There is always a tug of war in the mind of an online seller: to sell on a popular marketplace or set up an independent store. Some sellers take a balanced approach of maintaining a presence in a marketplace while running their own store. As a businessperson, you have to think through the expenditure part to ensure maximization of your profits.
So what would be a cheaper option? There is no definite answer to this question. We will however try to work out a broad picture of online marketplace costs and online store costs.
Let us first take a look at the general pros and cons of selling on both.
An Online Store:
An Online Marketplace:
Of course you can guide shoppers to your site through your marketplace presence. Let us now try to get an idea about the expenditure for both media.
Cost factors involved in setting up an Online (seller) Marketplace account
Most leading ecommerce sites offer free sign up, and invariably free listing.
At Amazon,
- Sellers who opt for FBA have the corresponding costs,
- Shipping and gift wrapping charges,
- A referral fee starting at 3% (varies according to category),
- A fixed closing fee of Rs. 10,
An example of the costs for a mobile phone worth Rs. 5,000
At Flipkart,
- A commission (a variable percentage depending on the product sold),
- A shipping fee,
- A collection fee for the payment collected on behalf of the seller,
- A fixed fee on each transaction,
- A percentage of service tax on the above four (collectively called a marketplace fee)
The following table explains the collection format:
Cost factors involved in setting up an Online Store
To start your own store, you will need the following professionals:
- A website developer – to well, develop the site
- A user experience (UX) designer – to ensure that your site is navigable, clutter-free and user friendly
- A graphic designer
- A copywriter
- A photographer
- A legal expert – to guide you through the formalities. This will mostly be a one-time involvement.
Apart from that to get the business up and going, you will need:
- A trusted payment gateway
- Advertisements and presence in social media
- A reliable courier partner
- Customer service to man the complaints and queries
This post on websitebuilderexpert.com gives realistic advice when it tells you to start slow. It suggests that you list out your requirements and start with a simple design and basic features. If you have a limited budget, you can also create a plug and play store at Shopify. Their rates are explained in the table given below:
Shopify is one of the preferred choices of those who want to create their own website thanks to its reasonable rates and customization options.
The expenses incurred to set up a website surpass an average marketplace charges and costs. Having a presence in an ecommerce marketplace might be a good starting point. Begin investing carefully online and as your profits go up, you can create your own website. Retain a balance – your website helps you build your brand and make you stand out, while a marketplace helps you reach out to a wider audience.
Need more advice? Reach out to Browntape. We are India’s largest ecommerce solutions provider, and we can help you manage your online business.
