Where To Start Selling Online: Marketplace vs. Online Store


May 06, 2018

Where To Start Selling Online: Marketplace vs. Online Store

Looking to sell products online but not quite sure where to start? You’ve likely heard many differing opinions from friends and family about getting started on Amazon, eBay, Etsy and more. Or what about starting your own online store? With so many options, just choosing how you will become a seller online can be a nightmare. Before you begin to have a panic attack, let’s break down some of the options and then where you can check out how to get started selling products online.

Before choosing a platform in which to sell your products, you’ll want to understand the differences between the top two options, selling on a marketplace vs. selling through your own online store.


Selling On A Marketplace

Getting started on a marketplace is usually the easier of the two options and will likely accumulate revenues faster. Marketplaces are established websites that allow 3rd party sellers (such as yourself) place their products for sale, in the form of a listing.


Pros:

The upsides of a marketplace consist of:

Lots Of Consumers Ready To Buy

Consumers love marketplaces because of the immense breadth of products (variety of categories) and depth of products (variety of products within a category). Typically marketplaces are a great catch-all where consumers know they can find anything they are looking for. That’s why customers use marketplaces as their “go-to” destinations for just about anything. Established sites like Amazon, Etsy, or eBay already have millions of website visitors every day who are ready and looking to buy.

Great Place To Gain Experience

Since a marketplace is a low-risk environment and some of the essentials (like obtaining web traffic) are already in place for you, it’s really an opportune way to gain online selling experience. If you get serious about it, you’ll learn a bit about pricing, product descriptions, sourcing product, and the value of reviews.

Low Cost

Selling on a marketplace comes with little to no cost, and a great place to start if you don’t have a sizable budget to invest in a new venture. Some marketplaces charge small fees for listing products (typically under $0.50 each listing) or may take a percentage of the final sale (like 2.5% of the final sale price of the item), but that is peanuts compared to the cost of starting an online store from scratch.


Cons:

The downsides of a marketplace consist of:

Reliance on Another Platform

This is both a pro and a con (as we mentioned earlier, the platform also is the one typically driving traffic). The disadvantage of relying on another platform is that you are subject to their fees (either listing fees or percentage of the sale) and you have to comply with their rules (limitations on products that can be sold and often limitations on what you can display).

Lots of Competition Side-by-Side

You’ll notice if you use any marketplace that any general consumer item for sale usually has multiple listings by different sellers. For instance, if you search “Black and Decker Toaster Oven” on eBay, you’ll receive about 1,500 active listings as results. This means the average consumer looking for a new brand-specific toaster oven on eBay has over 1500 other vendors they could choose instead of you, and there’s very little you can do to change that or influence the buyer's decision. This leads to my next point…

Slashing Prices Leads to Poor Profits

When very similar products have to compete with each other in the same marketplace, the competition typically leads to price wars. When price wars begin, sellers start slashing prices in a race to the bottom. Since branding one’s self is difficult to do (that point next), one of the only differences a consumer can see between listings is a price difference. These lowered prices may be great for the consumer, but for the seller, it typically leads to hardly any profits and ultimately an unsustainable business model.

Very Difficult to Brand Yourself

As I mentioned before, as a seller in a marketplace, you must comply with the marketplace’s rules. In doing so, you lose the power to effectively brand yourself and effectively get consumers to remember your brand. Without a storefront you can control, you limit your ability to place brand awareness items such as a logo, a signature font, or brand colors on your listings. Additionally, you lose the ability to offer cross-sells, up-sells, capture emails from visitors, or remarket towards them after the purchase. Think about the last purchase you made from Amazon, Etsy, or eBay. Do you remember the seller’s name? Not likely.


Selling Through An Online Store

This route is certainly harder as you basically have to start from scratch. Getting the opportunity to create your own online store can be a liberating experience with many upsides but also be warned, it’s a long and tough journey.


Pros:

The upsides of an online store consist of:

Control Over Your Brand

Although it may be daunting, you have the opportunity to create your own brand. Your brand has the potential to become the next household name and whatever you do in these early stages could help accelerate that. Creating a brand is far more than just picking some colors and a logo, but also lets you create the company’s values, goals, and mission. A brand lets your business come out from the shadows and into the spotlight.

Control Over User Experience

Want your users to read your blog posts? How about purchase 3 items in order to get Free Shipping? Maybe they should refer a friend and get a discount? These are all very real things you could have users do on your own website. When the website is under your control, so is the experience users will have when they visit. Unlike marketplaces, your website allows you to put up any content, any offers, any discounts, or any exclusive access rights you want. Controlling the visitor journey is a critical advantage that could lead to higher conversion rates and a website user’s can’t wait to come back to.

Higher Margins

Branding your store correctly and offering user experience advantages can provide your visitors with increased trust and a higher perceived value for your products. A higher perceived value means that as the business owner, you can raise your prices to match the consumer’s willingness to pay. These higher prices mean more revenue coming into the store, and with all else the same, more profits into your pockets.


Cons:

The downsides of an online store consist of:

Generate Your Own Traffic

This is certainly the biggest negative of having your own e-commerce store. Getting a sizable amount of traffic is a long-term process, it doesn’t just happen overnight. Getting traffic to your store will be a lot of hard work, and the lack of traffic will surely kill your brand. Without a large budget to spend on paid advertising, growing your store’s traffic organically will test your patience as an entrepreneur.

Building A Good Looking Website

Most entrepreneurs see websites every day and think “I could definitely build something like that”, but building a great looking website is a lot harder than it looks. Most entrepreneurs are fantastic at crafting a product or managing a business but are way over their head when it comes to website design. Having your own website means you’ll have to do some kind of website design and add content (or just pay a web designer to handle this for you). Of course, this isn’t the end of the world, there are great resources like Opasite ready and waiting to help you improve your website, even if your design skills aren’t what you thought they were.


Deciding how to get your products online might seem a bit difficult, but with this information, you should now clearly see the benefits and downsides of each option. Whether your aim is to build your own brand or find a large pool of consumers hungry for your products, there’s room online for all kinds of creative products and services.

If you are still unsure of the path you’d like to take to get your products online, please reach out to me at sam@opasite.com. I’m happy to hear your concerns and would love to provide you with the expert advice you need to move forward.


Happy Selling!



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