Is it worth having an online store, or is it better to use a marketplace?

In this article, you will learn about the advantages and disadvantages of each of these models!
March 25, 2024 by

Many people start their entrepreneurial journey by setting up a physical store, conducting catalog or door-to-door sales. As they progress, questions arise such as, is it worth selling online? Others start directly with online sales, often using services like Mercado Livre, Elo7, among others. But you might be wondering which option is more worthwhile: setting up my own online store or joining marketplaces to sell my products. Both options have their advantages and disadvantages, and choosing the right path can significantly impact the success of your business. In this article, we'll show you the pros and cons of each, helping you make the right decision for you!

Option 1: Setting up your online store

Creating your online store offers complete control over your brand and customer experience. Let's delve into the advantages:

  • Brand identity: Your online store is a reflection of your brand. You can customize its design, layout, and overall appearance to match your vision, creating a memorable shopping experience for your customers.
  • Flexibility: With your online store, you have the freedom to sell any type of product without the limitations imposed by marketplaces. You can experiment with new ideas, target niche markets, and adjust your strategy as your business evolves.
  • Ownership of customer data: A significant advantage is that you own the customer data. You can build relationships with your customers, execute targeted marketing campaigns, and nurture long-term loyalty.
  • Profit margins: Managing your store allows you to keep a more substantial portion of your profits without having to share with anyone. You won't have to pay high marketplace fees or commissions, thus increasing your earnings.

However, there are also some challenges to consider:

  • Higher initial investment: Depending on where and how you set up your online store, its creation may require a higher initial investment for development, hosting, and website marketing compared to marketplaces. However, there are even free options for creating your virtual store.
  • Marketing and traffic: You will need to invest time and effort in marketing your store and driving traffic. Building brand recognition can be more challenging when starting from scratch.

There are many websites where you can set up your online store, and choosing one will depend on the characteristics of your business, available budget, and established goals. Here are the top 5 websites for setting up an online store, providing a comprehensive overview of the available options:

  1. Shopify:  Shopify is one of the most popular e-commerce platforms globally. It offers a user-friendly interface, allowing users to create and customize their online stores with ease. Shopify provides various templates and themes, as well as extensive app integrations for additional functionalities. It supports multiple payment gateways, has built-in SEO features, and offers robust analytics to track sales and customer behavior.
  2. Wix eCommerce: Wix eCommerce is an extension of the Wix website building platform. It enables users to create visually appealing online stores using drag-and-drop tools and customizable templates. Wix offers a range of e-commerce features, including product galleries, inventory management, and payment processing. It also provides marketing tools such as email campaigns and social media integration to help drive traffic and sales.
  3. BigCommerce: BigCommerce is a comprehensive e-commerce platform suitable for businesses of all sizes. It offers a wide range of features, including customizable storefronts, flexible product catalogs, and multi-channel selling capabilities. BigCommerce provides advanced marketing and SEO tools, as well as integrations with leading payment gateways and shipping carriers. It also offers enterprise-grade security and scalability for growing businesses.
  4. Squarespace: Squarespace is known for its elegant website designs, and it also offers e-commerce functionality. Squarespace's e-commerce platform allows users to create visually stunning online stores with minimal effort. It offers customizable templates, integrated blogging tools, and built-in SEO features. Squarespace supports various payment methods and provides analytics to track sales and website performance.
  5. Webflow: Webflow is a powerful website design and development platform that also supports e-commerce functionality. It allows users to design and customize their online stores visually using its intuitive drag-and-drop interface. Webflow offers responsive templates, advanced styling options, and seamless integrations with payment gateways. It provides robust hosting and security features, along with detailed analytics to monitor store performance.  

Option 2: Selling on Marketplaces

Joining established marketplaces like Amazon or eBay offers a different set of advantages:

  • Immediate audience: Marketplaces such as Amazon and eBay have a vast existing customer base. By listing your products on these popular platforms, you gain access to a large audience from the outset.
  • Trust and credibility: Customers often trust well-known platforms like Amazon and eBay due to their established reputation. Being associated with these reputable marketplaces can increase your credibility and encourage sales.
  • Lower initial investment: Joining a marketplace like Amazon or eBay typically requires a lower initial investment compared to setting up your own standalone e-commerce website.
  • Logistics and payments: Marketplaces like Amazon and eBay handle payment processing and logistics, saving time and effort for sellers. They often offer fulfillment services such as Amazon FBA (Fulfillment by Amazon) which can streamline order fulfillment and shipping processes.

However, there are some limitations to consider:

  • Competition: Marketplaces like Amazon and eBay are crowded, and you'll face competition from other sellers offering similar products, which can lead to price pressure.
  • Limited brand control: The appearance of your store and branding options may be limited on platforms like Amazon and eBay, making it challenging to stand out.
  • Fees and commissions: Marketplaces charge various fees and commissions per sale, reducing your profit margins.

The e-commerce market in the USA has experienced remarkable growth, and in this scenario, marketplaces have played a significant role, providing an attractive sales platform for both large corporations and small entrepreneurs. Check out the top 5 largest marketplace platforms in the USA, which have contributed significantly to the growth of the sector.

  • Amazon: The global e-commerce giant Amazon entered the Brazilian market in 2012 and quickly became one of the leading marketplace platforms in the country. The company has expanded its operations and currently offers a wide selection of products to Brazilian consumers. Amazon is known for its efficient logistics and high standard of customer service, attracting both buyers and sellers.
  • eBay: eBay is one of the oldest and most well-known online marketplaces in the world. It provides a platform for sellers to list a wide variety of products, ranging from electronics to fashion to home goods. eBay's auction-style format and Buy It Now options offer flexibility for both buyers and sellers, contributing to its popularity in the USA and beyond.
  • Walmart Marketplace: Walmart, one of the largest retail corporations in the USA, also operates a marketplace platform where third-party sellers can list their products. With its extensive network of physical stores and strong brand presence, Walmart Marketplace provides sellers with access to a large customer base and offers various fulfillment options, including in-store pickup and delivery.
  • Etsy: Etsy is a unique marketplace focused on handmade, vintage, and craft items. It provides a platform for independent artists and creators to sell their unique products directly to consumers. Etsy's community-driven approach and emphasis on creativity and authenticity make it a popular choice for buyers looking for one-of-a-kind items.
  • Google Shopping: Google Shopping is a platform that allows users to search for and compare products from various online retailers. It aggregates product listings from different sources, including both traditional retailers and online marketplaces. Google Shopping's integration with Google's search engine and advertising platforms makes it a valuable tool for sellers looking to reach a wide audience of potential customers.

In conclusion:

To conclude, both creating your online store and utilizing marketplaces have their own set of advantages and challenges. The best choice depends on your business goals, budget, and long-term vision.

If you value full control over your brand, product offerings, and customer data, setting up your online store may be the right option. On the other hand, if you seek immediate access to a vast audience, want to start with lower initial costs, and prefer the convenience of marketplace logistics, joining marketplaces may be the way to go.

Ultimately, carefully consider the unique needs of your business and weigh the pros and cons of each approach. Regardless of your decision, the key to success lies in offering quality products, exceptional customer service, and maintaining a commitment to adapt and grow in the dynamic world of e-commerce.

If your issue is lack of time or if you neither like nor want to understand technology but wish to increase your sales, attract more customers to your business, or reduce your costs, feel free to contact us, and we can help!

DevKonnect March 25, 2024
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