Amazon or Shopify? Which is better for your business? Pt.2
Part 2: Direct Sales Channels
Oct 30, 2022
E-Commerce platforms are platforms that allow brands to launch their own independent online stores. They make it easy to develop the online store with a wide range of custom templates that can be used; enabling Entrepreneurs with no coding experience to set-up and launch their stores. Furthermore, brands can launch these websites under their own domain which avails several benefits such as:
· Brand Control: One of the main reasons sellers decide to sell directly is because it allows them to manage the narrative of the website. With your own website, you can design it as you see fit with your own brand guidelines and communication.
· Lead Generation: With your own domain set-up, you can create traffic from your different channels (Instagram, facebook, youtube, etc.) directly into your own website.
· Direct Sales: Last but not least, selling directly to consumers allows brands to retain their profit margins instead of paying it out to marketplaces.
That being said, e-commerce platforms do have their downsides:
· Increased Effort: They are often more difficult to set-up since they require creating a website, setting up a payment gateway, and investing heavily on marketing.
· Non-existent Operations Support: The likes of Shopify and WooCommerce will not provide you with a fulfillment center for your logistics requirements which means you have to work with third-party fulfillment centers. The third-party fulfillment center will be responsible for providing your consumers with an “Amazon-Prime”-like experience for your storefront.
With both solutions offering their own set of pros and cons, which one is best? Well, it depends on what the company is most interested in. Companies with commoditized products that are price-competitive and have little to no brand impact are better off selling through marketplaces. On the other hand, companies that are more interested in maintaining a brand presence and selling their products at a higher margin should invest more in direct sales through their own e-commerce platforms. Nonetheless, there is a third option, a hybrid model.
A hybrid model consists of selling through both, Amazon and your own website. However, this model requires more complexity from an operational perspective. Managing sales through multiple channels means managing an influx of orders that come from multiple channels. This can be difficult to communicate to your fulfillment center if they do not have a proper integration set-up. Furthermore, it requires you to maintain two different sets of inventory unless you are working with a fulfillment center that can centralize this information.
For that reason, whether you decide to sell through Shopify or both, Amazon and Shopify, selecting a fulfillment center to handle your storage, picking, packing and last-mile requirements is key. Your choice of fulfillment partner should be able to easily manage orders coming from multiple channels. This will help you streamline operations, reduce overhead costs and therefore increase your margins – all while providing a seamless online delivery journey for your customer.