Why Amazon is the Best Choice for a Marketplace

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People are often surprised to learn that DoLeaf relies (exclusively, for now) on Amazon for our payment processing. In the world of small, person-to-person transactions, PayPal is the dominant leader, and it’s well established on sites like eBay and Etsy. However, due to several innovative features, we’re convinced that Amazon is the way to go. The reasons all revolve around multiparty transactions and how they revolutionize online marketplaces.

Multiparty Transactions

By far, the most innovative feature that Amazon offers is the ability to execute 3-way transactions. This is what happens every time you purchase something in a marketplace. The buyer sends money to the seller, and the marketplace takes a small cut of the sale. However, prior to Amazon, there was no way to execute this all at once. Instead, it usually took multiple transactions. In most cases, the seller would pay the buyer directly, and the marketplace would send the seller a monthly invoice. Or, the buyer would pay the marketplace, and it would cut a check to the seller. In either case, at least two transactions have to occur, incurring additional overhead and fees at each step.

With Amazon, the entire transaction can be executed instantly. Amazon will take the money from the buyer, cut out a portion for the marketplace and deposit the rest directly into the seller’s account. Only one transaction occurs, and everyone receives their money instantly.

Lower Fees

The most direct benefit of all this is lower fees. With every transaction there are fees to be paid. With the old way, you had to run multiple transactions to pay everyone, so you paid the transaction fees multiple times. Bundling transactions together, like with a monthly invoice, was a way to keep costs down, but it was still pretty expensive. With a single transaction, however, the fees are only paid once, greatly reducing the amount of overhead that goes to pay for simply moving money around.

Instant Payment

Another important benefit is that everyone receives their portion of the payment instantly. This has obvious benefits for the seller, since many would be reluctant to ship until payment is received, and rightfully so. However, there are indirect benefits as well. Since DoLeaf is paid instantly, we have to spend less time invoicing and dealing with outstanding accounts. This allows us to keep costs down and focus on adding new features, rather than tracking down overdue accounts. It’s truly a win for all sides.

Better Integration

One of the most frustrating things about other payment systems is the lack of integration with the marketplace. On many marketplaces, the sale is booked before the buyer actually pays. This is because that actual payment processing is done by a third-party, like PayPal, and the marketplace has no knowledge of this. It all takes place between the buyer and seller, and the marketplace just has to assume that all goes well.

Unfortunately, sometimes things don’t go well. Perhaps the buyer refuses to pay, or the seller needs to refund some of the money. With other marketplaces, the seller then needs to go through a dispute process in order to let the marketplace know that they should not be charged the full transaction fee, since the payment did not execute as planned. With DoLeaf, this is completely unnecessary. Since we are an integral part of every transaction, we know instantly when a payment or refund occurs. Sellers will never be overcharged or need to dispute a charge.

Many Stores, One Checkout

Some marketplaces suffer from the many-checkout problem, where to buy from multiple sellers at the same time requires running the buyer through the checkout process several times, once for each seller. The obvious problem here is that at any time the buyer can get cold feet and decide to quit the process.

Thanks to Amazon’s ability to group transactions, a DoLeaf sale takes only a single checkout, no matter how many stores are involved. It’s a well known fact that making checkout smooth and easy is an excellent way of making sales.

So Only Amazon Forever?

While we at DoLeaf are huge fans of Amazon, we recognize that putting all our eggs in one basket is a terrible idea. Further, not everyone has an Amazon account, and those that do may prefer to use other methods. We want to be as open and inviting as possible, so we would love to offer other options.

Luckily, Amazon’s new system has lit a fire under PayPal, who has announced that they will be supporting multiparty transactions and many other features in the future. So, you can bet we’ll be keeping an eye on PayPal and hoping they come through on their promises. It may be a few months, but as soon as PayPal flips the switch and turns it on, DoLeaf will be one of the first at the door.

At the end of the day, DoLeaf is committed to providing the best experience for both buyers and sellers. We want to make checkout and payment smooth and easy, while also making it simple and straightforward for sellers to manage their stores.