Today’s e-commerce business owner has more options than ever when it comes to where (and how) to sell goods online. You can open a standalone ecommerce site using a number of ecommerce platforms (shopping carts), such as the turnkey store provided by Turnkeymaster.com, or you can set up shop on one of the many established online marketplaces, namely eBay, Amazon or Etsy.
So which option is best for your ecommerce business? Dozens of ecommerce business owners who were interviewed by us share a list of the major advantages and disadvantages of selling via Amazon, eBay, Etsy versus selling on their own ecommerce site. Almost everyone interviewed by us had a standalone ecommerce site in addition to a presence on one or more of the marketplaces mentioned. At the end of the interview, we found why it can make sense (as well as dollars) to have a presence on both.
Selling on Amazon
Advantages of selling on Amazon
- Huge customer base
Amazon is one of the largest online retailers with 244 million active members and their users are shopping;
- Credibility and trust
New customers may be more comfortable purchasing from Amazon than purchasing from a website they’re unfamiliar with, as Amazon is a known and trusted company. In short, customers do not have to worry that they would be cheated from buying on Amazon.
- Excellent back-end infrastructure and support, including tax collection and shipping
Amazon has a great back-end infrastructure to support selling. This means everything from inventory tracking to tax collection (this can be a huge pain, particularly for states like California where taxes need to be calculated down to the zip code) to credit card processing is possible with Amazon’s platform. It’s all there for you. No need to figure out how to do all the setup yourself.
- Fulfillment Service
In addition, The Amazon’s FBA (Fulfillment by Amazon) service lets sellers ship their inventory to Amazon’s warehouse, Amazon then handles sales of the sellers’ product, the fulfillment, returns and customer service issues with a fee.
Amazon’s built-in algorithm for recommended purchases help drive traffic to your store. Someone may visit Amazon to buy a product that you don’t even sell, and your product may come up in a recommended purchase. Similarly, Amazon affiliates will link customers to your product through blog posts, Facebook posts and Twitter, which provides products and information for girls experiencing their first period. This relieves sellers from the headache of maintaining an affiliate program.
Disadvantages of selling on Amazon
On Amazon, fees start at a minimum of one dollar and go up to as high as 25% of the item’s price, said an interviewee. And “if you decide to do Fulfillment by Amazon, where Amazon warehouses and fulfills your product, you pay a listing fee plus typically a few dollars in fulfillment fees depending on the item.”
“I calculated our current total cost per transaction just last week through our FBA business and after adding up the seller fees, warehousing fees and other transactional costs, we pay on average 26 percent for every dollar of revenue we get from that sales channel vs. around 8 to 10 percent on average for Sewelldirect customers,” says Cameron Postelwait, marketing director of Sewelldirect, which sells connectivity solutions.
- You’re a commodity
On Amazon, “you’re mostly a commodity and subject to someone undercutting your price,” says Mike Kawula, who has sold on Amazon and eBay as well as his own site and is now a business consultant. “You’re [also] competing with Amazon directly if they decide to sell your product,” which can hurt your sales.
- No control over branding
Another disadvantage to selling on Amazon vs. your own site: “There aren’t many branding options on Amazon,” says von Bernuth. “The only thing you have control of is your products’ photos and text description. Everything else is Amazon branded.” “Customers rarely see who the end vendor is when shopping through Amazon,” adds Andrew Van Noy, CEO, Warp9, a provider of Magento mobile commerce services for midsize online sellers. “This disconnects you from the customer, and therefore does not strengthen your brand.”
- No email from customers
You can’t capture buyers’ email address or remarket to them. “Amazon does not let you capture a buyer’s email,” says von Bernuth. “On your own site you can set up an email newsletter and encourage customers to sign up for it.” Lack of customer loyalty. “Customers are loyal to Amazon and not your brand,” says Van Noy. So “you lose the repeat business or the ability to up sell/cross sell.”
- Competing on prices
“Sellers often find that they are competing on a very thin margin when selling on Amazon.” Says Vicky Weatherford, the owner of a fashion jewelry store. “Customers see prices as the most important factor when they come to a buying decision. They would often compare prices from all your competitors and buy from the one that offers the lowest price.” She adds on.
- Customers may be easily directed to your competitor’s store on Amazon
There are plenty of “traps” in Amazon whereby a visitor may be easily diverted from one store to another. The purpose of Amazon is to satisfy the buying need of the customer by getting he/she other options on the products made available by other stores, if he/she is not interested in the products on any one of the stores. By doing this, the customer would not
Selling on eBay
Advantages of selling on eBay
- Ease of use
EBay’s easy-to-use selling, listing and inventory tools make it easy to sell your products on the site — and do it quickly.
- Immediate access to millions of potential customers
On eBay, which has over 149 million active buyers located around the world, you have “built-in traffic and customers — [and often get] above average conversion rates,” says James Applegath, who sells on both eBay and his own site, Defunkd, a vintage t-shirt collective.
Global reach. “As a global seller, we appreciate how [easy it is to] set up [shop] on global eBay sites and reach international markets,” says Jimmy Vosika , founder & CEO, ShopJimmy.com, which sells TV parts and lamps, TV stands, tech tools and electronics accessories.
Disadvantages of selling on eBay
- Fees can add up
Fees on eBay can vary, depending on what you sell and how you sell it. That said, sellers typically pay 10 percent of the sale price, with a maximum fee of $250 — though advanced listing upgrade fees add more to the cost.
- You may not get paid”‘Joy’ bidders, aka nonpaying bidders/buyers, are a huge problem as many listing formats don’t require a payment to make a purchase,” says Applegath.
- Favors buyers over sellers”Over the years, eBay has made it increasingly difficult for sellers by tipping the scales of empowerment heavily in favor of buyers,” he adds, citing eBay’s new 180-day return policy and buyers’ ability to leave negative feedback, even if the seller is not at fault.
- Selling on thin margin
Similar to other C2C market places, the competition on ebay is extremely intense and sellers have to cut profit margin in order to stay in competition.
Selling on Etsy
Advantages of selling on Etsy
- Large, targeted customer base
Etsy has over 40 million active members, who are specifically looking for hand-crafted, artisinal or vintage items, and sold over $1.35 billion in merchandise in 2013.
- Easy to set up shop
“Etsy makes it easy to list and advertise,” says Phallin Jennings, the owner of Four Sisters Farm Soap, which also has a standalone ecommerce site.
“A seller can quickly set up a storefront, payment options and generate shipping labels without any HTML or CSS stylesheet knowledge,” explains Jennifer Colgan, owner, Jessie Girl Jewelry.
- Powerful, supportive community
“Etsy has forums and teams that create a sense of family amongst sellers,” says Jennings. “This brings in multiple sales as well, as Etsy sellers love to support one another.”
Disadvantages of selling on Etsy
“There are listing fees and final sale fees on Etsy as well as the PayPal processing fee,” which can really add up if you list lots of items, says Nidhi Chanani, owner, Everyday Love Art, which has both a standalone site and a presence on Etsy.
- Little or no ability to customize or personalize your shop
“There is a limit to how much personalization a customer can do through an Etsy listing,” says Colgan. Whereas on “my own website, I can make the experience much better for my customers.”
“All seller pages look the same, making it a little more difficult to distinguish yourself,” says Ashley Rodgers, owner, Cult Paper.
- Lots of competition
“Since Etsy’s marketplace consists of very specific categories, there’s a lot of competition within them,” explains Eileen Chai, co-owner, Fleet Collection, which sells vintage clothing. “Recently we’ve noticed an influx of overseas sellers offering custom-made gowns for prices so enticing, I’m almost tempted to buy one,” she says. “Since our dresses are locally made in Los Angeles, it’s hard to compete with that, especially when search results render a side-by-side comparison.”
“There are a lot of copycats on Etsy,” Eileen adds. “We’ve seen shops that have been strongly ‘inspired’ by ours, down to the listing format, description and policy page. Some shops have even duplicated our exact listing down to the product photos!”
Selling on Your Own Standalone Website
Advantages of selling on standalone website
- Control over branding
The standalone website includes articles and information, the company history and mission along with a product video, all of which help create brand awareness, whereby the ability to include additional company information is not available on Ebay or Amazon.
Having a standalone site allows you to display your branding and message however you like, via video, etc, especially with a new and unique product, a standalone site builds brand trust.
- Social factors matter
“You could have a blog on the website, a gallery page of new work, an about page and links to social media websites such as Pinterest, Twitter, Facebook and Tumblr pages,” says Rodgers. “Some of these features are available on some C2C market places, but standalone website is easier to navigate, whereby C2C market places would try to restrain the traffic from being re-diverted to other websites. With standalone website, you could engage better with fans by building an online community right on the website. When customers come to your website, it is easier to influence them with social factors. It is also cohesive as everything is right there based on owner’s will.
- Complete access to customer information
The customer is yours only when you have full access to all of his/her contact information for future communications, mailing lists, etc. You could contact them by email, skype, livechat tool, phone, social media and other communication tool without any limitation.
- Capability to run (and advertise) promotions/offer discounts
“A key advantage to selling on your own site: it’s easy to implement discount rules/offers, such as Buy 2 Get 1 Free,” or offer customers 10 percent off, says Daniel Rensing, founder & CEO, The Smart Baker, who previously sold on Etsy. Similarly, you can “easily add and change homepage banners/sliders to advertise special promotions.”
- Flexibilities on display of product information
There is total flexibility when it comes to displaying product information on standalone website such as the number of product photos and videos to be uploaded. You could have so many different ways of describing and displaying product information on the site to best suit the need of your target customers, and you could easily differentiate your website from your competitors’ ones. For example, you could display a video on top of the product information or put multiple photos alongside with the product descriptions, and you could let them download your product catalogue for free right on the website. This is impossible for most of the C2C market places.
- Calls to action
With standalone website, you could decide what you want your visitors to do. For example, you could ask them to sign up for your newsletters, sign up for membership, request for product catalogues, or ask for a free sample by designing and setting up the appropriate “calls to action” buttons throughout the website.
- Total control on domain name
“You have full control on the domain name of your standalone website” says Patricia Bailey, a user of turnkeymaster.com. “You only need to pay for the renewal fee for the domain and the domain is yours forever. No one could take the site away from you.” “The advantage of this is you need not worry about the site being shut down or closed by the owner of the platforms say, Amazon or Etsy (These two market places have very strict rules and impose heavy penalty for violations) when you violate their rules unintentionally. Another advantage is that when your business gets bigger and the brand gets known, you could set your own rules and do not have to remain as a “rented store” under any one of those market places.
- Email list
Email list is the biggest asset for any website. The more email you have on the list, the more valuable the website is. For customers who are not ready to buy, you could send out regular newsletters or other useful information to them. This enables them to be well informed and better educated with the products, and help solve any questions they may have before making buying decision. Once the customers receive better education and service, it helps foster better relationship and they are likely to be long term customers. Whereas for Amazon, ebay or Etsy, the customers either buy or they don’t when they come to your store. It is hard to get long term customers on the C2C market places.
- Better profit margin
When selling on your own standalone website, the profit margin is always better especially when the brand gets known. This is because it is less likely customers would be “pulled away” by your competitors via advertisement banners displaying on the same site, unless you choose to allow them to advertise on your website (which is insane if anyone does so)J
Disadvantages of selling on standalone website
- Lack of visibility/you’re harder to find
One of the main advantages of selling via an Amazon, eBay or Etsy is that you often have a greater, or easier, chance of having your products discovered by potential customers, especially if you are a new business. You also don’t typically have to pay to advertise. With a standalone ecommerce site, however, it can take months until your site or pages show up on the first few pages on the search engine.
- Marketing your own site can be time consuming and expensiveUnlike other C2C market places where they have ready traffic, it takes double effort to market your own website. It is also not cheap to advertise on search engines such as google via PPC if you are not good at it. Money could be burnt out easily within months.
So what is the best option for you?
In conclusion, it is recommended that we sell via an online marketplace as well as your own site concurrently, that is, have a standalone ecommerce site and sell on Amazon, eBay or Etsy (or another marketplace), by taking advantages of the features from both platforms.
“I think it’s smart for any new online seller to start off on marketplaces to learn the business and get your feet wet,” says Kawula. “Afterwards I strongly believe you need to create your own website.”
“When we first started, we really didn’t have any experience with building a website so we took a shortcut and set up an Etsy shop,” says Chai. “This allowed us to generate sales and income via Etsy while we simultaneously worked on building our site,” she explains. “Now, we see both platforms as playing an equally integral role: The standalone site is home base for our loyal customers to receive updates, browse new items and take advantage of sales and promotions while the Etsy shop gives us traffic with fresh buyers that hopefully are eventually converted into our standalone website users for future orders.”
The bottom line: “Having your own ecommerce site allows you to have more control over your brand, products, pricing and promotions,” says Vosika. “So I see all these channels as complimentary.”
“Most important, you should learn how to drive traffic from your online store on Amazon, Ebay, Etsy, Wish or other market places to your own standalone website. Ultimately, you want your customer to be loyal to your brand and it is easier to control your brand on your standalone website than any other market places.” says Sylvia Thomson, who is the owner of a standalone fashion online store. “Only people who have no idea how to effectively market their sites or who are lazy to do so would choose stay with these market places forever.” “With social media prevailing everywhere, it is much easier and cheaper to market the site than before….” she adds.
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