Online Marketplaces vs. Ecommerce Websites
Today we’re going to step back and offer some top-level guidance for the new sellers out there. Today’s eCommerce landscape offers a world of opportunity, but it also offers a lot of choices. As an eCommerce retailer, it is important to understand the different ways that you can sell your goods, and how the channels you choose can impact your business.
Retailers worldwide are experiencing growth in online sales with merchants in the United States earning the highest revenues and China a near second. There’s never been a better time to start an online retail business, even if it’s just part time. But where do you sell products? How do you choose what best fits the business you want?
Below we’ve listed the parameters of selling via several major online marketplaces, as well as those of hosting your own eCommerce website:
- Industries Served: low and medium risk industries, including clothing, kitchen, furniture, food, media, toys, electronics, sporting goods, and more.
- Currencies Accepted: Up to 48 different currencies depending on where you list.
- Customer Payment Options: All Major Credit Cards, JCB International, China UnionPay, NYCE, STAR, and Amazon Store Card
- Processing Fees: $0.99 per transaction + commission (12-15%) for under 40 orders/month; $39.99/month + commission for more than 40 orders.
- Industries Served: eBay supports largely the same categories as Amazon, with a few exceptions.
- Currencies Accepted: Up to 24 different currencies.
- Customer Payment Options: All Major Credit Cards, PayPal, Bill Me Later, ProPay
- Processing Fees: Variable listing fee (usually less than $1.00) + commission (12-15%)
- Industries Served: artisanal goods, one-of-a-kind items, handmade, crafts, art supplies.
- Currencies Accepted: Up to 23 different currencies.
- Customer Payment Options: All Major Credit Cards, PayPal
- Processing Fees: $0.20 for a four month listing + 3.5% / transaction
Your eCommerce Site
- Industries Served: whatever you want (as long as it’s legal)!
- Currencies Accepted: whatever you want (as long as your merchant processor can handle it)!
- Customer Payment Options: whatever you want (as long as your merchant processor can handle it)
- Processing Fees: depends on your merchant processor, usually a credit card processing fee of around 2.5%.
Pros and cons of selling through your own eCommerce site
The best aspect of having your own ecommerce site is that you have complete control over the layout, graphics, images, videos, coding, and content. With your own site, you can select the keywords important to your business and optimize for search engines. Similarly, you can optimize the layout of your merchandise for lead generation and conversions. Most eCommerce site providers also allow you to purchase and use your own domain name, which is a great way to build your brand.
However, with all of these advantages comes a lot more responsibility and money. You have to either manage all of these aspects yourself or pay employees to do it for you—and good help is not cheap.
In addition to managing the site, you are also tasked with what has become the biggest hurdle for aspiring retailers… driving traffic! With your own site, you have to use the tools at your disposal (search engines, social media, email, tradeshows, and good ol’ fashioned hustle) to get people in the door. Traffic is the hardest (and often most expensive) thing to build for any online business.
Pros and cons of selling through an online marketplace
This should not come as a surprise, but the pros and cons of selling through an online marketplace are exactly the opposite of having your own ecommerce website. With an online marketplace, you do not have all of the extra costs associated with operating a website, but you also do not have complete control over your sales platform. You will not have to pay to host a website, but you cannot include specialized modules or forms to optimize for conversions.
But, you also don’t have to worry about traffic! Along with the heavy commissions of Amazon, eBay, and the rest come millions of happy shoppers ready to browse your offering. With that level of built-in traffic, along with the low maintenance and integrated customer resource tools, we often recommend that a retailer get their footing by starting their business on a marketplace, if only to discover the products upon which they can build their business.
Wait, why not both?
Having made that point, there are simple ways to do both! While many ecommerce merchants feel they can only sell their goods through either an online marketplace or their own ecommerce site, the reality is a solution is available to help them simplify this multi-channel approach. Sellbrite offers multi-channel listing software for sellers of all sizes, allowing you to list your products from one catalog on multiple locations, as well as centralize orders and inventory, in one clean interface!
Starting on one sales channel is understandable, but as you grow, so does the risk of harm to your business. With a marketplace, traffic fluctuations, site changes, and/or seasonal merchandising focus can all invariably affect your business. As the saying goes, do not put all of your eggs in one basket. When you sell only on an online marketplace like eBay.com or Amazon.com, you are losing other sales. It is wise to sell through all sales platforms available to you to ensure that you are reaching as many potential customers as possible.