Marketplace vs. Your Own eCommerce Website: Which One is Better?

There are tons of benefits for brands pivoting to the digital landscape, especially when Covid strikes, forcing everyone to stay at home and practice social distancing.

However, the “digital landscape” is too general – you can sell on marketplaces such as Amazon, eBay, etc., on social media channels such as Facebook, Instagram or build your own website are all eCommerce options. Then among all of these, which is the best? Choosing the best place for your business to sell products online can be a daunting task.

With that being said, we will unveil all the pros and cons of these two options and show you the way how to choose the best selling platform for your products, resources, and most importantly, your vision!

Benefits of selling on a marketplace

Readymade traffic and great exposure with SEO-friendliness

Choosing a popular marketplace is the easy choice as they have established their own name, having their own fans with highly trusted websites.

For instance, Amazon.com had a monthly traffic average of almost 3.68 billion visitors in 2020, followed by eBay.com with 1.01 billion visits on average each month according to Statista.

Most visited online retail websites worldwide in 2020, by average monthly traffic (in million) 

Along with the high volume of customers, merchants selling on marketplaces can enjoy the advantages of active customers who are comfortable making purchases on marketplaces and have the habit to go there instead of somewhere new to find products, or just for a quick retail therapy.

Easy to get started and maintain without having to run inventory

It’s very easy to put your product in front of your potential and demand-driven customers on marketplaces because you can start selling there quite easily. For the most part, the most time-consuming task to be executed is showcasing your goods or services for sale, which commonly takes up to one week.

Marketplaces take care of all other technical tasks such as updates, security, and bugs, so merchants do not need to pay for web development services. You also profit from secure payment methods that are equally provided by a marketplace owner.

Moreover, you don’t have to worry about shipping and inventory issues as they have established a complex and enormous supply chain network that is capable of delivering to all buyers.

Downsides of selling on marketplaces

Despite all the attractive advantages, some disadvantages even surged a quitting wave, such as the famous leaving of IKEA in 2019.

Selling fees

All the easy peasy, worry-free features, and advantages of marketplace sellers come at a cost (literally).

On popular service marketplaces like Uber, Fiverr, Lyft and Postmates, the commission hovers around 20%. For product marketplaces, the story is quite different. Etsy charges its merchants 3.5% while the two main players eBay and Amazon hover around 10%. Rental marketplaces seem to have more variance, with Airbnb charging 11% on average and Turo (previously RelayRides) as much as 25%.

Cut-throat competition with multiple competing brands on the same site

The public exposure is still there, but among such a cut-throat competition between brands on the same marketplace and in such a crowd, your store may not necessarily stand out.

Because of many attractive advantages, many merchants are flooding to the most popular marketplaces to fight for customers’ attention there. Even worse, competitors can target shoppers who visit your shops and place advertisements right on your places.

Little to no branding

A dark side of the marketplace coin you may or may not know about is the lack of personal brand. Imagine this: a customer gets bored and surfs marketplaces to have retail therapy. They’re simply looking for an item with the price and characteristics that meet their needs, meaning they may or may not realize what brand they’re buying from since they trust the marketplace.

This leads to a long-term impact that can seriously hurt your company as you can’t grow your business outside those marketplaces, own your customer database or do anything else because marketplace customers are simply not your customers.

Get banned easily

As if missing the chance to connect with your customers, winning their loyalty and understanding their shopping behavior is not bad enough, any merchants selling on marketplaces have to face one scary scenario: You can get banned from selling on marketplaces just as easily as advertisers get flags from Facebook when running advertising campaigns.

When you sell upon others’ rules, your exposure can be seriously impacted by their changing algorithm or whatever the rules allow. If things are going well for you, that’s great – but it can be gone and never be back, just like how Amazon banned thousands of stores owned by Chinese companies from its retail platform due to fake reviews incentivized by the stores’ operators.

The lesson was costly for Chinese merchants: over 50,000 Chinese merchant accounts had been banned and more than CN¥100 billion (US$15.4 billion) in expected revenues had been lost by July 2021.

Benefits of selling on your own eCommerce website

A business’s online presence, regardless of industry, has a massive impact on its success. In this day and age, some businesses still don’t realize that a majority of their customers will visit their website before making a purchase.

100% control of your store, data, and brand

People don’t say “Data is the new oil” for nothing. The concept behind “data is the new oil” is that just like oil, the whole operation of a company may rely solely on arranged and analyzed data.

So, when having your own website, the company has 100% ownership of valuable data: who are their customers, how are their browsing habits, what’s trending among customers right now that may affect your inventory, and so on.

In the eCommerce world, a thorough understanding of customers allows the company to realize the true value, make data-driven decisions, and lead the game when their competitors are still busy following fads.

Direct contact with customers

The perks of engaging directly and intervening into any of the buyer phase are the those marketplace lack.