While The world appears to be upside down right now, many are wondering what they should do. Not you though. You have decided to thrive in these challenging times by carving out your own path. You are ready to sell online and earn a profit.
Now you are left with the question of deciding between an Amazon or eCommerce store. Which should you sell on? In this article, we will cover the differences between selling on Amazon versus your own store. The rewards can be excellent with both, but first, you must find out the right fit for you.
Starting an eCommerce store on your own site
Believe it or not, eCommerce was invented way back in 1979 and has evolved into the colossal sized digital marketplace that it is today. Today starting your own store has never been easier, and millions of people just like you are doing it. Experts have estimated that there would be roughly 6.54 trillion dollars in eCommerce sales in 2020, up from 3.53 trillion dollars in 2019. Online sales have almost doubled in just one year! Now let’s cover the pros and cons of owning your own eCommerce store.
- You control the entire customer experience from start to finish. This can be crucial, depending on which products you sell. For example, if Amazon decides they won’t sell your type of product on their site anymore, you don’t have to worry because you own your online store and don’t rely on them.
- You have access to your customer’s information so you can remarket to them. This information is precious because the average customer needs to see an ad or hear from a business around seven times before they take action and buy.
- You can track who visits your website or who takes a specific action on your site. You can then use this information for advertisements, chatbots, or email marketing to retarget them. Using email marketing and chatbots are a great way to increase sales.
- You own your brand and store. When someone buys a product of yours off amazon, they are technically Amazon’s customer, not yours.
- You can use eCommerce software and themes to customize your site in any way you wish.
- You have the opportunity to sell B2B (business to business), which you can’t do on Amazon.
- No Amazon fees.
- The workload is much greater. All responsibility falls on you. Setting up your site, tech issues, customer service, inventory management, shipping, advertising, and more is all in your hands.
- In the beginning, things are likely to be slow unless you have excellent marketing and advertising skills and hot selling product offerings. Even then, you will still have to start from nothing to grow your business. Doing this will take time, perseverance, and patience.
- Lost Time- You must spend a lot of time on your business versus selling with Amazon FBA because you are responsible for everything.
- Less Traffic. Amazon has millions of customers flocking to their site daily. Nobody will know about your new store, so you will have to market and advertise to get customers. Marketing and advertising are essential to a new eCommerce store.
Start selling on Amazon
Amazon Selling Pros
- The largest online marketplace in the world means exceptionally high traffic.
Over 206 Million people visit Amazon every single month!
The United States has the most Amazon traffic:
- Option to use FBA (fulfillment by Amazon). With this service, Amazon handles all packing, shipping, returns, and even customer service for your sales.
- You can sell internationally. Amazon currently has 16 international stores. You can sell your products in Asia, Europe, The Americas, and the Middle East.
- Amazon is trusted by virtually everyone and has gained solid credibility over the years as a company you can depend on.
- Customers are eager to buy from Amazon. When customers visit Amazon, they are looking to make a purchase.
- Amazon offers speedy shipping via FBA.
- Tools for Amazon product research and niche research to help increase your sales. Research tools are essential and can have a massive positive impact on your business.
Amazon Selling Cons
- Amazon’s fees – For every sale, you make with Amazon, they take a cut. Also, if you do FBA with Amazon, you must pay those fees as well. The referral fees vary per product category, and the FBA fees can range from $1.97 per unit for the smallest items up to over $137 for more oversized, heavier products.
- Intense Competition- Since Amazon is the largest online store, you will be competing with millions of other sellers. Differentiate your business to stand out. Offer more value and use best practices to overcome this obstacle.
- Amazon has all the power- If you don’t follow the marketplace rules, Amazon could arbitrarily suspend your selling privileges, leaving you, for lack of a better word, totally screwed.
Ecommerce Site VS Selling on Amazon Comparison
As previously mentioned, costs vary depending on the type of products you are selling.
Here is a snapshot from Amazon’s site:
Here are a few examples of how your FBA fees are calculated:
Amazon costs can be higher depending on what you sell. You have to pay FBA fees (unless you do fulfillment yourself), referral fees, and with a professional plan, you spend $39.99 a month. Otherwise, you pay 99 cents per unit sold.
The costs of starting your eCommerce store can significantly vary.
You will have to pay for an eCommerce service like Shopify, Which starts at $29.99 a month for their basic plan.
You will also have to pay someone to create and design your site if you don’t do it yourself. This cost can be a few hundred or a few thousand dollars.
Along with owning your eCommerce store, you will need specific apps. Some of these apps are free, but others require payment. Depending on your business needs, this could be a smart start-up investment.
You will also have to pay for your store’s domain name. Domain costs could range from around $13 up to thousands or even millions if you were to buy an existing well-established domain. You will likely choose your unique domain, which will be around $13 a year.
As a store owner, do you plan to do everything yourself or to hire others? If you employ others, you must add these to your costs as well.
Because of all the variables involved in starting an eCommerce store, we can’t give you an exact number for startup costs. If you tackled everything yourself, you might only have to spend a few hundred dollars or less. However, if you are hiring for all or the majority of the work, you could spend well over $5,000.
Depending on your business model, you could operate out of something as humble as your garage or as big as a warehouse. On the other hand, if you have a dropshipping type of business, you don’t have to worry about inventory storage. You will need to stay in touch with your suppliers to ensure you have enough inventory in stock to sell those items.
Amazon FBA Inventory
Using Amazon FBA can be outstanding for certain sellers when it comes to inventory. Amazon will pack, ship, handle returns, and customer service for FBA sellers. Although, if your FBA products don’t sell within a year, Amazon will charge you an additional fee for long-term storage.
Time To Launch Your Business
As an Amazon FBA seller, you can be up and running as soon as your products are shipped to an Amazon fulfillment center and processed. Once your products are received at the fulfillment center, it usually takes 2 to 6 days for your products to be available for sale. The longest part of the launching process is sometimes sourcing your products and engaging in research.
Launch time for an eCommerce store is different for everyone. If you plan on having a big store with many products, it will take much longer than if you have a small store. Realize that when you start an eCommerce store, you have to build everything from scratch. This entire process can take anywhere from a couple of days to well over a month. It all depends on your situation.
Amazon offers multiple different types of advertising to get your business noticed.
Here is a snapshot of Amazon’s advertising options:
When you have your store, you must handle all advertising unless you pay someone else to do it for you. There are many ways to advertise your store. If you utilize social media and search engine advertising like Google, YouTube, Facebook, Instagram, Twitter, Pinterest, etc., you can reach a much larger audience. You will have to test your ads to see what works and what doesn’t. In the beginning, you will likely spend more as you figure out what works well.
Starting your eCommerce store or selling via Amazon are both great options. The question you must ask yourself is, which is best for me? Do you have the time to dedicate to becoming an eCommerce store owner?
Or would you instead take on less responsibility and have more free time as an Amazon FBA seller?
Both options are great but pick the one that suits you best.
So which path will you take?
Good luck selling. I know you got what it takes!