I been getting some questions lately about starting your own e-commerce site as suppose to Amazon. What is the big difference?
Selling on Amazon
Advantages:
- You can start selling immediately, because you can order a product from Alibaba or AliExpress, then throw it up on Amazon and potentially make your first sale on the same day.
- You can make A LOT of money quickly – Amazon basically gives you their traffic and their paying customers. If your product get to page 1 in a niche with high demand, you can easily make thousands of dollars in a day.
- You can scale your business in no time, because Amazon provides you their warehouse to store and ship your goods (If you enroll in their FBA program), you can sell tons of different products without hiring a single employee or rent any office/warehouse space.
Disadvantages:
- You can lose it all as fast as you gained it. Since you are selling on Amazon’s platform, you are at their mercy. If they decide that they no longer want you as a seller, for whatever reason, they can shut you down swiftly and there’s nothing you can do about it.
- Competition can destroy you overnight. Whenever a business becomes successful, there will always be someone out there to take away your success if you are not careful in protecting it. Amazon is no exception. Competition can be fierce in popular niches such as cellphone accessories or supplements. The success of your product depends entirely on its keywords ranking. When your rank drop, your sales will plummet with it.
- Not a place to build a Brand. I hate to break it to you, but if you want to build a recognized brand, Amazon is not the place to do that. Amazon shoppers only care about 3 things, the product itself (quality, material, features), the price, and the number of reviews before they decide on which item they will buy. Your brand name makes NO difference in their purchasing decision.
Selling on Your Own E-Commerce Store
Advantages:
- Build a real brand – The only way to build a real brand is to have your own store, where new and repeat customers come to buy your NAME BRAND of bags, jewelers, kitchen knives, etc.
- More Stable Financially – It may be harder to gain customers initially but it’s also harder to lose them. As long as you offer a quality product at a good price with exceptional customer service, you should be able to keep these loyal and repeat customers for a long time. As long as you do things right, you will not lose your business overnight. They are YOUR customers, not Amazon’s customers.
Disadvantages:
- Takes a longer time to get the same results as Amazon. You have to create your own traffic, and acquire new customers one at a time. It’s much harder to reach the same financial success as Amazon in the beginning.
- The learning curve is higher, especially if you are not tech savvy. Basic knowledge of website building, online marketing (Facebook, Google Ads, SEO, email list, etc.) and traffic generation is crucial if you want to get results quickly.
- More money required upfront. Depending on how you want to structure the business, you may have to rent warehouse space, hire staff, pay for traffic and leads to your site. There are ways to minimize these spendings if you know what you are doing. For example, use Amazon multi-channel fulfillment program to store/ship your products, or learn social media marketing yourself.
