When it comes to sell online, one of the biggest questions every eCommerce business owner thinks ‘should I sell on Amazon or build my own store?’
And this question is indeed extremely important.
If you want to get a large number of customers and generate business revenue faster Amazon is the best marketplace for this case. But selling on Amazon won't give you brand identity as Amazon customers don't care from whom they are purchasing. They give all credit to Amazon for what a seller is doing behind the scenes.
The second option comes to build your own store and sell directly to customers and establish your brand independently.
But again, selling through an online store isn’t a single-day task. It takes tons of eCommerce marketing efforts to bring visitors to the store and then convince them to buy the product.
So which one is better?
In this article, eSearch Logix will tell you Should You Sell on Amazon or Build Your Own eCommerce Store by analyzing the advantages and disadvantages. This well-researched comparison will give you a clear idea of which option is better in a particular case.
What is Amazon?
Amazon.com is the world's biggest online retailer and America's top eCommerce company. It is an online marketplace for buyers and sellers. At present, Amazon has over 200 million Prime subscribers and 147 million are based in the US only, making it the largest online retailer website in the world.
To sell on Amazon, you first need to create Amazon seller account and then get it verified. Once your account is verified, you can start selling.
Advantages of Selling on Amazon
Amazon is the world's largest online marketplace and top leader in eCommerce business. Market report suggests that around 66 percent of product searches originate from Amazon. 89% of US customers alone say that they are more likely to buy products from Amazon than any other eCommerce website.
So when you come to Amazon for eCommerce business, you will have solid brand support. Let's take a closer look what are the advantages of selling on Amazon:
1. Easy Access To Large Number of Customers
At present, Amazon has over 200 million Prime subscribers and no other eCommerce site has such a large number of customer base in the globe. Every month millions of active users visit Amazon for searching for products and most of them make a successful purchase.
This huge customer base is like a ready-made treasure for starter businesses that usually struggle to get customers initially.
2. Sellers Have to Focus Only on Selling
Amazon works as a middle-man between the seller and the customer by handling all associated logistics. Through the Fulfillment by Amazon (FBA) program, Amazon manages the responsibility of storing and stocking and delivering products at a small price range.
This gives advantages to business owners who lack the budget to hire or own a warehouse or have full-fledged packaging and shipping services in place. This FBA program reduces the upfront cost of eCommerce operations.
3. Zero Upfront Costs
Selling on Amazon takes zero upfront costs. Online store will cost you in terms of website development, web hosting, design, SEO, and marketing tools. But at Amazon, all you have to create your product listings and start selling.
Amazon has a modern product cataloging system that enables you to optimize and categorize your products to be shown in search queries whenever customers make them.
4. Solid Platform for eCommerce Marketing
eCommerce marketing is important to grow your online sales. Amazon, which doesn't need any introduction, is the top adverting platform for eCommerce companies. Amazon provides a broad range of ad types like Amazon PPC, display ads, video ads, audio ads, sponsored ads by brands, Amazon sponsored products, etc., to allow sellers advertise their products.
And with the introduction of Amazon Live, consumers have a new kind of intuitive marketplace where they can interact with sellers or influencers live on Amazon.
5. Easy SEO
For online stores, search engine optimization plays a critical role to sell online. Without SEO, no online store can think of getting a good amount of sales. Top eCommerce website development company in India considers SEO as the backbone of eCommerce business in today's competitive digital world.
Amazon gives you modern features to optimize your product pages for the right keywords which have search visibility in eCommerce SEO. As a result, you don't have to put a lot of effort into SEO.
Disadvantages of Selling on Amazon
1. High Competition
Do you know how many companies are there selling on Amazon? There are over 1.9 million active sellers in 2021. As per the Market Plus report, around 2,000 new sellers join Amazon every day. So even if you don't have to compete with sellers but the number of competitors who would be selling the same products that you sell increases daily and make it tougher to get a sale.
Especially when you sell common category products like grocery items, women and men's fashion clothing, beverages, then competition increases at that level whether you invest in product optimization and Pay-Per-Click advertising, you might not get the results you want from Amazon. So, high competition is one of the biggest disadvantages of selling on Amazon.
2. High Fees and Low Margins
Don't think you will keep all the profits you get from your sale. Amazon charges fees with many plans like seller plan, referral plan, FBA fees, and additional costs like high-volume listing fees, rental book service fees, closing fees, etc. Amazon charges a CPA fee between the range of 8%-15% for each sale you make.
Before you start, you need to review the potential cost of your eCommerce business running on Amazon. You have to Compare the ROI to your marginal profits and check how it is profitable to be on Amazon.
3. You Have Low Control
Remember, Amazon gives loyalty to customers, not to the seller. Amazon takes complete control over your eCommerce product listings; they can anytime remove content or listing, or entire product catalog, as per the requirements.
If you sell a lot of products it would cost you in terms of product listing fees and take significant time to appear at the top of Amazon search results.
4. You Can't Build Your Own Brand
Can anyone see a streetlight flashing in a day? It's difficult to observe to spot street bulb lighting due to the sunlight. Same principle applies here. Millions of eCommerce companies are faded under the flashy brand popularity of Amazon. So if you have a goal of establishing your own eCommerce company brand, forget it, it is not possible on Amazon.
5. Amazon Sells its Own Brand Products
Amazon has its own different brands such as AmazonFresh, AmazonBasics that also sell on the same platform. These brands earn sales easily due to the Amazon brand tag. Users sometimes even don't do in-depth research and quickly add to cart and check out.
This factor is among the top disadvantages of selling on Amazon as sellers have to directly compete with Amazon on Amazon's owned platform. And because there is direct competition, it is difficult for small or even bigger sellers to beat Amazon on Amazon.
What is an eCommerce Store?
An eCommerce store is a website that is meant to sell products or services online. It is a kind of private marketplace where one company or seller sells their own products directly to the customers.
eCommerce store is a part of eCommerce development that involves web design, landing page creation, online transactions, shopping cart, and other various online shopping activities that users need. When it comes to eCommerce web development, you either have to hire a website development agency or build your own store directly on an eCommerce website builder. But going with a website builder saves you a lot of costs.
Most popular eCommerce website builders are:
Advantages of Selling on Your Own eCommerce Store
1. You Get Full Control
The best part of developing your own online store is that you get full control over the content, website design, and selling system. You can customize your site according to your business requirements and goals. You can eliminate all distractions that affect your sale whereas Amazon has more distractions for users.
2. Build Your Own Brand
Selling on Amazon is like an invisible seller; customers don't know or don’t care who is selling the product. But when selling through a dedicated eCommerce store customer know who is actually selling the product and give the value if they get good services or offer.
Besides this, having your own eCommerce store allows you to make a long-lasting relation with customers and turn them into your brand advocates as well. You get the opportunity to showcase what makes your brand and products unique. Brand image matters a lot.
In the eCommerce industry, Amazon had started as an eBook seller and then gradually Amazon turns into a brand which is why consumers easily trust products wherever Amazon is mentioned.
3. Low Competition
The biggest advantage of having an eCommerce store is anyone who visits your website will buy only your products- it is your own marketplace, no one else is here to lure your customers. Selling on your own online store doesn't force you to reduce the product price due to competition fear. You have complete control over the pricing which results in higher profits over time.
4. No Product Listing Fees
Because it is your website no one will charge you for the listing products. However, you will have to pay as per the subscription plan of the eCommerce platform that you would be using. You can create any number of product pages and customize your eCommerce website design as you want. You can sell unlimitedly without any applied charges.
5. Better Marketing Opportunities
Amazon listing doesn't allow sellers to advertise their listings anywhere on the Internet. Amazon takes complete control of your product marketing through its own advertising like Google ads and Google shopping.
But when you sell on your own eCommerce store, the whole digital world is open to your store. You can create a dedicated eCommerce marketing plan for your products. However, on Amazon, you have to compete against your own product listing for getting a spot in search results.
Disadvantages of Selling on Your Own eCommerce Store
1. Website Management Cost
When you have your own eCommerce website you have to take care of all the tasks of managing the site. You have to choose the right web hosting server and robust CMS to manage the product pages and add content, images, etc.
To develop an eCommerce website you will have to either hire a professional agency or use a DIY website builder and create at your own.
If you decide to build your store on the eCommerce platforms like create a Shopify store, set up an online store on BigCommerce,Magento, Volusion, you have to build as per development technology and guidelines.
On other side, if you consider usingthe best website builders like Squarespace, Wix, Weebly, GoDaddy, WordPress, MyShopWop, SiteSnip, you will need basic knowledge to set up initially. Typical website management will cost you greater than hire Amazon seller account management services.
2. Web Development Cost
Before you earn a sale, you have to invest. eCommerce website development cost falls between $3000-$100,00, depending on the country. Here at eSearch Logix, we develop an eCommerce website starting from $750 onwards.
However, if you don't have the initial resource or funds to invest in on Amazon, you just have to create Amazon account and it doesn't cost you a lot.
3. Difficult To Reach Customers
Internet is the universe of 1,197,982,359 websites. You didn't count the exact number, right? When you create a website you add another number in this figure. Think about customers how they will find your website among these billions of websites.
You can sell when customer first finds your website. To make your website visible on the Internet and Google, you have to separately invest in premium SEO plans. And it takes both time and money, making it difficult to reach customers.
4. Limited Number of Customers
Amazon boasts of having millions of active customers. Almost everyone in the world shop online knows Amazon. But your eCommerce store has a limited number of customers due to brand awareness and lack of website visibility. You have done a lot of eCommerce marketing, digital marketing to make more customers and these marketing practices costs significantly.
5. Need of Customer Service
No business can run without customer complaints. Amazon is famous for the high-class customer service which is why they have a large number of loyal customers.
As an eCommerce store owner, you have to set up a dedicated customer support team to assist customers and run all other business operations simultaneously that directly affect customer experience. This is a disadvantage of selling on your own eCommerce store as compared to Amazon.
Time for Final Verdict
eCommerce business is deep and dynamic which requires initial time to gain momentum and make profits. Should you sell on Amazon or build your own eCommerce store depends on your business goals and requirements. You need to compare the advantages and disadvantages of both selling on Amazon and build your own eCommerce store.
So the clear answer is you should first start selling on Amazon with your private label. Once your products get popular and you get the overall knowledge of cost and logistics of handling eCommerce business then you should move to your own eCommerce store.
But keep in mind, it requires good eCommerce intelligence to succeed on both Amazon and eCommerce store. eSearch Logix is a decade-old website development and digital marketing agency. We are expert for both- We can help you sell effectively on Amazon and create your own store and start selling quickly.
Explore Our Web Portfolios and you will understand why are confidently inviting you to collaborate with us.