It’s a common question. The appeal of setting up an eCommerce business on Amazon, especially in the US, is appealing as it feels easier and the same with Ebay.
In short, I wouldn’t sell on marketplaces if you plan on building and running a long-term business. And let’s face it, all these side projects ultimately want to be a stand-alone business.
At its core, when you sell on a marketplace like eBay or Amazon you don’t own the relationship with the customer, you’re just fulfilling the order, they bought from the marketplace. This is an issue because the majority of successful long-term profitable businesses get repeat customers. If you don’t have a relationship with the customers, i.e. their email and they don’t recognise the brand you can’t resell to them.
The other issue
Amazon and Ebay don’t let you sell on their site for the benefit of humanity. They charge a nice big percentage of the sale. It can be up to 45%! Although the average is 15%, you can spend this much on advertising your store and have a relationship with the customer.
Amazon and Ebay own you
Let’s say you build up a nice business on Amazon, orders are coming in, you’ve worked out their processes, the one day you get an email saying “We’ve closed you account”. You’re dead in the water, and all that hard work has gone to waste. It is up to them who can and can’t sell on their platform If you own your own site you control it. The key to any business is being in control.
Advantages of selling on Amazon and Ebay
Quite simply, it’s easier. That is why people do it. They have visitors ready to buy, warehouses ready to ship you just buy the stock and list it.
It’s also a good place to start learning how to sell. You learn product selection, inventory control, customer service etc. However, at some point, you’ll realise the above and have to start all over again.
Isn’t setting up your own website from scratch harder?
Quite frankly, yes. But it will be worth it. Your margins and profit will be higher and you can get repeat customers for much less. It’s building for the long term. It’s like buying a house instead of renting one.