In the modern digital economy, sellers have more options than ever when it comes to getting their products in front of customers. One of the biggest decisions a business must make is whether to sell products on a marketplace like Amazon, Etsy, or eBay, or to go off-marketplace by selling through their own website or physical location. Each option comes with its unique advantages and challenges.
The right choice depends on a variety of factors. Understanding these can help businesses choose the best route for profitability and growth. Let’s take a closer look at the key considerations when choosing between on-marketplace and off-marketplace sales.
1. Audience Reach and Visibility
Marketplaces offer immediate access to a large, ready-made audience. Platforms like Amazon and eBay have millions of visitors daily, increasing the likelihood that a customer will stumble upon your product. This can be particularly beneficial for new or lesser-known brands trying to gain exposure.
Off-marketplace solutions, such as Shopify or a custom website, require more effort in marketing to attract traffic. However, they provide full control over branding and customer experience, which can help build long-term customer loyalty.
2. Cost and Profit Margins
Selling on a marketplace comes with fees—these can include listing fees, transaction fees, and fulfillment fees. Amazon, for example, can take up to 15% or more of the sales price depending on the product category.
On the other hand, selling off-marketplace usually requires a larger upfront investment in website development, hosting, marketing, and payment processing. However, profit margins tend to be better since you’re not giving a significant portion to a third-party platform.
3. Branding and Customer Loyalty
On a marketplace, sellers compete directly with numerous other brands, and customers usually remain loyal to the marketplace rather than to the individual seller. This can make it difficult to build a distinct brand identity.
Conversely, selling off-marketplace allows for full control over brand presentation, customer communication, and follow-up marketing. You can implement features like loyalty programs, personalized recommendations, and email campaigns to strengthen relationships and drive repeat business.
4. Operational Complexity and Logistics
Marketplaces often offer tools or services to simplify logistics. Amazon’s FBA (Fulfilled by Amazon) program, for example, handles storage, shipping, and even customer service for sellers. This helps streamline the fulfillment process but can lock you into certain service agreements.
Off-marketplace selling often requires the business to manage logistics independently, including warehousing, shipping, and customer service. While this might require more effort, it provides more flexibility and control over operational processes.
5. Data Ownership and Analytics
When you sell through a marketplace, the platform controls the customer data. Access to useful analytics may be limited, and customer contact information is often unavailable, making it more difficult to create targeted marketing campaigns or analyze buying behaviors.
With an off-marketplace approach, you own the customer relationship and data. This allows for more advanced tracking and analytics abilities, leading to smarter decisions in pricing, inventory, and marketing strategies.
6. Compliance and Platform Policies
Online marketplaces have strict rules and standards that sellers must follow. Violating these—even unintentionally—can lead to account suspension or listing removal.
Off-marketplace selling frees businesses from these restrictions, giving them more control over their terms, returns, and policies. However, compliance with general e-commerce regulations and laws still applies and must be managed internally.
7. Speed to Market
Marketplaces offer a faster way to get products in front of customers. The setup process is often streamlined, and turnkey services are available to help sellers go live quickly.
Building a standalone e-commerce site can take more time and technical resources. That said, this investment may be worthwhile for businesses focused on long-term sustainability and brand equity.
Conclusion
Choosing between on-marketplace and off-marketplace sales is not a simple one-size-fits-all decision. It largely depends on your business goals, available resources, and long-term vision. Here’s a quick summary of when each might be most appropriate:
- Choose on-marketplace sales if: You’re launching a new product, want to reach a wide audience quickly, or prefer a simplified logistics process.
- Choose off-marketplace sales if: You prioritize brand control, better profit margins, long-term customer relationships, and data ownership.
In many cases, a hybrid strategy that combines both approaches can offer the best of both worlds—maximizing reach while building a lasting brand identity.
