“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.
Marketing
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.
Trust
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.
Loyalty
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.
Personalized Products
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.
In Closing
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!
Comments
I think that web stores don’t make sense for a lot of online retailers. However for retailers who are looking to grow beyond marketplaces sellers they are essential. eBay and Amazon are an enormous part of the ecommerce landscape, but they are only part of it. If a seller can develop a good website experience they can access sellers who are searching for products on platforms such as Google.
Being a marketplaces only seller also exposes the seller to the risk that they may be ejected from the marketplace and lose a significant proportion of their business. This is unlikely but possible. We have for example recently had our Amazon.it account suspended.
I agree it makes sense to diversify to protect your business, and there are some buyers that will go to Google first – but even then there’s a good chance they will end up back on a marketplace.
For those who do sell through their own stores, I think it’s important not to see it as just another channel. Marketplace sellers can do OK without having a particular niche or audience, but not so much on their own site.
To add on, there’s a massive fundamental aspect one must look at. When selling on the marketplaces of eBay and Amazon, it will be run along the lines of eBay’s and Amazon’s interests. Sometimes policy changes will not align with your own interests and you’ll be forced accomodate or lose your ability to sell.
If you’re a seller on Amazon, it is most wise to use the success in that marketplace to expand your business into other marketplaces and perhaps even major retailers. Tapping into a major retailers marketplace will not only provide you with a more specialized relationship with the marketplace owner but they’ll show interest in the sale of your merchandise since it has a bigger influence on them(unlike Amazon or eBay where it’s not always easy to speak with somebody with sway in the company to help make things easier for you and there is always a horde of sellers ready to take your place).
Even if you don’t think your own site can fit you while selling on Amazon, if you plan to expand, having a site at least with a core setup(say to serve as a database for product information and images) will come in handy because it’s highly likely you’ll evolve and expand to a point where it becomes more profitable to handle matters in-house than to rely on marketplaces.
I am so glad I read your article Andy. There is much pressure to have a web store with little thought of how to manage one – assuming you can get people to buy in the first place. I am a sole trader and haven’t the time to devote to two ‘shops’ or to co-ordinate stock between one and the other. I am now going to use my time to try and increase traffic to my eBay shop through email, and concentrate on doing one thing well instead of two things badly. I have bought a couple of Domains for possible future use, but I will wait until I have a unique selling point before I think about opening an independent shop.
Thanks Patricia! I think it’s always a good idea to do one thing well instead of two things badly – especially with online business people can get caught up with doing one different thing after another and never make the most of any of them.
Clearly there are risks for a business that only sells on eBay, it’s easy to see that. But I disagree with the inward-looking viewpoint I often see which says “I have to sell on my own site in case eBay bans me”. A much stronger business can be built if sellers find a way to genuinely say “I can serve my customers better by selling on my own site”.
Great article Andy.
We have a matching website for every eBay store and sell 8% more on the websites than eBay however… we buy a lot of traffic from Google, Bing and comparison shopping engines.
We do also spend a lot of time optimizing the sites and listings for SEO (search engine optimization) however over 90% of the converting traffic on the website comes from paid advertising.
I think many sellers feel eBay and Amazon fees are expensive and think having a website is a much cheaper method of getting sales however…. from our experience buying traffic is the only way to get a lot of traffic to a website.
Excellent points Neil. I look as the costs of the various marketplaces as customer acquisition expense. You are going to pay to acquire customers on the websites also. In fact, there fees provide a good estimate of what to budget when creating your own marketing plan.
I think there could be a lot of reasons for having an independent web store. However, I am going to stick with the most compelling reason, as well as the simplest to illustrate. The fact is, most people DO NOT shop on marketplaces. I did a quick search for 2012 numbers and a little quick math found the following:
2012 B to C revenue on the internet: ~ 1 TRILLION dollars worldwide
2012 Amazon Revenue: $61 Billion (~6.1%)
2012 eBay Marketplaces: $6.07 Billion (~0.61%)
2012 Rakuten (Play.com and Buy.com and more): $4.7 Billion (.047%)
2012 Alibaba: $157 Billion (15.7%)
This shows, even using rough numbers, that these major marketplaces are less than 25% (22.9%) of the total B to C revenue on the internet in 2012. Additionally, this number is probably very high since Amazon and Alibaba likely include lots of none B to C revenue (wholesale and cloud revenue) that I didn’t attempt to split out.
Those 75% are shopping other places, most likely specialty stores. I know personally that I shop on Amazon a lot, eBay some, but I buy a lot of other things from specialized retailers on the web for the depth of product they have. Most people are operating in the same way, as the numbers indicate.
Building and maintaining your website is not easy. As Neil pointed out, it is costly. However, taking the time to do it is a long term payoff. This is where the customers are.
I have my own webstore (3 in fact) but I still sell on ebay – I use ebay to get customers to come back and buy more from my webstores – I have a lot of repeat customers this way – who often come back and buy in bulk from my webstore. If a few years ago I sold mainly on ebay – now it is about 60% ebay and 40% my own stores – and the amount I sell on both has increased in total.
Great article and interesting discussion sparked….
Excellent article Andy.
Absolute rubbish. There are millions of buyers who do not trust ebay, and less so but increasingly so, amazon because of the high number of scammers on those sites. It is difficult to find anybody from those who buy regularly on ebay who has purchased something and not been ripped off, although now ebay and Paypal have cleaned up their act a little it is sellers rather than buyers who are ripped off the most, particularly from false claims.
You stated yourself, “I hadn’t created a compelling reason for them to buy from me instead of someone else.” – so there’s your answer. Just because you didn’t doesn’t mean that nobody else can. There are millions – yes, millions – of independent websites out there that are flourishing. I know of one set up just six months ago that is now making it’s owner a regular four-figure monthly profit, and it’s nothing special, nothing particularly unusual, it has just been done the right way. notably he has not spent one penny on marketing it, but has spent a lot of time and effort learning how to market it.
I am in the process of doing exactly the same thing and although I am targeting a very competitive niche I am already getting thousands of visits and sales are starting to come in. As I continue to build it this will improve over time. It’s not easy, it takes time but it can be done and is being done by millions around the world. I
Ask yourself one simple question, would the internet really exist if it only existed of ebay, amazon and a handful of major players?
Hi Mark, thanks for your comment.
I’m not saying that independent stores can’t be successful, I’m saying that many marketplace sellers have businesses that won’t translate well to having their own store. For example, those selling commodities (as many do) like household batteries. I think an independent store needs something a bit special in terms of product, content or service — all three if possible!
Personally I’ve had bad buying experiences on eBay and independent web stores (but not Amazon, as far as I can remember). When a purchase goes wrong on an independent store, your only option is to complain to your credit card provider – an unpleasant process in my experience. But when it goes wrong on eBay or Amazon, it’s easy to get it resolved.
If you look only at the trust element, it’s more rational to buy from marketplaces as they offer a buying guarantee. From many people I talk to, that alone is enough to scare them away from indie stores. Google Trusted Stores is interesting, as it is an attempt to do something similar for independent stores.
I don’t disagree with any of that but the general theme of the thread, that you are wasting your time if you want to take on ebay/amazon et al is rubbish. There are ways of building and promoting your website and climbing up the rankings, as well as building trust. I know because I have done it. I just think it is wrong for people to get the impression that it isn’t possible.
Frankly there isn’t much you can sell on ebay and amazon that you could not sell on your own site, and in fact you are not subject to the same restrictions as the big boys place on you. For example, there is a guy lives a few miles for me who has made millions selling electronic cigarettes which are banned on ebay.
Another positive aspect for sellers of setting up your own website is that you are not subject to the restrictions placed on you by the marketplaces, e.g how many photos you can upload, what size they have to be, terms and conditions of sale and so on.
The bad thing about the marketplaces is they are good for buyers but for sellers they are shocking at times. It’s fairly common knowledge that if you file a claim on ebay you will get your money back. This applies to scammers too. It is impossible to sell low value items and make a worthwhile profit unless you are selling large numbers because on such items those extra fees make a lot of difference.
But the other, unseen issue is the ludicrous amount of “Item not received” (INR) claims you get. It is far too easy for scammers to claim, often under the threat of leaving negative feedback. I have sold on ebay, amazon and my websites and simply do not get those claims from website sales. The number of claims you get on ebay is shocking, it was 4% of sales at one point earlier this year. Furthermore many sellers will tell you that as a fee-paying customer both sites are absolutely appalling at “looking after their customers”. These are all good reasons why sellers should consider operating their own websites and done correctly you can use ebay and amazon to drive customers to your sites.
e-commerce via your own website is alive and kicking I assure you. Affiliate marketing is another angle too. I am a member of a site which even shows you how to set up and market your own site though I’m not going to add an affiliate link obviously. As for Google’s latest plan I think it’s just another attempt to get their share of the pie that gives ebay and amazon a lot of their traffic. Like those two, all Google really want is your money.
The message I’m trying to put across is: don’t build your own store because you are fed up with marketplace selling, build your own store because it allows you to serve buyers better. Many sellers are inward-looking and only think about the benefits for them. Buyers won’t buy from you because it’s better for you, only because it’s better for them.
By the way, in the article I do mention the potential to sell products that the marketplaces don’t allow, and you gave the example of electronic cigarettes. That’s a great example and the right kind of place to look for opportunities, I think.
In my opinion eBay and Amazon are fantastic at “looking after their customers”. But their customers, first and foremost, are the buyers. Looking at it another way, the marketplaces are just buying specific retail services — sourcing, fulfillment etc — from sellers. It’s more fitting for sellers to see themselves as suppliers to the marketplaces, rather than customers.
Yes, Google want your money. As do you, me, eBay, Amazon and every other business owner. In the example of Google Trusted Stores, they’re trying to get our money by providing a potentially useful service to both buyers and retailers. I’m not saying it’s a great service or destined to succeed. In all probability it will fail. But, I think they’ve identified something that’s needed — a way for independent sellers to show buyers that they can be trusted.