You might have started selling online through a market place like Amazon, Etsy, eBay, Cqout or your local favorite like DaWanda in Germany, Marktplaats in The Netherlands or Allegro in Poland. Hopefully, your business is growing and if things go well you will soon need your own platform. Increasingly you will face the relatively high costs of the platform you use, but more important is the fact it doesn't allow you to grow and stand out from the crowd. It might be high time to have your own branded store to really engage with your customers. So, how do you know when it’s time to take the next step? I already planned writing about this topic for a longer time when I ran into a nice post by the experts of Entrepreneur.com that very well identifies six signs that you and your business are ready to "take the plunge" and begin selling on your own e-commerce platform.
1. You’re paying too much in fees
Without your own independent revenue stream it can literally feel like your platform provider is “eating you alive with fees”. The marketplaces make their money of fees, often around 15 percent, generated by each transaction. Of course this might be nothing but fair for the services they offer, but you have to be aware of it. There might come a moment that you know ways how to make better use of that money.
“When you’re starting out, fifteen percent may not seem like a huge number but once you start making significant sales in the five-figure range, you are forking over thousands of dollars to these platforms that can otherwise be moved under your own bank account,” explains Terry Lin, an e-commerce educator and founder of fashion accessory company Baller Leather.
“It may take a while to build up an online store and shift traffic there, but it is a long ball play that is better from a strategic business standpoint.”
Setting up your own webshop isn't for free, it will demand a serious investment in time and money. You know best whether in the long run this is a more strategic option for you.
2. You’re not diversified
To protect your business, you’ll need more than one stream of revenue. “If you have everything built on a single platform, you'll be boned if you get kicked off,” explains Brad DeGraw, author of e-book FBA-Hot List.
“The best way to have a resilient income is to own the business rather than hope you always fit in the business of other platforms.”
For many people, the moment to diversify is when their revenue reaches $10,000 per month, says Degraw.
Of course you don't have to wait that long. Other reasons might stimulate you to reconsider the single platform approach. And this isn't necessarily a hard route. Currently, several platforms make it simple to open your own online store(s) for low monthly rates. Having your own shop means a new sales channel that you fully control yourself and you are the one who owns the clients and their data.
3. Sales are flat
Depending on your product it is for sure possible to earn well just by being present on marketplaces. Nevertheless, experst like DeGraw also recommend creating your own platform once sales there begin to slow.
“Once you’ve found your plateau … it’s time to start another channel. As soon as we see that plateau off we’ll focus on other channels as well as our own site.”
Dave Huckabay, who sells scientific and industrial equipment, mostly to other businesses, agrees. “Once you have as much of that market as you're going to get, it’s time to go after that rest of the internet.”
4. Customers are asking for it
When (potential) customers will ask you where they can find your online store, you know it's high time if not already too late. Having your own site is a sign of brand maturity and tells customers that there is a serious business behind your product. Sending them to your page on a market place won't give the same professional and reliable image.
5. Your needs have become more sophisticated
When you start your online business you probably don't know the exact needs of your buyers. But at a certain moment you will feel you want to arrange things in another way than the marketplace allows you to do. You just know you need customized functionality to better present your products and improve the consumer experience. Most marketplaces handle cloth shops very well, but when you sell more complex products with a high level of customization, like curtains, blinds or motorcycle parts, you may need a more adjustable solution.
Besides, you will probably need integration with other systems, like a CRM, ERP or catalogue manager when you grow. For sure you will need a lot of statistics to follow the customer journey to find out what you can still approve and how to support your customer better. Such data are crucial for the success of your shop.
Your needs will dramatically increase once you start doing business with clients abroad. This might seem far away for your business today, but among our clients we see this is becoming a real challenge. At once your shop has to become multi-lingual, you need to handle multiple currencies and your logistic partners will increase.
6. You sell a specialty or luxury product
“There is a reason Louis Vuitton and other luxury brands avoid listing their products on Amazon and never provide discounts,” Lin says.
Such companies aim to keep up a sense of exclusivity and therefore won't officially present their products through a marketplace. This strategy is usually for low volume, high margin businesses in the jewelry, fashion and accessory industries where a great user experience is a must.
“It sets the image and emotional state for a consumer that Amazon or eBay never could.”
If you are selling wholesale, business-to-business or items in bulk, having your own webshop will also make your business seem more credible. Your clients will know where they can find you.
One size just doesn't fit all
When you are running a shop or you consider doing it, you just know that there are many product variations. There isn't one size that fits us all. This is applicable to marketplaces as well. For many businesses it will be the right place to start and probably you will remain being present there for ever. But at a certain moment you will just feel it's time to open your self owned shop. And isn't that basically just good news! Good luck with that challenge and feel free to contact me if you would like to share your challenge. Please feel invited to leave your questions and comments below.