Why Selling Through Your Own Site Is Better Than A Marketplace
When setting out on your ecommerce journey, there are many decisions to make.
One major question that arises for merchants selling their own products is whether they should set up an ecommerce store or sell the items via a marketplace.
There are so many pros and cons for each option that this question is quite often a battle for new and old merchants alike.
In this article, we will make the case that it is better to sell your products through your own store, and outline the reasons.
No Platform Fees
Selling your products through a marketplace is not free. For all the exposure and trust you may gain by being present in these arenas, you will need to pay sums out of your earnings in addition to fixed costs.
Here are examples of two major marketplaces:
- Amazon - There are two types of seller accounts on Amazon: Individual and Professional. The former are required to pay $0.99 for each item sold through Amazon, while the latter will be charged a flat fee of $39.99 with no limit on items sold. This means that anyone intending to sell above 40 units per month should opt for the Professional account.
It does not end there. Amazon also charges a referral fee for each item sold. This fee can range from 6% to 45%, with the vast majority falling within the 8%-15% range. Here are some examples of fees for the various categories:
- Consumer Electronics - 8%
- Pet Supplies - 15%
- Amazon Device Accessories - 45%
Also, there are additional fees for various cases such as gift wrapping and more.
Read More: How to Overcome the Amazon Challenge
- eBay - This marketplace’s fee structure is completely different from Amazon’s - though just as complex - and is overall the cheaper option. eBay is considered around 5% cheaper when it comes to profit margin, and this can be a significant difference. Here is how the eBay fees system works:
- Insertion Fee - The price of creating a listing, which is around $0.35 for most categories
- Final Value Fee - The amount that needs to be paid when an item is purchased. This equates to around 10%
In addition, there are payment gateway fees to consider, as well as listing upgrades.
When you have your own store, the fees amount to zero, and there are no complex fee structures to understand while you attempt to guard your profit margin.
While large marketplaces guarantee you visibility like no stand-alone ecommerce site can, these benefits will ultimately raise costs.
When you have an ecommerce site, you own a web property. When you only list your products on a marketplace, you do not have ownership over a site or the customers.
In the latter scenario, all you have is an arrangement in place and no true online asset.
This can affect many aspects of your business such as brand identity and legal aspects such as customer data rights.
To best demonstrate this point, here is an example:
- If you are selling on Rakuten, and this marketplace has decided that you have broken one of its rules, it can instantly shut your listing down and leave you with nothing. When you own a store, the only entity you will have to answer to is Google - and even it cannot shut you down in the same way a marketplace can.
Free From Platform Rules
When you are using a marketplace to sell your products, you have to follow the rules.
These platforms are notorious for being fiercely customer-centric, and this is achieved by keeping sellers in line.
Here are some examples of marketplace rules that will simply not apply to you if you are selling items through your own store:
- Amazon will not tolerate sabotage of another’s seller’s listings. If Amazon believes that this is happening, it can freeze your listing while it investigates
- On eBay, there is an option for sellers to report when a buyer does not pay for an item they have committed to purchasing. If this option is abused by sellers, or if there is any dispute or misunderstanding, eBay can instantly remove selling privileges
- On Etsy, reselling handmade items is not permitted. If your items are flagged under this restriction, Etsy could remove a listing without refunding any listing fees
Marketplace rules are strict, tough to understand, and more often than not, penalties are applied during the investigation stage, harming precious sales flows.
When you own your own store, you only need to follow your rules and the law in the country you reside in.
Establishing Relationships And Building Your Brand Identity
When a customer buys an item through eBay, they are technically and legally eBay’s customer.
In fact, the customer probably will not remember the name of your brand at all.
In your own store, you will be able to connect with your customers in some of the following ways:
- Personal communication with no restrictions, including email marketing
- Provide personalized service
- Use your own branded packaging
Running your own ecommerce site is far from easy, but many would argue that at least you are working on your terms.
Selling via a marketplace can enable you to scale and gain exposure in ways that may not be possible on your own, but the price in dollars and in your sense of control can be steep.
While quick income as soon as possible will be likelier through a marketplace, for long term growth and brand-building, owning your own site is the best choice.