Selling Online – Should you open your own store or sell on marketplaces?

Published by Browntape on iamwire.

In the e-commerce space, there are a very few products that are not sold online today. From grocery to sexual wellness, it’s all there in the online selling space with consumers getting to pick from a number of options. “Should you sell online?” seems to be a question of the past now. What’s more relevant now is, “Should you open your own store or sell on 3rd-party marketplaces?”

In our journey up till now at Browntape Technologies  we have come across several sellers facing the same dilemma, although the strategy for each seller could vary depending on the merchant’s needs, below are some points that remain same while taking the decision of where to sell.

Where do consumers shop?

The first step in online selling is of course deciding what you want to sell. Once you have zeroed in on the product or products, the real question needs an answer – Where do your target consumers shop?

We heard how the marketplaces did well during Diwali with some achieving never-seen-before sales. Is that only during festival times or do consumers generally prefer to shop on marketplaces?

Currently, all the major marketplaces are well positioned in the Indian consumers’ minds. Best deals on books and electronics are associated with Flipkart and Amazon, while Myntra is on top of consumers’ minds for clothes and accessories. Snapdeal is considered as a winner for discounted products.

One of the main reasons for consumers’ preference for marketplaces is the credibility and trust factor. Although online shopping is popular with the masses now, many are still skeptical about shopping from unknown sites.

Why you should consider selling through an online 3rd-party marketplace?

1. Consumers trust marketplaces

Consumers never say they bought something from seller A or seller B, they only say they bought it off Amazon or Flipkart. Sure, consumers are aware that they are actually dealing with a third-party when buying from an online marketplace, but they expect sellers and products to be verified by the marketplaces. They have the assurance that if something goes wrong, the marketplace will take the responsibility of sorting it for them.

Marketplaces in turn have worked towards getting consumers’ trust by providing return and refund policies, protecting against bad sellers, etc. Depending on the platform, there are different policies to keep track of sellers’ performance and products. They reserve the right to reject a seller at any point if found to be a fraud.

2. Loyalty from consumers

Online marketplaces have established themselves so well in consumers’ minds now that when they think of purchasing something, they first go to their preferred platform before checking on others. Even if they find what they are looking for in an independent e-store, they would probably still go back to their favourite marketplace and buy it from there only anyway.

3. Save on marketing costs

Online marketplaces are like online shopping malls where footfalls are already happening (in terms of online traffic). They are shelling out millions of dollars to market themselves, so you would not have to invest anything from your pocket for marketing your products. They try to stay on top of their game with constant tweaking to their SEO, social media, advertising, affiliations, loyalty programs and a lot more. So in some way or other, they will find their way into consumers’ minds and attract them. Moreover, they charge you only when you sell anything through them. It’s a win-win.

4. No hassles of setting up payment gateways

All marketplaces have their own payment gateways in place so wont have to worry about setting it up as you would have to in case of setting up your own store. All the sales that you make on the marketplaces, the payments for those are transferred directly into the seller’s bank account. Its always better to reconcile the payments though to make sure that all payments are made.

5. Logistics are taken care of

Most marketplaces have tie ups with multiple logistics companies like FedEx, DTDC, Bluedart, Aramex, Delhivery, etc to provide shipping services. When a seller signs up with them, they will already have the option to use the marketplace’s logistics partners. This is a big boon since setting up and managing individual tie ups with multiple shipping companies is very cumbersome and time consuming.

So all these sum up to the fact that online sellers just need to list and sell, and they don’t need to –

• win trust, as consumers already trust the marketplaces.

• encourage loyalty with additional programs or offers, as consumers already have their loyalties towards marketplaces.

• spend in marketing costs as marketplaces are already doing it to attract consumers to their platforms.

• setup payment gateways

• manage logistics and shipping companies

When should you consider setting up your own online store?

Selling on your own online store is not an extension of the same online selling process; it is a completely different ball game.

1. Unique Products – Your own brand

If you have a unique product that you want to develop as a brand, then an online store makes sense. Developing and building your own brand is not possible in an online marketplace beyond a certain extent. But you should take the leap only if you are ready to shell out the kind of investment that would be needed to actually achieve that level of brand recall in consumers’ minds.

So you have control over your brand and your content, as opposed to a marketplace where you have to stick to the marketplace regulations and formats to have them going up.

2. Your own customer base

This is probably the biggest advantage of having your own online store. When a consumer buys from you, you get all details and he becomes your customer. Now you can decide how you want to target him and attract him to come back to you for more, as opposed to a marketplace where you don’t have control over details of your customers.

3. Control promotions and deals

You can promote your products with whatever deal or offer you wish and push them to your target audience. Whereas, in a marketplace you are one among the many running the marketplace deal trying to get customers’ attention. When you have excess inventory, you can run a deal on your own store to clear and sell them; whereas in a marketplace you don’t have control over the timings of promotions.

Profit Margins

Initial set-up costs for your own store would work out higher than marketplaces. However, marketplaces work on a commission model, meaning a part of your sales figure would always have to be given back. Whereas, in your own store, once you have set up, everything that comes after that is yours.

Maybe you should ask these questions before deciding on your own online store or online marketplace –

• Do you have that kind of capital to invest in setting up your own store?

• Is your product/products that unique that customers will flock to your store ignoring all the major marketplaces?

• Will you get that kind of volume in sales to get your return on investment?

• Do you have the expertise and team to establish your brand and market to your target audience?

If your answer to all the above is no, maybe you should start selling or continue selling on marketplaces and work your way towards setting up your own store. Don’t forget to share your thoughts with us.