The internet is powering many businesses and connecting them with the buyers and stakeholders across the globe. It has proven to be of equal help for both sellers and buyers as it presents brands with opportunities and customers with ample options to make a smart choice.
As it has become easier to create websites with platforms like WordPress and then turn them into WordPress apps, the dream of building a business from the ground up and succeeding can be made a reality.
If you have also been fanning your entrepreneurial fire and drive and have been aspiring to start a business, this is probably the best time. However, we understand that there are many challenges, questions, and dilemma that one needs to overcome when it comes to starting one’s own business.
Today, we are here to address a similar challenge and question that confuses many small and mid-level business owners. If you have been stuck between the two options of selling on platforms like Amazon and starting your own online store, let us help you with the same.
Read this blog to gain some insights and learn about the pros and cons of selling on third party platforms and starting your own business. Stay tuned till the end and also get the perfect solution to your queries about making a smart, robust, and affordable start.
Selling on a third party platform
There are many businesses that rely on big eCommerce platforms like Amazon, eBay, etc., completely for sales and profits. This is because they often lack the budget and infrastructure required to sell products online and deliver them to customers globally. Hence, they become sellers and work as affiliates.
On the other hand, some businesses choose to sell on these platforms despite having a digital infrastructure suitable for online sale and purchase. This is because many eCommerce platforms bring in more sales and exposure.
However, the “one cap fits all” approach does not work here. Each business is unique and must be treated accordingly. You can make your choice based on a number of factors if you are well-informed.
So, let us begin with understanding and weighing the pros and cons of selling on third party platforms and gathering some useful insights. The notable pros and cons of selling on third-party websites are as listed below:
The USP of the popular eCommerce platforms is their huge reach and hold among the masses. Amazon alone claims to have over 200 million Amazon Prime subscribers around the world. It is one of the most popular eCommerce platforms in many countries and has a humongous reach. Clearly, if you sell on Amazon, you get a huge ready to harness customer-base.
Therefore, if you do not have the budget to spend on SEO and marketing and want to gain visibility among customers, you can partner with such brands that have a ready to be tapped audience base. This will also ensure that you bag a good amount of conversions and revenue to your credit without struggling with making a brand name and earning consumer trust first.
Low entry barrier
There is a minimum logistical and infrastructural requirement if you want to get started in the eCommerce realm with third-party platforms. For instance, you can get started and start selling on Amazon overnight just by creating a seller account.
You can also outsource tasks of shipping and delivery by using Amazon FBA (Fulfillment by Amazon). These ready to use online infrastructure and order processing tools make the option of third party selling an economical and frictionless option.
World-class infrastructure and huge community
Amazon has a vast supply chain that is spread across the globe. So do other third party sellers like Ali Express, eBay, and others. This makes management of multiple aspects of running a business easier and more feasible.
This includes connecting the customers with the brands and products, storage of the inventory within the facilities, shipping the orders to the customers and managing customer service, returns, order transits, etc. The buyers and sellers also get a safe and secure environment where they can operate with minimal risks.
Additionally, platforms like Amazon also have a huge community of businesses. Here sellers can connect with other sellers and get answers to their queries and learn from the other experts of the industry.
No control over merchandising
“Ten or 15 years ago it was really just about making great clothes. Today it is about telling a story, reaching your customer, and engaging that customer in more dynamic ways.” These words by Stacey Bendet, Chief Executive Officer of Alice and Olivia LLC, pretty much sum up the importance of branding and story telling in this day and age.
However, when you partner with third-party eCommerce platforms, you lose this control over merchandizing and branding. The platform determines how your brand and products are presented to the potential audience and also controls many other aspects of merchandizing. This can often turn out to be a drawback and lead to disputes in the long-term.
Weak business-consumer relationship prospects
Nike ended its partnership with Amazon and stopped selling its products saying that it led to a buffer between them and their customers. “As part of Nike’s focus on elevating consumer experiences through more direct, personal relationships, we have made the decision to complete our current pilot with Amazon Retail,” the company said in a statement.
Although this reason may sound incomplete and insufficient, we agree that selling on third party platforms can affect the direct relations between a brand and its customers. There is lack of direct interaction and communication and thus the prospects like buyer loyalty, lifetime value, etc., depended on the business-consumer relationship can get severely botched.
Lack of accurate consumer data
Selling on third party platforms also leads to a lack of control over data. It becomes tough to determine the statistics related to sales, consumer behavior, purchase patterns, etc. This lack of accurate consumer related data can affect your long-term business decisions and fail to provide any direction to you as a brand.
Huge on-site competition
More than a million businesses and brands, both big and small, sell on Amazon. This leads to a huge competition on the platform. Customers also get the option to compare sellers, prices, brands, products, etc., on the platform and thus the chances of them migrating to a competitor is always high.
The intense competition on Amazon also leads to cut-throat competition and pricing wars. Brands are often compelled to sell their products at low prices and offer heavy discounts. Therefore, you end up competing with other brands on the platform and may even lose in some cases.
Financial cuts and losses
If you are planning to sell on third-party platforms, you must have a calculated approach. Reviewing the potential costs and profits will give you an idea about the expected revenue on the platforms.
You must also be aware of the commission, cuts, etc., levied by the platform. Some platforms offer different packages for businesses of different levels and scales. For instance, Amazon has different kinds of plans and fees for its sellers like Seller plan, referral fee, FBA charges, etc.
Starting your own store
There are many businesses that abstain from partnering with any third party sellers in order to reach their customers and prefer being the pilot of their own vehicle.
For those who want to control every aspect of their business and do not want to get into the hassles of dealing with third-party moderators, starting an own business from the ground up is the best option.
Go through the points listed below regarding starting an eCommerce business and make an informed decision after knowing all about the critical aspects and be prepared for the same. Explore and weigh the pros and cons of starting an independent online store as described below:
Complete control and flexibility
The power of owning and running your business feels different. Having your own eCommerce store also implies that you have complete control over your brand assets, design, navigation, presentation, product listing, etc.
You also get the freedom of running promotional offers, campaigns, etc., of your choice. This imparts control and you get the power of making executive business decisions without any concerns and interferences.
Easy to acquire consumer data
When the customers explore your platform and channels like website, app, social media, etc., you get direct access to a huge data base. You can track customer activity, session time spent of different platforms and pages, categories attracting maximum traffic, point of abandonment, and a lot more.
These insights and data can ultimately be used to design new marketing campaigns, send productive emails, interact with customers, up-sell, and cross-sell products, make brand developments, and take data-backed business decisions.
Additionally, you get to know your consumers better and hence establish a meaningful and direct relationship with them. This can help you build a loyal consumer base that recognizes your brand and loves it.
Better branding prospects
Each penny that you spend on your platform, ultimately leads to the growth of your business infrastructure, and helps you in the long run. Therefore, starting an online store can also help you with better branding prospects, in-house growth, business expansion, and more.
You can also work steadily to improve your SEO statistics, app store rankings, internet visibility, etc., and ultimately build an established brand name and identity that is independent and free from interference or overlapping by any other brand.
High initial costs & responsibilities
Setting up an infrastructure from the ground up is a complicated and challenging feat. It is not all smooth and frictionless. You may need to make a comparatively huge investment at first. However, this may seem better than giving cuts and commissions to a third party platform for a long time to some business owners.
Additionally, you will also need to take up multiple responsibilities and manage the entire eCommerce infrastructure and various aspects related to it. From choosing an eCommerce platform to creating a site and app, and keeping them all operational, all must be supervised well. All this requires a huge work-force, multiple resources, and logistics, and set up.
It is for this reason that many businesses start with selling products on third party platforms and then proceed to create their own platform.
Creating a business from scratch is an uphill battle. One must have immense patience and perseverance to see any growth. In fact, the crucial milestones like first sale, first hundred visitors, first thousand downloads, etc., may take longer than anticipated. Thus, when starting your own business, you must be prepared for challenges, surprises, losses, profits, and lot more. Be consistent and let the brand grow steadily before you build your empire.
To sell or not to sell: The conclusion!
Now that we have explored both the avenues, it is now time to finally get to the conclusion. As discussed above, both the options of selling on a third party stores and starting one’s own business have their share of pros and cons.
However, while it may be easier to gain bulk conversions through established sites like Amazon, eBay, etc., having a full fledged online business with independent infrastructure, resources, reach, and more, has its own charm.
The real difference here lies between the terms “rented vs owned”. When you sell on a third party platform, you actually rent a space there. There is lack of control and flexibility and the efforts might get limited to a financial growth and not an overall growth of the brand.
However, it has its own benefits that may otherwise not be accessible and feasible for independent brands, especially small and mid-level businesses. One must make use of the global reach, infrastructure and robust logistics of these platforms and many customers tend to trust these platforms more than independent sellers.
Conclusion: Make the most of both worlds!
The best approach would be to harness both the avenues and make the most of every opportunity coming your way. If you partner with a third party seller and also continue to build your own business infrastructure, then one will cover for the shortcomings of the other.
Make a small start and scale to greater heights
Tap into Amazon or any other third-party advantage and also gain experience of your own business. After all there is nothing like the pleasure of telling people that you own a business, have a website and also an app for your mobile-friendly customers.
When it comes to setting up your own business infrastructure, you can make a small start and take baby steps. First, go ahead and create a website. We recommend WordPress CMS as it is the most popular platform and also the easiest and the most affordable to get started with.
It also has a huge gamut of plugins and themes that can be used to enrich your website with features, functionalities and even aesthetics. Thereafter, you can proceed to build your own app for your mobile-friendly customers as it is the most significant tool for businesses in the age.
You can create an app online with the free app builder by AppMySite. It enables you to build, customize and test your own app without writing a single line of code. Clearly, the path to starting one’s own business has become easier and more feasible with time. So, wait no more, go to WordPress to build a website and come to AppMySite to create an app and set up your business in no time!
Over to you!
That was all from our end today. Go ahead and make an informed start based on your deductions, research, and business goals. Take the points listed above in consideration and make a plan that suits your ambitions as a business.
As discussed above, you can consider selling on third party platforms but do not shy away from creating a website and an app of your own. It will impart independence and give you the power of making your business and marketing decisions.
So, go ahead and build your own road to success. Set up your online business and create a unique brand identity that resonates among your potential customers. Tap into the internet and mobile-friendly audience and turn them into loyal customers. Subscribe to AppMySite and explore our other blogs to learn more.