When you start to sell online, one of the first decisions you have to make is whether to sell your product on an established platform – with Amazon being the largest of them all – or an e-commerce site of your own. Both options have their own advantages and disadvantages, and the right choice for you depends on your individual business needs.
Selling on Amazon: The Pros
Amazon dominates the e-commerce industry with its size and reach. Selling your private label supplements (or any other product) on Amazon can benefit you in the following ways:
- Instant exposure to a large audience. You can put your products before many customers right from the beginning, instead of having to slowly grow a sales list.
- Faster income. It can take several weeks or months before your own site attracts buyers. Amazon can help you make sales faster.
- A strong platform. You don’t need to learn to code or hire a designer. The entire system is already in place.
- Lower initial expenses. Especially when you are just beginning to make sales, the fees that Amazon charges can be less than what you would pay to create your own e-commerce site and staff it.
Selling on Amazon: The Cons
The convenience of selling on Amazon is offset by other factors that may put its individual sellers at a disadvantage:
- They are the brand. In an interview, marketing consultant Sam Mallikarjunan points out how people will say they bought an item “on Amazon,” and not from the vendor who was using Amazon as its e-commerce platform.
- They are also promoting your competitors…sometimes right on the same page. In many cases, because of the way the pages are formatted, you can only distinguish your brand by price. This can lead to…
- …a race to the bottom. If you are forced to compete on price, your profit margins will shrink, possibly affecting your business’s long-term sustainability.
- They may move your stock. If you are using Amazon’s fulfillment services, they may decide to move your products to a different warehouse without informing you, temporarily making your items unavailable for sale.
- Their fees cost you more over time. As your sales increase, the cut that Amazon takes can exceed the cost of establishing your own site.
- They keep your customer. This is the largest hidden cost of selling through Amazon. They maintain direct contact with your customers, and they can then direct all of their future purchases to other vendors.
Selling on Your Own Site: The Pros
While Amazon has advantages to a smaller company just starting out, selling through your own e-commerce site can be best for your long-term growth in the following ways:
- Customer relationships. Acquiring a long-term customer is far more valuable than making a one-time sale. Once you have your customer’s contact information, you can continue to reach them through promotions, blog posts, and social media. You also have full access to the sales analytics that can help you get to know them better.
- Growing your own brand. Instead of being just another seller, you have the potential to develop a company persona through your site’s appearance, products and message that will attract and retain your best customers.
- Wide catalog offerings. Once you have identified your ideal customer, you can increase the range of products you sell per visit based on their interests. For example, if they are shopping for pre-workout health supplements, they may also want to buy other fitness accessories.
- You keep the profits. All of the profits you make from your sales can go right back to making your business stronger.
Selling on Your Own Site: The Cons:
Launching your own site requires some patience and tolerance for risk. The main disadvantages are:
- A longer time to build sales. Your site may only become profitable after a long period of marketing and promotions.
- The expense of creating a site. You may have to wait for more profits to come in before you develop a site with all of the features you want.
The Best of Both Worlds?
Many sellers find success in selling on both Amazon and their own sites. The key is to shift your focus as your needs change. Attract your first customers quickly on Amazon, and then add inserts to your shipments encouraging them to take advantage of special offers only available on your e-commerce site. When they do visit your site, encourage them to return by offering helpful content and special promotions or loyalty programs. Over time, your reliance on Amazon can decrease as your brand becomes more well-known.