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When you’ve decided e-commerce is the business medium for you, the next step in the process requires a little more thought. Should you aim to beat ‘em or join ‘em? This is the Amazon debate. Should you forge your own path to success, or become part of Amazon’s marketplace?
Both have their pros and cons, but the route you choose should depend on how you want to run your business and your specific end goals.
Independence Pros
The biggest advantage of running your own e-commerce store is neither fees nor commissions leave your pocket when you make a sale. Every cent of profit goes right into your bank account. Around one-fifth of e-commerce marketplace sellers operate on margins under 10 percent. Over half of marketplace sellers have margins above 20 percent, and 6 percent of sellers are lucky enough to enjoy margins over 50 percent. Depending upon your product’s margin, your business could well be vulnerable should Amazon increase its seller fees.
Your own e-commerce store gives you the opportunity to customize everything as you please. You’ll have complete control of what you sell, how your platform is set up and how your brand is portrayed—all in one convenient online location.
If you don’t want to pay designers, writers and programmers to help build your store, you can leverage a hosted e-commerce platform that offers full customization options while remaining independent . From website hosting and themes to free logo creators—these platforms exist to ease the burden of developing your own hardcoded site and all the tasks that come with it.
On top of having the ability to change anything about your online store at any time, you’ll also have the personal feel going for you. On your website, you can tell your story and set yourself up as the “mom ‘n pop” shop, or a niche boutique.
It’s also worth noting that going independent doesn’t disqualify you from selling on Amazon or other marketplaces. In fact, you might find using Amazon alongside your platform will give you that extra sales boost you need.
Independence Cons
The e-commerce market is very crowded and it’s extremely difficult to push your product or brand to the top of the list. Without a physical storefront, your business is reliant on web traffic. When you start your e-commerce business, no one will know your site exists. Effective marketing helps generate web traffic, but that takes time, know-how and money. Between organic SEO efforts and paid media, a lot goes into successful e-commerce marketing.
The e-commerce market is growing year over year, which is great news for aspiring e-entrepreneurs. The bad news is the competition is also getting stronger. Amazon is projected to own about 44 cents out of every e-commerce dollar spent in the U.S. in 2018, up from 38 cents the previous year.
Amazon Pros
If you end up deciding that joining the Amazon marketplace is the best route for you, then you’ll likely get more traffic, your products might be exposed to more shoppers and Amazon will take care of the fulfillment and return process. Another advantage for e-commerce owners who decide to let Amazon handle their fulfillment process is that it makes their products eligible for Amazon Prime. For a new e-commerce business with limited resources, Amazon can really stretch the value of a dollar. Leveraging their scaled logistics resources can make a lot of financial sense, even with sharing your profit.
Amazon also has an established customer base and brand name. Signing up to sell with them can lead to acquiring more repeat customers. These are shoppers who may be browsing Amazon looking for a product you have, though they aren’t looking for your store specifically. Once they purchase from you, there’s a chance of repeat business because your shop is also using Amazon’s excellent customer service and speedy shipping.
Cons of Joining Amazon
While joining Amazon might seem to eliminate one of the largest e-commerce competitors, that’s not exactly true. According to Crazy Egg, unlike other marketplaces, Amazon is focused on selling products—not building up your e-commerce store. In order to sell well, you’ll need to rank higher for customer queries. This requires getting solid reviews and seller ratings.
Joining Amazon’s platform also costs money. Their subscription fee is $39.99 if you plan to sell more than 40 items a month or $0.99 plus fees for fewer than 40 items a month. The most successful sellers choose to sell Fulfilled by Amazon, which allows their products to be packed and shipped by Amazon. This opens up Amazon Prime eligibility; though it also has a different set of fees associated. These can range anywhere from $2.41 per item on a small standard-size up to $4.71 plus $0.38 per pound over two pounds. The fees are even higher for larger, non-standard items.
The way you want to set up your e-commerce business depends on how you want to run your business and your ultimate end goal. If instant sales are your main priority, then Amazon may be the platform for you. If you’re interested in building your brand with complete control and potentially higher profit margins, then independent e-commerce ownership is the route to take. Whether your is aim to beat ‘em or join ‘em both options in the Amazon debate can result in success.
It’s up to you to decide which is best.