Finding a Formula for eCommerce Success – Why Selling over a Platform may not be Right for You

Most eCommerce start-ups at least consider using an eCommerce platform or marketplace to sell their products. Operating over a massive branded platform like Amazon and generating large volumes of website traffic might seem attractive. And depending on the nature of your business, there may be a wide range of benefits. But it could be difficult to stand out from the crowd.

Amazon’s search algorithms don’t work like Google’s. It has a different ranking system. It offers a lot of in-house and reseller products. It may therefore be difficult for you to really differentiate your product.

That is not likely to be a problem if you are selling commoditised goods because in these markets points of differentiation are typically around price, functionality and delivery. But if your product is more consumer-based, or targeted at specific needs or specific tastes, you may struggle to make your mark.  You could look to make the most of customer reviews and pay for a more prominent position but it may be much more difficult for you to make your mark using a large eCommerce platform.

The other aspect to bear in mind is that the costs of using such a platform can quickly ramp up. The charges may look low initially but once you ‘up your presence’ and start to depend on the platform for delivery and ranking etc., costs start to escalate. And the more you become dependent on sales made over the platform, the more difficult Is to grow your business without continuing to use it. If your product is similar to ones offered by the platform owner, you may find they develop online ads that compete directly against yours. And they are likely to have more firepower.

So, while for some eCommerce start-ups these kinds of platform may be the best route to market, there are alternatives. If your business has a unique selling point, it is easy for it to get lost in the noise of a large eCommerce platform. Building your own online store and selling through it can offer you greater flexibility. You can start to establish your brand’s very own digital property on the ever-expanding Internet. You can wrest back greater control over your margins by removing the middlemen and going directly to your customers.

Moving beyond this, you can begin to turn your online shop into something that truly represents your business in every way:  from your customer engagement to your product offering to your brand personality. That is not easy to do on an eCommerce platform or marketplace.  And by building your own shop you can further enhance customer engagement and experience by offering tailor-made product customisation and then communicating this clearly to your target markets.

In summary, then, selling through large platforms or marketplaces has its place in eCommerce – depending on the nature of the products you are selling and markets you are targeting. But for many businesses, a direct-to-consumer approach can be instrumental in delivering improved product differentiation, stronger margins, enhanced flexibility, and, ultimately, greater competitive edge.

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