Fulfilled By Amazon vs Running Your Own E-commerce Site

There are so many ways to run a business online that it is difficult to pick one. The wonderful thing about starting an online business is how much freedom it gives you to make money and live the lifestyle that really works for you. No commuting and far less risk are the other advantages.

Online store business backend

photo credit: Kampus Production / Pexels

There is a way in particular that offers the regular person a way to enjoy the benefits of running a business without needing to spend a fortune setting up a brick and mortar store. That is to sell your own products online.

You have a choice to make though. Should you send your products to Amazon and have them sell them and ship them for you via their FBA system or should you open your own ecommerce store and sell them yourself?

There are pros and cons to both so let’s compare the two so you can decide for yourself which is the better option.

Ecommerce sites require more attention

Try to imagine the difference between running your own store and just sending your products to a store to sell. When you send your products there is little you are responsible for. When you own your own store you have a lot on your plate besides just selling the product.

The same holds true for an e-commerce store. Everything that goes into running a website is now your responsibility. When you send stuff off to Amazon, they are in charge of all the technical aspects that go into it.

You’ll need to get familiar with the inner workings of a website so it can rank well on Google and also work well so people trust it. This means doing a lot of backend work on the technical aspects. Things like sorting out the meta robots directives so your site is properly indexed by Google are important to understand.

SEO is also something that is a make or break factor in how successful your site is that you will be responsible for. You won’t automatically have traffic coming to your site so you have to know how to generate it.

In essence, there is a lot more that goes into running a website that many people realize and it is all important.

Ecommerce business owner managing shipping

FBA is expensive

Having a mainly hands off approach to selling your products online comes at a cost. Amazon charges some high fees to give you the opportunity to use their traffic that comes in by the millions every day.

For instance, there is the basic fee that everybody would expect to pay called the fulfillment fee that is a charge per unit once it is sold. How much it costs depends on a lot of variables. The fees don’t end there, however. There are also long term storage fees that can add up when products sit for a while without selling. You’ll even pay for the monthly storage of the products that are in the warehouse while you wait for them to sell.

If you have to scrap a product and get rid of it then you will pay removal fees for that. Returns from the customer will also generate a fee.

In other words, it is a very tricky thing to balance charging the lowest price possible to compete with other third party sellers and still being able to make a profit due to the fees you have to pay.

Social media works for both

One way to generate more sales with either scenario is by using traffic generated by social media. You can set up accounts on the platforms that make the most sense according to where your market likes to hang out online and then direct them to your product pages.

The page is unimportant so it can be to your own ecommerce site or to Amazon’s listing for your product. If you leverage your social media correctly you can build up some brand awareness and end up generating sales in a sort of snowball effect. Even though Amazon has millions of people visiting the site every day you want to make sure that people are seeing your listing. When you have people buying it helps the page rise in the algorithm and can get you to the top of the results which leads to more sales.

Amazon fulfillment service - FBA

Start out with FBA

With just about any type of startup, it is advised to create an MVP to get started. This is the Minimum Viable Product. It’s sort of a prototype or test to see if there is enough interest and profit to make it worth it to go all in and create a company around the product.

You can do something of the sort to see if it is a good idea to make your own ecommerce site before you dedicate your resources to it in the beginning. Start out by using FBA and seeing how things work out there. If your product takes off and you are able to build some brand awareness around it, then this means that it is worth it to start your own site.

Alternatively, if you are having trouble getting the sales rolling, or there are a lot of returns coming in because people aren’t happy with the product then this is a sign that you should go back to the drawing board.

Let Amazon be your testing grounds to refine your product or idea until you can make it work. You should be able to break even with your product even if it goes badly and you aren’t seeing any signs of being successful.

Conclusion

There is no easy answer as there are pros and cons to either scenario. However, you can keep more of your money when you sell on your own site as opposed to Amazon. However, driving traffic to your store is not always easy.

If you try out the last suggestion and go with FBA first then you will gain a lot of insight as to how to proceed to make your product really successful.

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