Pros and cons of a complimentary marketplace / e-commerce website; pricing strategies

Community
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So, here is the dilemma.

Our community have been live for 3 years now. It’s all about producing milk, making cheese and so on.

We have a marketplace on our forum that’s free for everyone: people sell animals and milk products actively. This brings a lot of people to the forum, but the sales are mostly between each others, i.e. community members sell to community members.

Our idea is to launch a complimentary marketplace website for our community members to sell home-made cheese. Here are the key differences:

  • it will target buyers outside of the community
  • it’s strictly specialised on cheese only (our community members make a lot of it)

We wanna brand it separately, under a separate domain and unrelated to the main community website – that’s because buyers usually have no interest in goat keeper and cheese maker communities per se.

In the same time, for those wanting to learn making cheese or expand their range, we’ll give links to the related topics / categories on our Discourse website.

Does this idea sound sane?

Another thing is pricing strategy. Because we’ll sell to our members, i.e. we have some loyalty already, should we proceed to paid accounts, or give free trial, or make it free for some period of time?

I’m a complete noob in pricing strategies and I realise the best would be to try. However, there should be some caveats and some experience out there to sell things to community members. Please share your thoughts.

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I have experience with web sales and i can say that it is a completely different model from a community.

Your community sales right now are simple trading. Once you put a site up, it is a business. You now have to do all the issues related to running a business, including stock keeping, billing, delivery, logistics, sourcing, promoting, order taking and market planning. I’m quite sure price setting will be only a small piece of your work.

EDIT: Or you can put up an ecommerce site and let your users register online stores in it. You can do the billing and probably delivery and take a cut from the sales. This might be better than running a full store yourself.

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Yeah, I’m thinking of putting a marketplace in place, and let sellers handle payments (people do so often by direct card-2-card transfers in Ukraine). I’d then only charge a monthly price for the sellers and not cut any fees, plus not take any responsibility for payments and the quality / delivery of the goods.

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You have:

  • Different products for sale
  • Different vendors selling
  • Varying product prices
  • Varying product quality

You would need

  • Trusted payment system
  • Some sort of buyer review feedback system for products
  • Seller rating and seller reputation
  • A very clear TOS agreement

It seems like in your case, either a flat rate (no) or percentage of sales price (yes) would be the best ways to monetize.

I really need to highlight that you want avoid handling shipping at all costs.

Ideally, you should provide maintenance of the marketplace / growth / handling of payments and the seller would handle all shipping arrangements. (Ebay)

That’s my 2 cents.

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This sounds like a good way to go, but I say that with the most rudimentary understanding of your business.

  • Minimal overhead on your part, while giving you an initial revenue stream to iterate further on.
  • It’s based on your community, which you have more experience with (i.e. a better understanding of) than creating a business.

By the way, have you talked to your community about this? You definitely want to give your users a heads up about this. Explain that running the community costs time & money and you need to make it sustainable somehow. Your success is their success, so they have an incentive to give you great advice that is mutually beneficial.

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I did so, thanks. I put a quiz giving people 3 options:

  • not interested
  • interested but only as a completely free solution
  • interested as a commercial service with monthly payments

Got just 60 replies in a week, 56 of which are for the option no. 3 — I suppose if one third of them will opt in after the launch, it would be a good “conversion”.

People in Ukraine are not like people in US. The former used to get stuff for free and not pay a penny for even a very useful service. So that would be something difficult to crack.

Thanks everyone for your comments, any more thoughts are very welcome.

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Selling outside of the community, is that going to b2b (selling to businesses) or b2c (selling to consumers)?

I understand the appeal of launching an e-commerce standalone website, you can do it relatively “cheaply” these days using something like WooCommerce, but you still need to invest in ssl, legal stuff, customer support (just to answer technical issues, not just sales questions), plus more importantly… your time.

The direct response marketer (direct mail, mail order) in me is looking at a much simpler, and much more analog business model/solution. This whole potential business looks to me as a subscription based “cheese of the month” type of business.

If you don’t want to be the person fulfilling orders, all you would need (highly simplified answer) is a catalog that gets send out and have the vendors (the people selling the cheese) pay to be included in the catalog. This would be much easier, quicker, and be cheaper to launch/test than immediately starting out with an e-commerce website.

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