Find out why online marketplaces can be slow poisons that gradually but surely suck away the life of your online business and how you can prevent it from happening.

Many businesses began their e-commerce journeys by first selling on online marketplaces, such as eBay and Amazon, or Lazada and Shopee for those in Southeast Asia, among others.

Online marketplaces are definitely great platforms to get your feet wet with e-commerce. They attract massive consumer traffic and can be quick test beds to see if your products sell or not.

Indeed, many people have created successful online businesses simply by selling on such marketplaces.

However, in the long run, focusing solely on online marketplaces can hurt your business and brand.

If you’re not careful, you can easily fall into a downward spiral that traps you in the marketplace environment where you’re hustling away to make more money for the marketplace operators and not yourself.

Here are 3 reasons why you should leave online marketplaces and start your own online store.

1. Build your own brand

When you sell on online marketplaces, you do get spillover benefits of the brand recognition that these sites have over the consumer audience at large.

Most online shoppers would know what Amazon, eBay, Lazada and Shopee are. You can be assured and even guaranteed of shopper traffic and eyeballs on the products you listed on these marketplaces.

With their seemingly infinite financial firepower, these marketplaces can advertise and attract many more customers than your own e-commerce shop can.

The problem is when someone buys whatever that you are selling from one of these marketplaces, who do you think they will remember buying from? You? Nope. They’ll say Lazada/Qoo10/Rakuten.

With limited ability on these online marketplaces to create your own content and build your own brand, it is extremely challenging to differentiate yourself from an ocean of similar sellers.

In fact, you’re continuing to build someone else’s brand when you sell within the online marketplaces. These platforms will just keep getting bigger and bigger, while your brand is just one of the many that contributes to their phenomenal successes, not yours.

And if one of these key players falters and cease operations, then you have to scramble for the next online marketplace to peddle and start the building process all over again.

Never hand over control of your business’ destiny to someone else.

2. Be in control of your marketing budget

Online marketplaces typically make money by either charging merchants a flat monthly subscription fee. Or a % commission per transaction, or both.

Additional fees apply for benefits and features such as premium listing and highlighted marketing blitz.

While these features are seemingly optional, you’ll soon find that for your products to compete effectively on these marketplaces against other sellers, you simply can’t afford not getting them.

Little by little these costs add up and you’ll eventually find that you may be losing money with each sale you make.

What a bummer to be working your ass off and has little to zero profitability to show for!

The worst part is, you most probably have to keep doing it to attract new eyeballs and consumer interest to your products in a vicious cycle that you cannot get out of.

This is similar to the “Groupon effect” where customer-merchant relationships are reduced to individual transactions with little to no impact on long-term loyalty and retention.

You are better off reallocating your funds instead to digital marketing campaigns – e.g. Google and social media marketing/advertising – that help you build a loyal customer base and following right from the start.

3. Your efforts should reward yourself, not others

Notice how all the marketing advice that you get from online marketplaces always centre around promotions?

Offers and special deals to attract consumers to buy more of your products. But never quite mention anything about building your brand?

This is simply because online marketplaces do not have any incentive to help you build your brand; they are only keen on raising your product sale volume.

That, in turn, contributes to their Gross Merchandise Volume, or GMV, the main performance indicator that drives their market valuations and therefore attractiveness to shareholders and investors.

To be fair, you do get a boost to sales in the short term.

However, all your efforts and resources in pushing those promotions only end up hurting your bottom line because you have been dropping off profit margins with constant price slashing discounts.

Consumers attracted by your offers are going to the marketplaces to buy, not your own site. Therefore, you end up serving the business objectives of the online marketplaces you’re on, not yours.

Why spend money and effort to make others look good but not yourself?

With an e-commerce site to call your own, you can be sure that everything you do and every single dollar you spend to market it, accumulates over time to serve your brand and your brand only.

Build your dream, not someone else’s.

Conclusion

There is no doubt that online marketplaces are great platforms to get a taste of the exciting world of e-commerce, especially when you’re just starting out.

Online marketplaces have certainly contributed greatly to the public’s eager adoption of online shopping, kickstarting many a successful business in the process.

However, as a business with serious and long-term brand building intent, you should look beyond immediate convenience and benefits.

Start building your own branded e-commerce website to take control of your business’ destiny; you’ll find the endgame to be much more rewarding.


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