12th March 2020
Lots of businesses and side hustles today exist solely on social media, generating leads and sales out of likes and shares. To capitalise on this the biggest social media sites are all developing better solutions to accommodate easier shopping, without having to leave. Instagram for example have gone big on their Instagram Shopping solution over the last 12 months, recently adding the ability to checkout directly on Instagram to the US market. We’re sure to see the big social media companies pushing this more and more in the future.
Along with this we have the world domination of Amazon, who year on year are taking over more of the eCommerce market by providing a service that smaller players can just not compete with. Depending on your product there’s also probably another 2 or 3 marketplaces that your business could be utilising.
This brings a lot of people to the question: why do we need our own online store or website?
To be successful, eCommerce business should be utilising every channel that’s appropriate to their brand - if you don’t then you’re leaving money on the table. Each business should have a completely unique, comprehensive eCommerce strategy - social media sales and marketplaces may well be a part of that strategy, but they should never be the long-term goal.
The first main reason businesses need their own eCommerce website is the long-term scalability of your business. This is especially relevant when comparing your own store to selling entirely on social media. Selling across social channels directly is a manual, labour intensive process. You’ll find a lot of time and effort is being spent liaising with customers and manually entering data into various systems. The more automated your systems can be at this stage, the more you can focus on growing your business. Going forward, as your business grows the amount of resources being spent on these manual processes only increases.
You’ll also be limited when it comes to acquiring new customers, as your only viable marketing channels will be organic and paid social. In general, the more customers you acquire, the more each one will cost, by limiting yourself to a very small number of channels these costs can quickly cause you to hit a ceiling. Were you to have your own online store built, the marketing opportunities are endless; this not only opens up digital marketing channels like SEO and paid search ads, it also gives you a place to send potential customers from offline channels.
Launching and investing in your own eCommerce website is a long-term business decision. It offers your business a security that you’d never get from relying on social media and marketplaces. If you and your employees are relying on your eCommerce business as your main source of income, then building your own sales platform is essential. It takes away a lot of the scary what if’s...What if your account is deleted? What if Amazon gives more prominence to paid ads?
With marketplaces specifically there’s also the massive risk of being undercut by your competitors, especially if you’re a reseller. It’s in Amazon’s interest to make it as easy as possible to compare products that are similar or the same and to highlight the cheapest option. This inevitably leads to a race to the bottom on branded products, if a competitor is on better terms with manufacturers than you are then you’re out of the race - no one’s going to buy the second cheapest option.
This the simplest reason to explain, the commission charged by marketplaces is much greater than anything you’d ever be charged on your own eCommerce website. Currently Amazon’s commission stands at between 10% and 12% depending on the category of your products. The highest possible commission on our favoured eCommerce platform Shopify is currently 2.2% plus 20p per sale.
When you also factor in the ‘race to the bottom’ that happens on marketplaces and the difficulty businesses have in establishing customer loyalty without their own site, it’s clear to see that marketplaces are a difficult place to make significant profits.
The most important reason to me that small businesses need a website is to have complete control of your brand, your messaging and the way your business is presented to your customers. An online store is your own platform with unlimited flexibility and it’s the perfect way to communicate your personality to potential customers. If you love your brand and you shout about it, you’ll stand out from the crowd.
Picking the right eCommerce agency to design and build your online shop will give you a platform that excites your customers and embodies your brand. You will never be able to effectively communicate your values and create a loyal customer base that’s passionate about your brand using marketplaces or social media shopping facilities alone.
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