I’ve been getting a lot of questions lately about why you should start your own store from complete scratch when there are marketplaces out there like Amazon, Etsy and EBay that can offer you instant sales.
And it’s true. If you choose to sell a popular item on Ebay for example, chances are that you will be able to generate some quick revenue. And it’s also true that many people are making pretty decent money on platforms like Amazon and Etsy as well.
So with that being said, why the heck would you ever want to own your own store? Why bother trying to establish your own customer base when you can leverage someone else’s and make a profit?
The answer isn’t always obvious and it’s often very tempting to go straight for where the money is and make some short term profits. Heck, my wife and I sold on EBay before we started our online store, but here’s why we decided to start our own platform.
When you sell on Amazon, EBay and Etsy, you don’t own your business. They reserve the right to manage your shop listings however they want and you can’t access your customer list.
Now that’s not to say that you shouldn’t sell on these platforms but in the long run, you should not put all of your eggs in the hands of a platform you do not control.
Today, I’m going to highlight some of the trends that I’ve been seeing with Amazon, EBay and Etsy in terms of their account management practices.
In addition, I’ll compare and contrast the differences between selling on Amazon vs Ebay vs Etsy in terms of revenue potential vs time investment.
Selling On EBay
Back in 2015, EBay’s customer satisfaction index plummeted 4% while competitors like Amazon rose to the top of the list.
And ever since that report came out, EBay has been really trying to improve their image by throwing down the hammer on “bad” sellers.
Today, if you sell on EBay and you receive a small flurry of negative feedback in a short period of time, there’s a high probability that you could get banned.
For example on the Ecommerce Fuel forums, I read about a shop owner who recently had his account terminated. And while this user did not sell on EBay in volume, he was making consistent sales from month to month.
However last year, his business underwent an operations management change, shipped a few orders late, got some negative feedback and his business account was instantly suspended.
But here’s the kicker. This user then tried to use his own personal account that had been in good standing for over 15 years. But because his account was linked to his business account, his personal account got banned as well.
All of his sales on EBay instantly vanished. And he could not create a new account because of EBay’s multi-account detection mechanisms.
Sometimes bad feedback can result from circumstances beyond your control or due to a simple mistake. How would you feel about getting your account banned if USPS lost several of your packages?
Moral of the story: Because EBay is really cracking down on sellers, your entire EBay business could go down in flames if you slip up with even a small string of negative feedback.
Selling On Etsy
I routinely browse the Etsy forums and there are often complaints about people selling “mass produced” goods on the Etsy marketplace. (*Mass produced = You don’t own the design)
As a result, Etsy has been transitioning to a much more strict policy in regards to what is considered “handmade” which has led to a lot of “collateral” damage.
One Etsy user, who blogs at Handmadeology.com, wrote an article about how his account got banned completely out of the blue.
He did not break any of the rules. He depends on Etsy for a large part of his livelihood. And he was really taken aback when his account was suspended.
But here’s the thing. When your account gets suspended, it’s not that easy to contest and it can easily take weeks of lost business until you get your account properly reinstated.
There is no phone number to call and the only way to contact Etsy is through email.
Anyway, you can read his post in its entirety here but after a long session of back and forth emailing, he finally found out that Etsy was accusing him of “drop shipping” because his shop announcement stated, “Handmade in New Zealand, shipping out of Pittsburgh.”
While this seller eventually got his account reinstated, he shared this priceless quote on his blog.
I thought I owned my small business, but by having my only presence on Etsy, it turns out that I didn’t. Etsy owns the shops they host, and they reserve the right to manage them however they choose.
Moral of the story: When you put all of your eggs in Etsy’s basket, a simple misunderstanding could put you out of business.
Selling On Amazon
Every other week, I get at least one email from someone who has gotten his/her Amazon seller’s account suspended.
Now I can not confirm or verify the exact accounts of all of these cases, but I can tell you that it happens very often.
And unless these people are lying through their teeth (possible, but I like to give people the benefit of the doubt), Amazon is quick to the ban hammer if there’s any remote suspicion of bad activity whether they are valid or not.
It’s guilty until proven innocent.
Amazon is also notorious for preventing sellers from selling in certain categories in order to favor their own branded goods.
Here are some legitimate reasons for why a seller might get banned by Amazon according to their policies.
- Seller experiences a string of negative feedback (sometimes as few as 2-3 negative comments in a row)
- Seller opens more than one account under the same person’s name
- Seller’s name is associated somehow with another banned account whether it be from a friend or relative
- Seller is accused of selling counterfeit goods.
You don’t have to look very hard to find depressing tales of Amazon sellers getting banned. For example, this particular story on the Amazon forums caught my eye the other day.
I have what I feel is a fairly large seller account. We are always at 95% feedback rating or higher, we get maybe 3 A-Z claims per week, almost 2k feedback per week, metrics are awesome, our seller health rating is at 100%, our ODR is at .14. We generate revenue north of 1 million dollars per month on Amazon alone.
We ship approximately 5000 orders per week from our warehouse and even more via FBA. We have only started focusing on amazon 2.5 years ago and have grossed over 19 million dollars in revenue total selling on Amazon.
We have generated over 3 million dollars in fees for amazon. According to my seller central account, I have shipped 793,783 orders in a 2 year period and because of 1 or 2 lousy “complaints of selling counterfeit or fake items” my account gets suspended. (Seller claims goods were legit)
I am now on day 4 of waiting for my review to come back. I have offered up all the usual proof and numbers but it is still just a waiting game.
Today was pretty hard as I laid off 14 employees, never a easy thing to do. I have also begun to call my vendors and let them know payments will be coming much slower than usual. I owe over 500,000 in my payables right now.
A while back, one of my ecommerce colleagues got hit by an Amazon competitor who started leaving fake negative reviews on his products.
Based on his account, it was very obvious that these reviews were fake but Amazon refused to do anything about it.
As a result, one of his products is down about 30% and he has started focusing his efforts toward developing his own sales channel.
Sidenote: Did you know that there are companies in China where you can pay a small amount of money and they will leave negative or positive reviews on any listing you desire?
If you want to learn more about malicious activity on Amazon, read these posts
Bottom line, Amazon can and will ban your account at any time under their discretion.
And just like Ebay and Etsy, there will always be “collateral” damage associated with their crack down policies.
Moral of the story: Even if you are a very successful seller, a few unfortunate incidents can cut off your revenue stream in an instant. And getting your account reinstated is not a straightforward process.
Creating Your Own Sales Channel
Hopefully, my examples above have illustrated that when you sell on EBay, Etsy or Amazon, you do not truly own your business.
At a moments notice, you could have your account banned at any time even though you might be following all of the rules.
When you own your own business, you can not get banned. When you own your own business, you don’t have to fight for and beg to have your account reinstated.
When you own your own business, you get to decide when and how you sell your own goods.
Creating your own customer base sounds like the harder path to take and it often is. But it is the best way to ensure the long term viability of your business.
And who says you can’t own your own site and sell on all of these other platforms? You can and you should.
After all, Amazon, Ebay and Etsy are just marketplaces and you need to diversify.
Which Marketplace Should I Sell On? Amazon, EBay Or Etsy?
Whenever you add an additional channel to your ecommerce business, it’s going to require a lot of work. For example if you are new to ecommerce, you should NOT launch a website, sell on Amazon, Ebay and Etsy all at the same time!
Instead, you should pick and choose the appropriate sales channel depending on the nature of your business and your best return on investment for your time.
Below is my analysis of which marketplaces to focus your efforts on in addition to running your own website.
Everyone Should Consider Selling On Amazon
First off, I believe that everyone needs to be selling on Amazon. Not only is Amazon the largest ecommerce company on Earth but over 50% of all commerce related searches start on their platform.
If you are not selling on Amazon, you are missing out on a huge potential chunk of sales…period!
In fact, I recommend that everyone start selling on Amazon first before transitioning to their own website with one big caveat.
At some point, you must remember to build your brand.
I’ve seen the same pattern over and over again with my colleagues and some of the students in my class. Amazon is like a drug.
You start selling on there and the immediate monetary gratification is so intoxicating that…
You forget about the need to start your own website.
You forget that Amazon owns your business and makes all the rules.
You forget about establishing your brand.
And then disaster strikes and you’re stuck with a container load of inventory with no place to sell it.
Here’s a good strategy to follow if you are new to ecommerce
- Start Off By Selling On Amazon – Use Amazon to validate the demand and quality of your products
- Start Your Own Website – Once you’re making consistent sales on Amazon, start your own website and focus on building your brand.
- Build An Email List And Social Media Presence – Your customer list will be the lifeblood of your business and an insurance policy in case anything bad ever happens.
- Focus On Building Mindshare – By using a combination of email, push notifications, messenger, social media etc…, get in front of your customers over and over until your brand name becomes a fixture in their heads.
Here are some posts that I’ve written that will teach you everything you need to know about selling on Amazon based on my experiences.
When To Sell On Ebay
If your ecommerce business is tapped out on both Amazon and your own online store, then you may want to consider selling on Ebay.
As of 2016, Amazon is over 15 times larger than Ebay in terms of revenue and the gap is increasing at an alarming rate. As a result, you can’t expect anywhere close to the same sales on Ebay as Amazon.
While Ebay can provide you with some decent incremental revenue, it comes at a cost.
Whereas Amazon FBA will store your product, fulfill your orders and handle basic customer service, Ebay does NONE of these things.
As a result, you need to dedicate resources towards answering questions, picking and packing orders, handling returns and dealing with customer support issues.
While every ecommerce business eventually needs a customer support team, dealing with Ebay customers is especially difficult.
People who shop on Ebay tend to be huge bargain hunters and they are extremely frugal. They expect great deals and will drive your customer support team crazy trying to extract every last dollar from you.
As a result, you have to decide whether the incremental revenue is worth your sanity. My advice is to give selling on Ebay a try and if it ends up taking too many resources, hit the pause button.
Note: You can use Amazon to fulfill your Ebay orders but the package will be delivered in an Amazon box
When To Sell On Etsy
Etsy is by far the smallest marketplace of them all and is roughly 25 times smaller than Ebay. As a result, don’t expect too many sales from Etsy compared to the other platforms.
Etsy used to be the ultimate marketplace for handmade goods but Amazon’s handmade marketplace has been giving them a run for the money.
In addition, Etsy has changed dramatically in the past several years to remain competitive. While they used to frown upon mass production, they now embrace it with their own wholesale program.
Right now, Etsy is falling further behind giants like Amazon and they are struggling to remain relevant. And the fact that they are in this position means that the platform is in constant flux.
Of the 3 marketplaces, I would put the least amount of eggs in Etsy’s basket unless you are a casual hobbyist or craftsman.
Moral Of The Story
When it comes to selling online, it doesn’t matter where you get your sales as long as someone is buying your products.
But that being said, you should never depend on a single platform for all of your revenue, especially if it’s one that you do not own and have no control over.
As your ecommerce business evolves, you have to think about your growth in terms of revenue potential, risk and level of investment.
Right now, Amazon’s revenue potential is too large to ignore even though they call all the shots.
Right now, your website is too important to ignore as a way to get repeat business and establish your brand.
But outside of these two main channels, every other marketplace is incremental. Sure, there’s money to be made on Ebay and Etsy but you have to decide whether it’s worth your time and effort.