If you are planning to sell products online then you can obviously do it yourself by creating an eCommerce website. Or you can also make use of existing eCommerce platforms such as Amazon to start selling products online with less hassle. But like anything else, there are pros and cones with both. So you need to weigh the pros and cons of both and decide what is best for you. In this post, we shall discuss the Pros and Cons of selling on Amazon and own eCommerce website
Selling on Amazon
Amazon is by far the largest eCommerce marketplace with a wide customer base worldwide. Since it is a platform for sellers to sell online, Amazon has almost every thing setup for the Sellers. To become a seller on Amazon, one need to create an Amazon seller account, list the products, and start selling. Sellers do not need to worry about eCommerce website design, security, checkout system, domain. hosting and even logistics. Sellers can peacefully focus on their business.
Pros of selling on Amazon
- Selling on Amazon may be cheaper and more manageable than setting up your own eCommerce site.
Setting up your own eCommerce will involve eCommerce website design, payment system, domain and hosting fees, website security, etc. You will not only need to pay for all those but also a team to manage the tech behind. Whereas to sell on Amazon, you do not need to pay for website design, hosting, design, security or marketing tools. Amazon already has everything you need to set up your storefront. All you’ve got to do is create your product listings and start selling.
- Easy to start selling: No need to worry about the tech behind – just create a Seller account, list your products and start selling.
- Access to a large customer base
Amazon is by far the largest eCommerce marketplace. So by selling on Amazon, you also have access to the large customer base.
- No upfront costs: There are no upfront costs for selling on Amazon.
Sure there are some fees to pay to Amazon as a seller. But when you are just starting out, you do not need to pay upfront to be a seller. You can start small. Product listing is free up to a certain product limit. So you can test and see.
- International Reach: Another major advantage of selling on Amazon is that your products can have international customers too.
- Don’t need to worry about the logistics: Through the Fulfillment by Amazon (FBA) program, Amazon does the storing, packaging, and delivery. You don’t need to have a warehouse, packaging and shipping services in place. Amazon can take care of those for you.
- Customer Service is also taken care of.
Cons of selling on Amazon:
- High Competition
Many sellers including giant retailers and companies sell their products on Amazon. So, competition is high on Amazon. But the competition may vary depending on the type of product. Customers searching on Amazon will see many similar products from many sellers. So, it may be tough to be the one selected to buy, unless the brand reputation has made a mark already.
- Lower profit margin -seller fees, taxes, FBA fees (if you’re using Fulfillment by Amazon (FBA) program for logistics, and advertising costs etc.
- Have to stick with Amazon rules or seller account may be suspended.
- Customer experience is not entirely under your control.
- Brand identity low – a customer will normally say he bought on Amazon rather than any mention of the brand.
Selling on your own eCommerce store
While selling on eCommerce marketplace such as Amazon may be great to start with, smaller businesses which are just starting out may be lost in a big ocean of sellers and products on big platforms like Amazon. If your business has ambitions to make your brand grow, then it may be better to have your own serious eCommerce website. That way, you can built your brand credibility and the customer experience is also under your control.
Pros of selling on your own eCommerce store
- Build your brand awareness and credibility
Having a brand website can help in building your brand’s credibility and built trust with customers.
- Tell your business story
By having a brand website, you can also showcase your business story on your website to create a positive image with your customers and built loyal customer base.
- You are in full control of your customer data
You can build email list and communicate with customers directly as and when needed.
- You have control over your prices
Since there is no competition on your own website, you have control over your prices. Unlike on Amazon where your competitors may be selling items at much lower prices, which results in higher profits over time.
- No listing fess to pay and other restrictions
You only need to pay tax on sales, payment gateway fees, and the price of the software( like Shopify) or domain and hosting fees etc.
Depending on your business requirement, paying all the other fees above may be more expensive than paying seller fees on Amazon.
- You have full control of the look and feel of your eCommerce website
You can customize your website they way you want. Whereas, with eCommerce platforms such as Amazon, the look and feel of the site is not in your control.
- Customer Service which is an important part of business is also taken care of.
Cons of selling on your own eCommerce store
- Cost of setting up the eCommerce website
You can either built it yourself using some CMS like Shopify, WordPress etc. if you have the know-how or get it developed from a web design agency, which would be costlier.
- Recurring domain, hosting, payment gateway fees
To own an eCommerce website, we need a domain name, web hosting, payment gateway etc. for which there are recurring charges (annually or otherwise).
- Lack of traffic
Every website suffers from low traffic initially. It taken time to rank on search engines. So potential customers may not see your products online. To improve this, you need to be patient as well as invest some money in Search Engine Optimization, Advertisement etc.
- Costly advertisements on your own
You have to manage the advertisement on your own and advertisement may be costly. Some investment on advertisements may also not yield results. So you need to choose the right advertising channels also.
- Need to manager customer service
Customer service is an important aspect of any business. Good customer service is needed to built loyal customer base. If you are selling on your own, then you will need to manage the customer service. Whereas, on platforms like Amazon, the customer service is also taken care of.
- Manager labeling, packaging, shipping and logistics
So, which is better – to sell on Amazon or sell on your own eCommerce website?
The answer to the question whether to sell on Amazon or to sell on your own website depends on the niche of the business, the time and money you are willing to invest. As we have seen, each has its pros and cons. So instead of opting for only one, you can also take advantage of both.
For small business which are just starting out to make a mark, it may be good to initially start off with platforms like Amazon. And once the products are popular, it may also be a good idea to start a brand website to start selling on your on eCommerce website. Once the products are popular and the brand start to have a fan following, customer will look for your products whether on Amazon or on your eCommerce website too.