When it comes to selling online, entrepreneurs often face a significant decision: should they sell on Amazon or create their own platform? Each option has its benefits and drawbacks, and the right choice depends on your business goals, resources, and priorities.

By understanding these key differences, you’ll be better equipped to choose the solution that aligns with your needs.

Selling on Amazon

Amazon is one of the world’s largest marketplaces, offering access to a vast audience of millions of customers. However, joining its ecosystem comes with trade-offs.

Pros of Selling on Amazon

1. Massive Customer Base:

With over 300 million active customer accounts, Amazon provides unparalleled visibility. Millions of people shop on Amazon daily, giving your products the potential to reach a global audience without significant marketing efforts.

2. Trust and Credibility:

Amazon is a well-established brand known for reliability. Selling on the platform allows you to leverage this trust. Customers are often more willing to buy from Amazon than from an unknown website, particularly when they can benefit from features like Amazon Prime.

3. Streamlined Processes:

Amazon simplifies the logistics of selling through its Fulfilled by Amazon (FBA) program. FBA handles storage, shipping, and customer service, freeing up time for sellers to focus on other areas of their business.

4. Established Infrastructure:

Amazon’s tools for listing products, tracking inventory, and managing orders are robust and user-friendly. Sellers can use these features without needing to invest in their own technology or systems.

5. Scalability Without Technical Overhead:

Small businesses and solo sellers can scale quickly on Amazon. You can add inventory and expand your product offerings without worrying about website capacity or technical maintenance.

Cons of Selling on Amazon

1. High Fees:

Amazon’s convenience comes at a cost. Sellers must pay referral fees ranging from 8% to 15% on each sale, in addition to other charges like fulfillment fees for FBA. These costs can quickly add up and eat into your profit margins.

2. Limited Control Over Branding:

Amazon dictates how product pages look, which limits your ability to differentiate your brand. Your business essentially becomes one of many sellers under Amazon's umbrella, making it harder to establish a distinct identity.

3. Intense Competition:

The marketplace is crowded, which means you’re constantly competing against other sellers offering the same or similar products. Amazon’s buy box algorithm favors competitive pricing, which can lead to a race to the bottom.

4. Data Ownership Restrictions:

When selling on Amazon, you have limited access to customer data. This restricts your ability to remarket, build relationships, or create tailored experiences for buyers. Essentially, Amazon owns the customer relationship, not you.

5. Risk of Policy Changes:

Sellers on Amazon are subject to the platform’s policies, terms, and algorithm updates. A sudden change can impact your visibility, sales, or even your ability to operate on the platform.

Creating Your Own E-Commerce Platform

Building your own e-commerce site offers independence, but it requires more effort and investment. Here's a breakdown of the advantages and challenges.

Pros of Creating Your Own Platform

1. Complete Control Over Branding:

When you operate your own website, you have total freedom to design it to align with your brand's identity. From the color scheme to product descriptions, every element of the user experience reflects your vision.

2. Ownership of Customer Relationships:

Your platform allows you to collect and analyze customer data, allowing you to build stronger relationships through tailored marketing, loyalty programs, and personalized touches. You keep all the insights and interactions that come with running your own platform.

3. Better Profit Margins:

Without platform fees and commission structures, you have more control over your pricing and costs. While you’ll still incur expenses for web hosting or digital tools, the savings compared to Amazon’s fees can be significant.

4. Flexibility and Scalability on Your Terms:

You’re not tied to third-party guidelines or algorithms. This autonomy gives you the ability to test new strategies, launch exclusive products, or pivot your business direction on your schedule.

5. Stronger Brand Identity:

When customers shop directly on your site, they associate the experience solely with your brand. This creates opportunities for loyalty and advocacy that selling on a crowded marketplace cannot replicate.

Cons of Creating Your Own Platform

1. Higher Initial Investment:

Developing a professional e-commerce website requires financial and time commitments. Beyond hiring designers and developers, you’ll need to consider ongoing costs like hosting, security, and maintenance.

2. Greater Responsibility:

Unlike Amazon, which handles inventory and fulfillment, you’ll have to manage these tasks yourself or invest in external solutions. This includes warehousing, shipping logistics, and customer inquiries, all of which require attention.

3. Building Traffic Takes Time:

Unlike Amazon, where an audience is already in place, you’ll need to draw customers to your site through marketing, search engine optimization (SEO), social media, and advertising. Building consistent traffic takes both effort and patience.

4. Potential for Technical Challenges:

Managing your own e-commerce website introduces technical risks, such as site outages, payment system errors, or cybersecurity threats. Without a solid infrastructure, these issues could disrupt your business.

5. Lower Initial Sales Volume:

When starting out, your website won’t have Amazon’s built-in credibility or traffic. It takes time and strategy to build trust and generate consistent sales.

Key Considerations When Deciding

To choose between Amazon and your own platform, consider these important factors:

  • Costs: Do you have the budget to build and maintain your own site, or would Amazon’s infrastructure save you money in the short term?
  • Control: How important is owning your branding, data, and customer relationships? Amazon offers convenience at the expense of independence.
  • Scalability: Are you ready to scale your business independently, or would Amazon’s systems provide an easier path to growth?
  • Audience: Does your target audience shop frequently on Amazon, or would they be more likely to support a branded e-commerce site?
  • Long-Term Vision: Is your goal to build a recognizable, standalone brand, or to generate revenue quickly and efficiently?

Finding the Right Balance

For some businesses, combining the two approaches might be ideal. You could start by selling on Amazon to gain exposure and generate initial sales. Once you’ve built a customer base, you can transition to your own platform while continuing to leverage Amazon as a secondary channel.

Another option is to use Amazon selectively, listing only specific products while keeping your flagship offerings exclusive to your website. This can maximize sales while still promoting brand loyalty.

By clearly identifying your priorities and weighing the trade-offs, you can make an informed decision that best supports your business growth in the long run. Whether you choose Amazon, your own platform, or a combination of both, the key is to align your choice with your unique goals and strategy.