Introduction to Ecommerce
For a small business that wants to sell products online, one of the most common dilemmas is whether to set up its own ecommerce website or use a marketplace like Amazon. This decision can have a significant impact on the business’s strategy for months or even years to come.
The Benefits of Selling on Marketplaces
Selling via marketplaces such as Amazon, eBay, or Etsy can give a business visibility, sales, and near-immediate exposure with minimal effort. Some of the advantages of selling on marketplaces include:
- Instant exposure: Online marketplaces put businesses in front of millions of shoppers.
- Easy setup: Listing products on an established site is much faster than setting up a content management system.
- Simplified SEO: Optimizing product descriptions, images, and titles for search algorithms on marketplaces is more straightforward than competing in Google search.
- Trust: Millions of people use marketplaces every day and trust these websites.
- Logistics support: Online marketplaces offer support for deliveries, returns, refunds, and customer payment processing.
The Drawbacks of Selling on Marketplaces
However, there are also some disadvantages to selling on marketplaces, including:
- Fees: Marketplaces charge sellers varying fees that can range from 2% to 20% of the transaction value.
- No brand control: Businesses are at the mercy of the marketplace’s algorithms, policies, and rules.
- No customer relationship: Businesses don’t own customer data, making it difficult to cultivate long-term loyalty.
- Competition: Marketplaces are intensely competitive, with many businesses competing against each other and against big brands.
- Brand visibility: Customers may not be aware that they are buying from a specific business, rather than the marketplace itself.
The Benefits of Setting Up Your Own Website
Many ecommerce business owners dream of setting up their own websites, which can provide:
- Full brand control: Businesses own everything, including their URL, designs, and pricing.
- Better profit margins: Avoiding marketplace fees and commissions can increase profit margins.
- Better customer relationship: Businesses have direct access to customer emails and data, allowing for re-marketing and personalization.
- SEO: A well-optimized website can bring in traffic from Google and other search engines without paid ads.
- Faster payments: Money from sales will often land in the business bank account the next business day.
The Drawbacks of Setting Up Your Own Website
However, setting up your own website also has some disadvantages, including:
- Building traffic is hard: Businesses need to invest in SEO, ads, social media, and content to attract customers.
- Technical setup: Building and running an ecommerce website is technically challenging and requires significant work.
- Tech costs: The costs of setting up an ecommerce website are significant, including buying a domain name, coding pages, and maintaining the site.
- Trust takes time: Building up trust in a website takes time and requires social proof, such as customer reviews.
- Logistics: Businesses need to choose a secure point of sale, manage shipping, and set up policy pages.
Multi-Channel Sales
Many small ecommerce companies sell through multiple channels, including major platforms like Amazon, niche local marketplaces, and their own websites. This approach allows businesses to reach a wider audience and increase sales. Starting on a marketplace can help businesses win customers, gain visibility, and gauge demand for their products. As sales pick up, businesses can then invest in a website that will become the primary focus of their offering.
Conclusion
In conclusion, the decision to set up an ecommerce website or use a marketplace like Amazon depends on the business’s goals and resources. While selling on marketplaces can provide instant exposure and simplified SEO, it also has drawbacks such as fees and limited brand control. Setting up your own website provides full brand control and better profit margins, but requires significant technical setup and investment in SEO and marketing. A multi-channel approach, combining marketplaces and your own website, can be the most effective way to reach a wide audience and increase sales.