Should you start your own eCommerce store?

One of the dilemmas that many sellers face in the early days of starting their business is - “Should I start my own eCommerce website or should I simply sell on Amazon?”

This is a great question - Each choice has advantages and disadvantages, and this post tries to dive deeper to understand which is the right path for your business.

Selling on Amazon

Amazon is a brilliant website with a vast selection of products at great prices. In addition, the Prime membership brings to customers fantastic offers like free shipping, 2 day delivery guarantees and early access to sales. Being a popular marketplace with decades of international presence and having earned the trust of millions of customers worldwide, Amazon’s reputation makes it easy for a seller to acquire customers. And considering that customer acquisition is one of the hardest problems to solve, Amazon is a great place to get your product out there.

In addition to easier customer acquisition, Amazon also takes care of all the operational aspects of dealing with discoverability, inventory and in some cases, logistics. You only need to focus on ensuring that your product information is correctly provided, and share your pricing and inventory information, and you are sorted. Amazon does the heavy lifting of maintaining and managing the website.

While the advantages listed above are great, you should also familiarise yourself with a few challenges. Many sellers find the commission charged by Amazon to be quite high, and their margins end up being quite slim. Often times, selling on Amazon is simply infeasible. I know a seller who was selling a product for ~Rs 800 on Amazon, and made a Rs 2 profit after deducting manufacturing, commissions and other charges. It simply doesn’t work out for such sellers.

In addition, you are one among many sellers competing to win the buy box on Amazon. The Buy Box is the box that contains the Add to Cart and Buy Now buttons, and when a customer buys products through these buttons, an order is placed against one of the sellers competing for that slot. The seller against whom the order is placed is determined by Amazon’s proprietary algorithm, and you may not always win the slot. You may have to reduce your prices quite significantly to win the slot to gain an advantage over other sellers, but that ends up eating into your profits.

Since you are one among the many sellers on Amazon, it is also hard to build your brand on Amazon. While Amazon does provide solutions like Sponsored Brands to get your brand some visibility, it is within the context of Amazon’s website and its styles. Quite often, it is easy to get lost in the Amazon ecosystem, and discoverability may become possible only through advertising which may become quite expensive for smaller brands.

A few sellers have also found it challenging to use Fulfilment by Amazon (FBA), a platform where Amazon lists your products but takes care of the fulfilment on your behalf. While this works great for a few sellers, and for customers as Amazon’s logistics is phenomenal, it can be problematic for other sellers whose products don’t move quickly on Amazon. They could have potentially made these sales offline, but are unable to fulfil due to their inventory getting stuck in Amazon’s warehouses. You also do not have a lot of control on the policies or offers on your products. These are usually defined by Amazon.

Overall, selling products on Amazon has its own share of advantages and disadvantages. In the following section, let us look at the pros and cons of having your own website.

Selling on your website

Selling on your website has quite a few advantages at the outset, and would simply be the points listed above read in a flipped manner.

For starters, building your brand is easy on your own website as you have complete control on the look and feel of your site. You are free to choose the look and feel of your website, the colours, the fonts, and how you want to represent your products. As you have fine grained control over your site, you can also add features to your site that are not possible on Amazon, features like a chat box to allow your customers to directly engage with you and have their doubts clarified, analytics to track the activities of your customers on different pages and a whole lot more.

You also don’t compete with other sellers - A customer who has visited your website has a high chance of conversion since there is nobody else competing for their attention. You simply need to ensure that your customer is able to see value in your products and your prices are attractive.

Selling your own website also means that your margins are significantly higher as you don’t have to pay hefty commissions. With increased profitability, you will be able to grow faster by reinvesting your profits into your business.

Additionally, you have complete control over terms and conditions, the kind of offers that you want to provide for your customers never have to worry about your inventory getting locked. You can cross-sell effectively within your site and control the visibility of products with ease within your website.

Now, let us look at the flip side. One of the challenges with having your own eCommerce store is customer acquisition. While Amazon is well placed and has customers regularly making a beeline to its website, you have to ensure that your website is discoverable with the right investments in marketing.

Another challenge that some sellers face is finding the right logistics partner. As Amazon has scale, it is able to negotiate great deals with its logistics partners. Smaller sellers don’t enjoy the same clout, and often have to pay a higher price.

You also need to be savvy to ensure that your eCommerce website provider is able to guarantee a high availability of your website (your site shouldn’t go down), in addition to ensuring high security, low latency, performance and scalability. Not all sellers are tech savvy, and many rely on their technology partners to ensure these things.

Who is the Winner?

There doesn’t have to be a winner. You can opt to sell on both channels, and get the best of both worlds. However, a common challenge with selling on both channels is ensuring that your products, inventory and pricing is in sync across the two platforms.

With Omnibus, you can have the cake and eat it too! Omnibus enables sellers to drive sales through multiple channels like eCommerce websites, POS, Mobile Apps and marketplaces like Amazon - All from within a single admin panel. With a single click, you will be able to set your pricing and inventory on Amazon, while continuing to sell on your own eCommerce website. Omnibus is able to seamlessly sync pricing and inventory between Amazon and your website, and can also pull orders from Amazon into a unified dashboard. 

Omnibus has integrated logistics - This allows our seller partners to view a list of eligible logistics partners for each order pending fulfilment and book an order through them. Omnibus negotiates better pricing

We hope this post helped you get a better understanding of the two approaches, and the pros and cons of each channel. If you are looking to get a deeper understanding of Omnibus and how we are simplifying the experience for sellers, do get in touch with us.