An online marketplace is a website or app where many independent sellers list products for sale, while the platform runs the shop front, the search, the reviews and usually the payment, taking fees for doing so. In the UK the best-known examples are Amazon.co.uk, eBay, Etsy, OnBuy and Not On The High Street, and local selling also happens on Facebook Marketplace.
How an online marketplace works
You open a seller account, list products with titles, images, prices and stock levels, and the marketplace shows them to its shoppers. On Amazon, many listings are matched to an existing product record using a barcode such as a GTIN, so several sellers can compete to supply the same item. On Etsy and Not On The High Street, listings are more individual, which suits handmade, personalised and gift products.
Each marketplace ranks listings in its own search using signals such as relevance, sales history, price, reviews and delivery speed. Fees vary by platform and category but typically include a commission on each sale, sometimes a listing or subscription fee, and extra charges if the marketplace stores and ships your stock for you. The customer buys from the marketplace’s interface, and the marketplace decides how much of their information you see.
There are UK tax rules attached. Under the digital platform reporting rules that took effect on 1 January 2024, marketplaces collect sellers’ details and report their income to HMRC each year, sending a copy to the seller. Sellers with only occasional activity are excluded; at the time of writing (October 2026), HMRC’s threshold is fewer than 30 sales and under about £1,700 in a year. The rules do not create a new tax, but they make undeclared trading income much easier to spot, so check HMRC’s current guidance rather than relying on a summary. Separately, marketplaces have been responsible since 2021 for collecting VAT on many sales by overseas sellers to UK buyers.
Why it matters
Plenty of shoppers search for a product directly on Amazon or eBay without going near Google, so a marketplace can put you in front of buyers your own site would struggle to reach. For a new brand, it is also a quick way to test demand without paying for every visitor.
The trade-offs are real. Fees cut into margin, price competition is visible and fierce, and the platform can change its rules, fees or ranking at any time. You also give up most of the customer relationship: you usually cannot add marketplace buyers to your email list, which limits repeat sales on your own terms. And an account suspension can stop that income overnight.
My view is that a marketplace works best as one channel among several, with your own site remaining the place where you build a customer base.
Common mistakes
- Listing the whole catalogue without calculating fees, delivery and returns per product, so some bestsellers quietly lose money.
- Using the same product descriptions on the marketplace and your own site. This is duplicate content, and the marketplace’s stronger domain often outranks you on Google for your own product.
- Separate stock counts for each channel, leading to overselling, cancellations and damaged seller ratings. Reliable inventory sync prevents this.
- Treating listings as set-and-forget, when titles, images and keywords matter as much there as on Google.
- Ignoring the marketplace’s requests for seller details needed for HMRC reporting.
How to act on it
Choose the marketplace that matches how your buyers shop rather than joining all of them. Etsy suits handmade and personalised goods, Not On The High Street suits gifts, and Amazon and OnBuy suit branded and everyday products. Calculate contribution margin per product after every fee, then start with a subset that still makes money.
Connect stock levels before you go live, write separate product copy for each channel, and study how buyers search inside that marketplace, which is the focus of marketplace SEO. Report marketplace sales separately from website sales so you can see what each channel really contributes.
Deciding where a marketplace fits alongside search, ads and email is part of the planning I do in digital marketing for ecommerce and retail businesses.