Webstore Vs Marketplace: Which one to choose?
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Are you still confused between whether to go with a web store or marketplace? So let’s try to settle the score once for all.
Selling online is a rage these days. With each progressing day, the share of e-commerce as retail sales are increasing and more and more new stores are coming with every year.
And it makes sense too. Online has its own benefits that transcend the limitations of a physical store – geographic limitation, lower outreach, overhead costs, and lack of metrics to truly measure the ROI of marketing activities.
However, it’s the outreach that tilts the debate in favour of selling online. There are two major ways:
- Selling on your own websites.
- Selling on 3rd parties aggregator websites like Amazon, eBay, Walmart, Wish, Etsy, etc.
Webstore Vs Marketplace: Benefits of Selling on Marketplaces
A lot of new sellers choose marketplaces to first offer their products to the customers and it makes a lot of sense too. As per USPS and comScore combined study found out that 97% customers first browse products on marketplaces before making an end-purchase. Selling on marketplaces has its advantages which as follows:
Easy to get Started:
As these marketplaces understand the needs and requirements associated with online selling operations, they have built dedicated dashboards that offer all the features and mechanism to track the performance of their products.
One doesn’t require purchasing domain name, hosting name and other intricacies involved with setting up their websites and then run targeted marketing comfort which can be daunting for a beginner.
Attracting a customer to your website requires expertise. A State of the Inbound 2018 studies found out that 61% marketers attracting their relevant audiences and leads their biggest challenge.
However, the marketplaces have their loyal customer base. A large portion of it revisits frequently to make repeated purchases. Some of the marketplaces have universal buyer persona which means people of all kind, interest and walks of life come to purchase at these marketplaces, whereas some of them cater to a specific buyer persona so they are termed as niche marketplaces.
Though desktop holds the bigger share of eCommerce sales, the majority of the product searches takes place on mobile. As these marketplaces are rich with resources, they built their mobile apps that adhere to lates customer preferences and ever-evolving technological changes.
As a result, when you list products on these marketplaces, products appear in their mobile apps as well. This helps you to get impressions for your products on mobile as well which invariably increase the revenue.
Wide Payments Options:
Also, the marketplaces have a wide variety of payments methods integrated with their e-commerce marketplace. This also reduces the rate of cart abandonment.
“In a recent study, 42% of online shoppers said that the types of payment options offered is a factor that influences them when deciding where to shop digitally” quotes Paypal.
Looking at the aforementioned choices, it gets tempting for sellers to list their products on the marketplaces and get connected with their ideal audiences.
Almost all of the marketplaces either have or in progress to offer a service similar to FBA (Fulfillment by Amazon) and Amazon Prime. If you stock your products in the FBA facility it gets qualifies for their Prime program. The success of the Amazon prime has been attributed to the faster shipments.
Webstore Vs Marketplace: Pitfalls of selling on marketplaces
However, there is a caveat to it. Although you can get new customers but you can’t sell to them again? So let’s understand the benefits of having a website.
No touch with customers:
As repeated purchase from customers is true hallmark of success for any business, marketplace sellers often are deprived of this opportunity. The majority of the marketplaces don’t share customer related data with sellers which makes them empty-handed and as a result gets devoid of any opportunity of building an email list.
The other factor is personalization. As marketplaces have set the guidelines which everyone else has to follow, they’re devoid of any opportunity to stand out from the rest. For a example, a product may require a Video to be put at the product page, but Amazon restricts them. This reduces the conversions.
Pressure of being affordable:
Majority marketplaces operate on the principle of Buy Box if your product isn’t the most affordable (including the shipping prices), it’s not the first one to be shown to potential customers. This can be frustrating. Howsoever, your product is superior in quality but if a product with a similar feature beats your pricing, you’ll experience the drastic decline in revenue.
The Competitor, just by the neck:
Also, your competitor is always by your side. Never for once, it leaves you, therefore it brings additional pressure of creating a great listing. You don’t get the benefit of the doubt as there is always an option available for them.
These are some of the drawbacks of listing on the marketplaces. However, there are also some evil practices by competitors which can cause you great harm.
“The competitor buys a large portion of some particulars items in large numbers, making the product out of stock for that particular item and then return the items later which causes double damage. First is you’re out of BuyBox for the item and second is your account can be suspended.
A lot of new sellers avoid registering their brands which needs a trademark, competitors sellers can change the images of your items. They can put a wrong image in front of another product which can result in a customer complaining against your products.
Leaving negative feedback on your listing is the most common strategy by the competitors to impart a bad name for your business. Also, what they can do is order your items multiple times and then return it, so that you miss the Amazon’s criterion of minimum Order Defect, Negative Feedback, and return rate.” as quoted from blog.
Benefits of opening an online store:
There are more than 5 million sellers on Amazon marketplace and among them 140,000 earned revenue in excess of $100,000. This year 1,029,528 new sellers joined Amazon marketplace which is equivalent to 2,975 new sellers every day. Still, there is a large pool of merchants that want to sell their marketplace products on Shopify as well.
All of the aforementioned information paints a rosy picture which is inclined towards marketplaces and it is indeed a popular destination for sellers. However, going all-in on marketplaces is neither viable nor advisable.
Merchants are inclined towards opening their store
According to one study by Feedvisor, the merchants, selling on Amazon, wanted to offer their products on other marketplaces as well and among them, Walmart emerged as the first preference followed by eBay. There were other marketplaces as well where they wanted to list their products such as Jet, Rakuten, Aliexpress, Newegg, and Sears.
However, it is Shopify and own websites followed by the BigCommerce and Magento is an interesting phenomenon. It is understandable as well. The sellers don’t want to limit their options, therefore, other marketplaces become a natural choice for them.
The most common path taken by Online Sellers First, they use marketplaces to test their products and once they’re convinced they want to build their brand independent of other brand’s identity.”
The most common reasons to sell on their website.
- They can build their brand.
- They can build their loyal customer base as they don’t get customers details from the marketplace.
- It gives them the flexibility to expand beyond the marketplace.
- Merchants can leverage their website for B2B sales too.
- Merchants can personalize their listings such as use video to educate their clients which is not possible at the marketplace
- They can build their brand.
Opening your online store gives you one distinct advantage as well. You can make your online store a nodal point and connect it with leading marketplaces via the multichannel listing apps/extensions. Thereafter, you can use your online store as a central point to manage all of the operations – inventory, order, shipment, and pricing management. By taking this route you benefit from both the things – establishing your brand and selling on marketplaces.
It would be unwise to discard the marketplace listing route since it offers tailor-made audiences. However, it will unwise as well to rely only on marketplaces, also the study from Feedvisor indicates amazon sellers wanting to open their e-commerce stores.
The potential way ahead is that a newbie should sell their products on marketplaces to get their idea validated. Also, established sellers could use marketplaces to diversify their sales channels.
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