Are you building your house on borrowed land? If you sell on Amazon, Etsy, Ebay or other third-party marketplaces, you could be.
There are certainly pros to selling on these sites. And I actually like to move old stock and one-off pieces on these third-party marketplaces.
But, before you put all your eggs in that basket, there are a few elements to consider.
Do you want to build a brand, or just sell products?
Do you want to be customer centric and build a loyal following, or are you happy to be a commodity?
I love what Paul Munford — CEO of Lean Luxe — has to say:
“If you give up control of customer experience and that direct relationship with the customer, then what do you really have?
Frankly, if I’m a brand on this path, I’m not even remotely worried about being on Amazon. It commodifies the brand. Nor am I really even looking to stock my stuff in non-Amazon third-party marketplaces either, because again that creates just another barrier between me and my customer.”
If you want to build a brand which has loyalty and longevity we recommend a self-hosted platform like Shopify.
How important is customer retention?
We know that getting an existing customer to repeat purchase is easier and cheaper than finding a new customer. Did you know that it can cost 5x more to acquire new customers than to keep current ones?
On average, loyal customers are worth up to 10x as much as their first purchase. That’s why I like to aim for a minimum of 20-30% repeat purchase rate.
When we sell on our own website we have the ability to track and measure the entire purchase journey. We own the customer info, the pixel, the data. We can have an elegant communication strategy to encourage repeat purchase which includes retargeting and segmented automated communication sequences.
You don’t get this opportunity on many third-party platforms, however you do with a self-hosted platform such as Shopify.
How important is data to you?
Data shows us the truth. It shows us the true state of our online store, without any emotion, reasoning or bias.
Everything in eCommerce and digital marketing is literally just numbers. You can track and measure everything. There has never been a better time to have an online store. We have complete transparency over the customer experience, what’s working and what’s not working – and we have the agility to change it, literally overnight.
However, so much data is lost to you when you play on a third-party selling platform. I say the data is lost to you, because they still have the data. And they use this data cleverly too. Self-hosted platforms such as WordPress and Shopify allow full transparency of data.
Their platform, their control
Third-party marketplaces control the content on the site and they have every right to place whatever advertising they want on their platform. Including their own private label brands which are cheaper than your brand, underneath your brand! Thanks to John Max for sharing this:
If a shopper is on Amazon and a cheaper brand is featured directly underneath yours, is your brand strong enough to compete with that?
Another thing third-party marketplaces have control over is which shops they allow to operate.
I have a friend who had built a store on eBay turning over 6 figures a month. eBay shut them down overnight with little explanation and wasn’t interested in discussing the matter further. Their business was taken away from them literally overnight and there was nothing they could do about it.
So, before going all in with Amazon, eBay, Etsy or any other platform, look at your long term goals as a business.
If you want to create a brand and business asset you control, we recommend going with a self-hosted eCommerce website platform. Shopify is the platform that we use and recommend.
We recently did a live training on this is our free group Unstoppable eCommerce Entrepreneurs. We invite you to join the group and watch the training now. See you on the inside!