Is It More Profitable To Sell On Your Own Website, Or On Amazon?
Should you sell on Amazon or your own website?
People ask this all the time. There are pros and cons to selling on your own site. There are also pros and cons to shipping your product to a retailer (any retailer, not just Amazon.)
This article is my answer as well as the formula for working out whether you can sell on a different shopping portal. Oh, and I’ll also show you how working with different stores and funnelling them to your own will decrease your costs and increase your profit margin.
For the busy people who don’t like reading: Needless to say, you should do both.
Selling On Other People’s Portals
I don’t make any distinction between selling on Amazon, Ebay, Etsy or somewhere specialist like CodeCanyon for plugins or some royalty-free art portal.
All of these sites see you as the manufacturer/supplier and the storefront as your retailer. This isn’t anything new in terms of business; it’s the same model that high street shops have been using since the olden days.
There’s no reason not to sell on these platforms for the most part. At the very least, you should sell something and then maybe keep your better, more exclusive offers on your own site.
To work out whether it’s profitable, you just add the cost of getting your product to the fulfilment site (if that’s relevant) and the commission that the store takes to your overall cost to produce your product.
So let’s say you create a product that you sell for $100.
To get it manufactured and shipped to you is $55. Add shipping to your customers and when someone buys from your site, the cost of the product to sale is $60.
So you make $40 in profit.
Now, let’s say you can add your product to Amazon, and Amazon takes 10% as their cut. (These are made-up figures.)
You’ll make $30 per order.
Should you do it?
Probably, because it’s profitable and you’ll get more sales. Throw in a branded invoice though and maybe your customers will buy direct from you next time.
The only time you wouldn’t do this is if the costs of selling on another platform eat into your margins and make it unprofitable.
If you make a profit and someone else does the customer acquisition, handling, shipping and whatever… why wouldn’t you want to sell to them and let them do that?
Selling On Your Own Site
You should sell stuff on your own site for the opposite reason as above.
You’ll have more responsibility and you’ll have to handle the customer service and the like, but you’ll make more money. Also, the big corporations aren’t your friend.
I’ve known plenty of people who sell exclusively on Amazon who’ve gotten shut down. Their income went from lots to nothing overnight. Now arguably they probably didn’t stick to the rules, but pointing fingers as far as fault is concerned doesn’t magic your income back.
When you have your own store and website, you are hedging against that risk. If you sell solely on Ebay and Ebay hike their fees to make you unprofitable, then you have to shut down or reconfigure your business at the worst time.
If you sell on Ebay and your own website, then if Ebay hike their fees you can shut that channel down and retain your customers. This is the real reason why branding is important. You want people to find you via Ebay but become repeat customers on your own site.
This way, the mega-corporations are doing the hard work and bearing the costs of customer acquisition while you get the recurring income. Obviously, most people aren’t thinking like this because they’d rather think Amazon see you as a partner (HAHA!) and that doing the hard work is too much like… well, hard work.
Multiple Sources Of Income
I wrote recently about a misconception that people have with multiple streams of income.
Most people hear the phrase “multiple streams of income” and think, “Right, better make a hundred different products in a hundred different markets. That’ll cover everything!”
In reality, you want to put the same product into as many different places as possible. It’s less work, less effort and more money.
Now, when it comes to products – be they books, toasters or luxury trips to Macau – follow the formula I’ve highlighted above. If it’s profitable, sell it there.
Have your own site. Sell on Amazon (or wherever.) Reach out to retailers in your niche and see what their terms are.
Selling one hundred products on one site is a massive undertaking and it’s a risk.
Selling one hundred products on a hundred different portals is less risky and less difficult.
As long as it’s profitable, why not?
Also, remember the rule that states that a new customer is the most expensive customer. The more portals you sell on, the more customers you’ll reach, and having other companies sharing your acquisition costs increases your bottom line.
Just make sure to point them all back to you.