“I just need to get selling on my own website – there’s no eBay fees, no feedback system – I’ll save so much I could even set my prices lower to bring the buyers in!”
Have you ever thought that? Or heard other sellers say it? I’ve heard it many times, and don’t question that there are advantages to having your own independent web store.
But there are many differences between selling on the marketplaces, and selling through your own store. The marketplaces have the advantage in almost all of them. In this post I’ll explain why most sellers should concentrate their efforts on the marketplaces, and tell you about the few cases where it still makes sense to go it alone.
Buyers Don’t Buy at Random
Nearly twenty-five years ago, at the age of sixteen, I started a business selling software. It was public domain software, so free to copy and distribute. This was many years before widespread internet use, so a mail-order software “library” was a useful service to provide.
Now, this wasn’t an original business idea – there were several public domain software libraries already advertising in the popular computer magazines. I just thought I would do the same, and get a small share of the market.
I had some money to invest, but not a lot, so took out a small ad in the computing press. I got a few orders, but nowhere near enough to pay for the ads. I thought I might need to build some buyer recognition – to show that my business wasn’t going away any time soon – so carried on advertising. The orders continued at a trickle, and I swiftly spent all my money on ads. The business had failed, quickly.
What went wrong? I’d figured out that I only needed to get a very small fraction of magazine readers to buy from me, so why couldn’t I get even that tiny slice? The lesson I learned was this: buyers don’t buy at random. There’s always a reason why they buy where they do, and I hadn’t created a compelling reason for them to buy from me instead of someone else.
Why Buyers Buy From Marketplaces
What’s all that got to do with selling online in the twenty-first century? Well, while technology has changed a great deal, buyer psychology has not. Buyers still need to be compelled to buy, and the marketplaces do a fantastic job of it.
eBay and Amazon are household names, but they haven’t been around all that long – it took a lot of effort and expense for them to get where they are. And they continue to work hard to bring potential buyers to their sites with advertising, search engine marketing, social media, affiliate programs, loyalty programs and much more.
Buyers buy from marketplaces because they know they exist, and there are many different routes that bring them to their sites.
When a buyer is browsing on a marketplace, they might see products from dozens, hundreds, or even thousands of different sellers. But the buyer doesn’t see it that way.
They just see it as buying “off eBay” or “from Amazon”. Do you often hear someone saying “I bought this off SellerXYZCo789 on eBay”? I doubt it. The particular seller they buy from is of little interest, as long as they satisfy a basic minimum standard in the buyer’s mind.
After all this talk of compelling reasons to buy, why don’t eBay and Amazon buyers care who they buy from? Don’t they need to be “compelled” any more? Actually, they need compelling reasons more than ever, but it’s not the individual sellers providing many of them – it’s the marketplaces themselves.
Buyers trust eBay and Amazon, even though they buy from third-party sellers, because:
- They trust the marketplace to assess sellers and throw out the bad ones.
- They trust the marketplace to put things right if they do go wrong.
And that’s exactly what the marketplaces do. The way marketplaces assess seller performance is sophisticated and comprehensive. If sellers don’t provide a good enough service, they drop down in the search results, have limits imposed, or get banned completely.
The marketplaces have strong buyer protection programs in the form of the eBay Money Back Guarantee and Amazon’s A-to-z Guarantee. When there’s a dispute between buyer and seller, these programs tend to give the benefit of the doubt to the buyer. That sometimes hurts the seller, but the buyer’s trust and goodwill is a big asset for the marketplaces. If it’s lost they might never get it back.
Buyers buy from marketplaces because they trust them, and that trust is well placed. The marketplaces have earned it and don’t take it for granted.
Buyer loyalty is where all the marketplaces’ advantages come together, powerfully.
Most of the time when I want to buy, I go to Amazon. Then I might try eBay. Or perhaps compare the two. Sometimes I’ll go to the website of one of the UK’s high-street retailers like Tesco or Argos. If all that fails, I’ll use Google, and I might arrive at an independent online store.
So finally I give the small online seller some attention! Actually, I’m only likely to have got this far because I was searching for the wrong thing at the larger sites. If I find the right product at an independent site, I’ll probably go back to Amazon and search for it there.
Am I an insanely loyal marketplace buyer to work so hard to avoid buying elsewhere? Is this rare? Unfortunately for the independent seller, it’s not. Even if you can get people to visit your online store, they often prefer to buy from another site they know and trust.
Why is that? Trust is probably the most important factor, but buyers who are loyal to the marketplaces also benefit from:
- Not needing to register with the site.
- The convenience and speed of saved address and payment details.
- A consistent experience – they don’t need to learn how the site works.
Now “loyalty” is a strong word, conjuring up images of unbreakable, irrational devotion. But marketplace loyalty is entirely rational. Buying from eBay and Amazon again and again only increases trust, convenience and usability. Most sellers can’t break that loyalty with their own web store.
Buyers buy from marketplaces because they’ve bought from them before, and it’s in their best interests to buy from them again.
What’s Theirs Is Yours
I’ve spent some time explaining why the big marketplaces have almost all of the advantages when it comes to selling online. Most small web stores don’t stand a chance. It’s unfair.
Or is it? Yes, the marketplaces have it good, but you can sell there. I can’t think of any other industry where the dominant companies willingly open their doors to every other business who can keep to their standards. If you sell on the marketplaces, all their advantages are your advantages.
- The marketplace seller doesn’t need to advertise, because the marketplaces do that for them.
- They don’t need to work so hard to get the buyer’s trust, because the buyer already trusts the marketplace.
- They don’t need to create an attractive and usable web store, because the buyer already knows how to buy on the marketplace – and likes doing it.
Marketplace sellers can concentrate on excelling in just those areas that they need to – product sourcing, fulfillment and customer service for example. Marketplace fees are for entry to the venue, marketing, and access to millions of buyers who come ready and willing to buy. Is there any other business where that’s possible?
When Web Stores Still Make Sense
A quick recap: most sellers with their own web store will struggle to create a compelling reason for buyers to buy from them, instead of marketplaces like eBay and Amazon. That’s most sellers, but not all of them.
What is so compelling that it can override buyers’ loyalty to marketplaces? There are several models that can, and do, work as independent web stores. But it’s not just a case of sourcing different product lines or writing a blog – these are completely different business models.
Under-served Product Categories
On eBay you can sell just about anything. There are some restrictions but most of those are items that would be immoral or illegal to sell anywhere. There are more restrictions on Amazon, even including categories like auto parts which actually require sellers to have their own web stores, or at least hosted product images.
The potential to sell products that just aren’t allowed on the marketplaces is very limited, but there are some categories which marketplaces don’t do well. One example is fresh flowers. Both eBay and Amazon do actually sell flowers, but it feels a little odd to buy them there.
Bunches is one online florist that I don’t expect to be strongly threatened by the marketplaces.
You can buy engraved or otherwise personalized products from the marketplaces, but they don’t fit cleanly into their shopping system. Amazon has even imposed limits on “novelty” items.
To buy personalized products on the marketplaces, buyers have to fill in a notes field or send an email after purchase. That can easily be forgotten or include mistakes, as there’s no automatic confirmation or preview of what the finished product will look like.
So personalized items are still a good fit for independent web stores. Trophy Store is one example of an online retailer in this area.
Your Own Unique Brand or Invention
Many marketplace sellers have unique products, either private label Chinese imports or combined “bundles” of other products. That may be enough to distinguish products from competitors on the marketplaces, but they aren’t really unique.
An online store can be successful selling genuine new brands. I think the best new brands target a niche of motivated enthusiasts – they’re not just another version of something that already exists. Good examples include Beardbrand and NatureBox.
Hobbies, Causes or Luxury Products
Some products just work best when sold on a dedicated site. These are the exceptions to the rule, that many buyers would actually expect to buy from an independent web store, and would feel out of place on a marketplace.
Here are some examples that I think fit that model:
- The Origami Paper Shop. For the origami enthusiast, the specialism of this site is appealing in its own right – it marks them out as someone “in the know”. It’s backed up by the impressive range of paper available.
- TOMS. This company sells shoes and eyewear on a buy-one, donate-one model: for every item sold, they give one away to a third-world charity. The message would be lost on a marketplace.
- The Travelwrap Company. These are expensive cashmere wraps that would be devalued if sold on the marketplaces. The independent site helps convey that they are exclusive products from a specialist supplier.
Selling on your own independent web store is not a simple extension of selling on marketplaces – it’s a completely different world.
It’s not just because you have to generate you own traffic, but also because buyers trust the marketplaces, enjoy buying from them, and will only go somewhere else if there’s a really compelling reason.
But the marketplaces offer many advantages over web stores, and the majority of sellers who sell commodity products should make the most of them.
Finally, successful online stores can still be built. But only by businesses with unique business models, or that sell under-served product categories, personalized products, their own brands or inventions, or appealing niche products.
I hope you’ve enjoyed this post and would love to hear your thoughts in the comments below!