In today's digital world, businesses have two major options for selling their products online: listing them on big e-commerce platforms like Amazon, Flipkart, and Myntra, or creating their own retail app and selling directly to customers. Both approaches have their own benefits and challenges. Let’s take a closer look at the pros and cons of each option.
Selling on Big E-commerce Platforms :
- Massive Customer Base Large e-commerce platforms have millions of active buyers visiting their sites daily. This means you gain instant access to a ready-made audience without investing heavily in customer acquisition.
- High Brand Visibility These platforms invest in large-scale advertising, ensuring constant traffic to their website and product listings. Your products can reach customers who might never have found your brand otherwise.
- Trust and Credibility Buyers trust platforms like Amazon, Flipkart, and Myntra due to their strong reputation, return policies, and secure payment options. Selling on these platforms enhances customer confidence in your products.
- Logistics and Payment Support Many platforms offer end-to-end logistics support, including product storage, packaging, and last-mile delivery. They also handle secure payment processing and fraud detection, saving you the trouble of setting these up independently.
- Easy Setup and Quick Sales Registering as a seller and uploading your product catalog is relatively simple. Unlike developing an independent e-commerce solution, you can start selling within days.
- Access to Advertising Tools Most platforms provide paid promotions and sponsored listings that help boost product visibility and sales.
- High Commission Fees and Hidden Costs E-commerce platforms charge commission fees, typically ranging from 5% to 30%, depending on the category. Additionally, sellers may have to pay for advertising, warehousing, and premium visibility, further reducing profits.
- Limited Brand Control Since your store operates under the platform’s branding, customers often remember the marketplace, not your brand. Customization options for your storefront are minimal.
- Fierce Competition and Price Wars Your products are displayed alongside thousands of competitors. Price competition is intense, and in some cases, big platforms may even introduce private-label products to compete with you.
- Strict Policies and Customer-Centric Rules Platforms prioritize customer satisfaction, often at the expense of sellers. Refunds, returns, and customer complaints can lead to penalties, negative reviews, or account suspension.
- Risk of Account Suspension or Listing Removal A few bad reviews, policy violations, or disputes can lead to listing removal or even permanent account suspension, causing major revenue loss.
- Data Dependency The platform owns customer data, limiting your ability to directly communicate with customers or create targeted marketing strategies.
Example : Boat (boAt)
boAt, a popular Indian audio and accessories brand, initially focused on selling through platforms like Amazon, Flipkart, and Myntra. By leveraging the massive reach of these platforms, boAt quickly gained visibility, customer trust, and high sales volumes without having to invest in its own logistics and customer acquisition.
Having Your Own Retail App :
- Full Control Over Branding and Customer Experience Your retail app allows complete customization, enabling you to create a unique shopping experience with personalized design, branding, and customer interactions.
- Higher Profit Margins Since you’re not paying commissions to third-party platforms, you can retain the entire profit margin. You can also experiment with different pricing strategies without restrictions.
- Direct Customer Engagement and Loyalty Building Having your own app lets you collect customer data, engage them through push notifications, and offer personalized discounts or loyalty programs.
- Flexibility in Pricing and Offers Unlike big platforms that enforce pricing rules, your retail app allows you to decide product pricing, discounts, and offers independently.
- Less Competition and No Distractions Unlike e-commerce marketplaces where customers can compare your product with others, your app focuses only on your brand, improving conversions.
- Improved Marketing and Retargeting Opportunities You have access to customer data, enabling personalized marketing campaigns through email, SMS, and social media.
- High Initial Investment and Development Costs Developing a retail app involves significant costs, including app development, UI/UX design, hosting, security, and maintenance.
- Marketing and Customer Acquisition Challenges Driving traffic to your app requires investment in SEO, paid ads, influencer marketing, and social media promotions. Gaining customer trust without an established reputation can be difficult.
- Managing Logistics and Customer Support Unlike selling on marketplaces where logistics are handled by the platform, you must arrange product storage, shipping, tracking, and handling returns/refunds independently.
- Security and Technical Maintenance Regular updates, bug fixes, security enhancements, and payment gateway integrations require technical expertise, which can be costly.
- App Download Barrier Unlike web-based marketplaces, customers must download and install your app before shopping, which may limit impulsive purchases.
- Legal and Compliance Responsibilities Running an independent e-commerce app requires compliance with consumer protection laws, data security regulations, and taxation policies.
Example : Mamaearth ,
a well-known Indian skincare and wellness brand, developed its own mobile app and website to engage directly with customers. While its products are also available on e-commerce marketplaces, a significant portion of its sales comes from its app, where it offers personalized recommendations, loyalty programs, and exclusive discounts.
Which One Should You Choose?
Ideal for Businesses Who Should Develop Their Own Retail App:
Ideal for Businesses Who Should Sell on E-commerce Platforms:
Best Approach: A Hybrid Model :
Many businesses use a hybrid strategy—they start by selling on big e-commerce platforms to gain exposure and then launch their own retail app to retain customers and increase profits. This allows them to enjoy the best of both worlds while gradually reducing dependency on third-party platforms.
Example : Noise, an Indian brand specializing in smartwatches and wireless earbuds, effectively uses both marketplaces like Amazon and Flipkart to drive sales and gain visibility while also promoting its own website and app for direct customer engagement. Noise encourages buyers to shop on its own platform by offering exclusive discounts, early access to new launches, and loyalty rewards, reducing its dependency on third-party platforms over time.
By carefully evaluating these pros and cons, you can decide the best approach for your business and long-term growth strategy.