Why Online Businesses Should Not Be 100% Dependent on Marketplaces

A stitch in time saves nine. An English proverb that very accurately stated long back that right decisions at right time save a lot of problems and issues you might face later.

As a seller the first question that arises is: Where should you be selling your products? With online marketplaces like Amazon, eBay, Flipkart and Snapdeal, you may feel compelled to sell your products online through high traffic sites. However, if you’re looking to grow a sustainable business and create your own marketable brand, you need to have your own online store.

​​​​Coming to the nation, India has become the world’s second largest Internet market, with 333 million users, trailing China’s 721 million. Despite being the second-largest userbase in the world, the penetration of e-commerce is low as compared to markets like the United States (266 million), or France (54 million), but is growing exponentially, adding around 6 million new entrants every month.

Now, for a fact, we firstly need to realise that choosing between a marketplace and an online store is not a simple decision as it seems and whether to change your sales channel or to choose from multiple channels simultaneously depends on various factors like the product profile, customer profile, marketing budget, end user targets, your value proposition, its investment capacity, companies strength and weakness, competitor study, etc. Hence before we proceed we need to make this very clear that in any business no method is right or wrong, it is just a matter of good and the better!

“With e-commerce technology becoming a boom in the retail industry, the market scenario is certainly going to see some visible changes. However, a percentage of consumers will always enjoy the rich experience of touching and feeling the product before making the final purchase. Alongside to revamping our stores, we are also creating an Omni-channel presence in the country with partnering with online retailers and building our own online website and mobile application,” says Rajeev Gopalakrishnan, Group Managing Director, South Asia, Bata India, focusing his decision to not change but to choose the channel and here he chose them all (selling through a physical store, online store and through a marketplace too).

For you to choose a right channel among selling via marketplaces or selling via your online brand store, read out the factors, both the channels depend on: 

1. Reach: Considering the reachability, Marketplaces reach towards mass across geographies and hence will increase your brand and product visibility more as compared to your own online store. To increase the reach of your store, you need to be very aggressive in promoting the same.
2. Brand Identity: When shopping from marketplaces, people always remember the marketplace name and not your brand name. The statement they say is,” I bought a watch from Amazon or eBay or Flipkart and so on.” If you are concentrating on building your brand, having your online store will serve your purpose to a greater extent. As all people will know is, your brand name and not the marketplace name.
3. Profit Margin: Marketplaces are commission based i.e. whatever product you sell, a certain amount of the product cost is charged as a commission. This will reduce your profit margins. If a marketplace increases their commission overnight, your profit ratio reduces. Compared to this, if you are selling via your online store, whatever earned would be in your pocket increasing your profit margins per sale.
4. Customer Service & Loyalty: Market place customers are not exactly your customers. They might switch their loyalty as per their preferences. If you are having your own online presence, you will get to know your loyal visitors and you can cater them accordingly. You can serve them easily as compared to marketplaces.
5. Customer Data & Insights: Through online stores, you can build your own customer base and track them well via analytics which is quiet difficult if you rely on marketplaces. Marketplaces generally do not help you with the customer statistics. Whereas in case of online stores, you can get all the minute details via various reports and can manage your customer very well.
6. Promotions: Owning an online store, you can promote your products as you wish to with any deal or any offer. You can get full control over your promotion with pushing your products to your target audience as per your convenience. Whereas, in a marketplace you need to compete among various brands relying on marketplace deals trying to get customers’ attention.
7. Customization: You can showcase your products according to your wish giving your brand touch. Also you can display your uniqueness which is not possible considering the scenario of marketplaces.
8. Flexibility and Control: Being on marketplace, you need to stick to marketplace regulations in form of content and other formats. Apart from this there are various restrictions. Compared to it, if you sell via your online store, it would be your rules, your policies and your regulations. The entire control would be in your hands. It’s you who would be deciding the content, product placements, and categorization and so on.
9. Set-Up Cost: Now coming to the set up cost, there is a wrong notion that online store set up require more investment as compared to marketplaces. Considering marketplaces, there are various sorts of fees including monthly subscription fee, listing fee, payment gateway fee, commission fee and so on while for online store, if your budget is low you can opt for SaaS based platforms to get your online store ready. They give you ease with maintenance part, store creation part, and many such services and that too at very nominal monthly fee.

Viewing the above comparison, we can conclude that if you are solely into selling via marketplaces, it is high time for you to re-strategize your selling strategy and get your own ecommerce store ready. It will help you out in getting control over your branding and content, personalize your offering, access to customer information and drive customer relationship experiences. Plus if you go for SaaS based service providers to get your store ready, they are quiet pocket friendly.

Bottom line, an online marketplace may help you get in front of the customers initially but your online store will help you establish a long-term relationship with them.

With this we can say that a stand-alone ecommerce site is absolutely necessary if you are going to sell online for a longer term. It is always better to take control of your brand, products, and promotions.

Decide your strategy wisely!