Ask An SEO: Should I Prioritize Selling On Marketplaces Or My Own Website? via @sejournal, @kevgibbo

This week’s Ask an SEO question comes from Mike in Toronto who enquires:

“For a small business that wants to sell products online, would you advise me to set up my own ecommerce website, or should I use a marketplace like Amazon instead?

This is undoubtedly one of the most common dilemmas for small business owners when they decide to start selling online.

It is a particularly tricky one to weigh up because the choices you make now could have quite a big influence on your strategy for months or even years to come.

But to give you my answer up front, my general advice is to begin selling via marketplaces such as Amazon, eBay, or Etsy. This will give you visibility, sales, and near-immediate exposure with minimal effort.

Then, in the long term, you should gradually build out your own website, letting you own your brand and audience.

Of course, there are caveats here. Some product categories don’t tend to do well via online marketplaces. This often, but not always, includes things like furniture, fine art, vehicle spare parts, and so on.

The reverse is also true. If you’re selling books, personal care products, and some kinds of handmade goods, it often makes more sense to stick with the marketplaces.

The Pros And Cons Of Selling On Marketplaces

To help you weigh up whether or not to sell on marketplaces like Amazon, Etsy, or eBay, here’s my take on the pros and cons of using them.

Advantages Of Selling On Marketplaces

Instant exposure: Online marketplaces put you in front of millions of shoppers. In the UK, for instance, a whopping 20% of consumers buy goods on Amazon each week, and 80% buy something at least monthly. Having your products available on marketplaces helps you get exposure without having to build traffic from scratch. Easy setup: Listing your products on an established site is much faster than setting up a content management system (CMS) such as Shopify. You need very little technical know-how to list products on marketplaces, and you can get up and running in just a couple of hours. Marketplace SEO tends to be simpler: Optimizing your product descriptions, images, and titles for search algorithms on marketplaces is much more straightforward than trying to compete in Google search (indeed, you could even be competing against marketplaces in search engine results pages). Trust: Millions of people use marketplaces every single day. They trust these websites and are more likely to buy through them, compared to a brand they’ve never heard of. Logistics support: Online marketplaces offer different packages to their sellers, but there’s usually quite a bit of support available for deliveries, returns, refunds, and customer payment processing.

Disadvantages Of Selling On Marketplaces

Fees: Marketplaces charge sellers varying fees. These can range from about 2% of the transaction value up to 20%, or even more for some product categories/price brackets. That can really undercut your profitability. No brand control: When you sell on marketplaces, you really are at the mercy of their algorithms, their policies, and their rules. There is very little you can do if the marketplace decides to push its own products over yours or suspend your account for whatever reason. No customer relationship: When you sell on marketplaces, you don’t own the customer data. This makes it very difficult, if not impossible, to cultivate long-term loyalty. You also can’t email customers with discounts or offers outside of the marketplace. The competition: Marketplaces are intensely competitive places. Not only will you be competing against many other small businesses in your niche, but you could also be up against big brands with name recognition. Somewhat disconcertingly, marketplaces like Amazon also sell their own versions of products (from jewelry to sweets to clothes hangers), which could directly compete with yours. Brand visibility: People who buy on marketplaces like Amazon may not even be aware that your brand exists. Many consumers assume they are buying from the marketplace itself, rather than your company.

The Pros And Cons Of Setting Up Your Own Website

Many ecommerce business owners dream of setting up their own websites. There’s something really exciting about having your own shop front to the world.

Here’s what you need to know before going ahead with that.

Advantages Of Setting Up Your Own Ecommerce Site

Full brand control: If you run your own website, you own everything. It’s your site, your URL, your designs, your pricing. Rather than having to rely on a fairly generic marketplace storefront template, you can build a website that really matches your company’s ethos. Potentially better profit margins: By avoiding marketplace fees and commissions, you can potentially increase your profit margins. Better customer relationship: With your own website, you have direct access to customer emails and data. This allows for re-marketing and personalization (provided those customers have consented to communications). SEO: If you have built a well-optimized website, this can bring in traffic from Google and other search engines without you having to pay for ads. Essentially, that’s free exposure for the right audiences. Faster payments: When using marketplaces, you typically have to wait for scheduled payout dates (marketplaces typically hold onto money for longer in case of customer complaints or refund requests). With your own website, money from each sale will often land in your business bank account the next business day.

Disadvantages Of Setting Up Your Own Ecommerce Site

Building traffic is hard: If you don’t yet have an existing audience, you need to invest in SEO, ads, social media, and content to start attracting potential customers. Technical setup: Building and running an ecommerce website is technically challenging. While a CMS like Shopify makes it a little easier, this is a lot more work than simply setting up a listing on a marketplace. Tech costs: The costs of setting up an ecommerce website are equally significant. You need to buy a domain name, code the pages, maintain the data, ensure the site and customer data are protected, maintain the website, and do various other technical tasks. Unless you’re confident doing this yourself, you’ll probably need to pay a specialist to do this for you. Trust takes time: Assuming your brand is fairly small, building up trust in your website takes time. The best way to do that is through social proof (for example, from customer reviews or companies like Trustpilot). But this won’t happen overnight; it can take months or even years to achieve. Logistics: There are various logistical issues to be aware of when setting up your own website. These include choosing a secure point of sale, managing shipping, setting up policy pages, or getting to grips with legal issues about refunds and returns.

Multi-Channel Is The Way To Go

It is very common nowadays to find small ecommerce companies that sell through multiple channels, including major platforms like Amazon, niche local marketplaces for specific geographies or interests, as well as their own websites and even social media.

It’s a bit outdated, but a 2017 study is quite illustrative. It found that 60% of SMEs made over half of their ecommerce sales on marketplaces, and a quarter had an equal split between marketplaces and their own websites.

Only 12% made all their sales on marketplaces, and only 8% sold exclusively through their own websites. Essentially, most SMEs eventually opt for multi-channel sales.

As I mentioned above, my feeling is that for most businesses, a multi-channel route is the best option.

Starting on a marketplace will help you win customers, gain some visibility, and also allow you to gauge demand for your idea.

As sales start to pick up in the marketplace, you can then begin investing in a website that will ultimately become the primary focus of your offering.

So, there is a lot to think about, but I really encourage you to jump in. It’s important to have a long-term strategy, but there is also a lot you can pick up through trial and error – and the journey can be incredibly fun and rewarding.

Good luck!

More Resources:

29 Must-Have Features For Ecommerce Websites Marketplace SEO: A Guide To Optimize Listings Ecommerce Marketing: The Definitive Guide

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Featured Image: Paulo Bobita/Search Engine Journal