST do to ensure something like this doesn’t happen to them. 

  • You must OWN your audience and not rely solely on a 3rd party marketplace to bring you traffic and sales. Yes, audience building takes time and effort, but it is absolutely essential. 
    • Build your following 
    • Build your email list 
  • Ensure you are diversifying your reach with a Multi-Channel Marketing Plan. 
    • How will you reach your customers? 
    • How do YOU drive traffic to your site? 
    • How can you make sure if one platform goes down, you have another to continue on without skipping a beat? 
      • Social media - Facebook, Instagram, TikTok, Pinterest, YouTube
      • Email CRM - back up your list regularly! 
      • If you are using a marketplace, make sure you also have your own website 
  • Build your business with recurring revenue streams. 
    • When something happens that throws off your day to day business, you can always count on your recurring revenue. 
      • COVID showed me just how important recurring revenue was to my business. 

Can you benefit from a platform with a built-in audience? Absolutely. But, realize you cannot take shortcuts in business. You cannot skip the work of building your audience yourself. You have control of your business. For much more about what is working now to build your business, listen to episode 144

Join me for this episode to find out what led to the fall of, what it means for tens of thousands of small business owners, and what you can do to ensure something like this won’t happen to your business.

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