Selling on a Marketplace vs. an eCommerce Store: Which Strategy Is Right for You?

When launching your eCommerce business, one of the first big decisions you’ll face is choosing where to sell your products. 

Should you sell on a marketplace like Amazon or create your own online store? Each option has advantages and challenges. 

In this article, we’ll explore the pros and cons of both options to help you determine which approach is best for your business.

What’s the Difference Between Marketplaces and eCommerce Sites?

At a high level, marketplaces like Amazon, eBay, or Etsy are platforms where multiple sellers list their products for sale. 

These platforms attract millions of shoppers, provide built-in infrastructure for payment processing, customer service, and shipping (in some cases like Amazon’s FBA), and handle much of the operational overhead. 

Sellers pay listing fees and commissions on each sale but benefit from instant access to a large, established audience.

On the other hand, an eCommerce site is your own online store, typically built using platforms like Shopify, WooCommerce, or Magento. 

With your own site, you have complete control over branding, customer experience, pricing, and data, but you’re also responsible for driving traffic through marketing, shipping, and handling customer service. 

Ultimately, having your own e-commerce site has higher initial costs but greater long-term flexibility.

Why You Should Start by Selling on Marketplaces

You might be wondering, what's the best option for beginners? Undoubtedly, starting on a marketplace like Amazon is often the wiser choice. 

The main reason? Traffic. 

Getting visitors to your website as a new entrepreneur can be challenging and expensive. However, Amazon holds a massive advantage in this area, drawing millions of shoppers daily.

Consider this: 9 out of 10 consumers check Amazon before purchasing, even if they initially discovered the product elsewhere. 

In 2024, Amazon accounted for 40.4% of total retail ecommerce sales in the U.S: 

Image source: Statista

It’s not just about getting one-time customers; Amazon’s repeat business is impressive. Almost 50% of consumers purchase on Amazon at least once a month​. With such high-intent traffic, no other platform can offer you access to as many potential buyers right from day one.

Most importantly for you as a new seller, over 60% of all Amazon sales come from independent sellers—many small to medium-sized businesses like yours. These sellers have thrived, with the average independent seller generating more than $250,000 in annual sales.​

Simply put, Amazon’s marketplace gives small businesses a powerful launchpad to grow their sales without the upfront investment and risk of managing their own website.

We’ve just given you a lot of stats, so to help you, let's use an example that breaks down the costs needed to sell products from your own site compared to Amazon. 

Example: Selling a Car Brake Rotor

Selling on Amazon can often be cheaper than managing your own e-commerce store, and here's why: broken down by numbers. 

Let's use the example of an automotive ecommerce store selling a car brake rotor on Amazon to illustrate these cost differences.

Startup and Maintenance Costs

Amazon

Amazon offers two types of seller subscriptions: 

1️⃣ Individual Seller Plan: $0.99 per sale.

2️⃣ Professional Seller Plan: $39.99/month.

In addition to seller fees, Amazon charges a “referral fee” to facilitate the sales relationship between buyer and seller. This fee is a percentage of the cost of every item sold. In the automotive category, this referral fee is 12%. 

Let’s break down the costs of selling a $50 car brake rotor on Amazon:

E-commerce store (Shopify) 

The cost of setting up and selling your products via Shopify depends on your chosen plan. You have three options: 

So, assuming you have a basic Shopify plan, here’s how much it would cost to sell a $50 item on Shopify:

📊 $50 × 2.9% + $0.30 = $1.75

Payment processing will cost $1.75 per sale. While this seems cheaper, don’t forget the $25/month for your Shopify plan. This cost also doesn’t include shipping and marketing, which we’ll discuss below.

Marketing costs

Amazon

Thanks to its massive built-in traffic, marketing isn’t crucial when starting on Amazon. However, you can invest in sponsored ads to scale your business. In 2024, Amazon ads' average cost-per-click (CPC) is $0.99.

Let’s break it down:

• Suppose you spend $100/month on ads for your product, which gets you approximately 100 clicks.
• With Amazon's average conversion rate of 9.96%, those 100 clicks would result in roughly ten sales.
• The cost per sale would be $100/10 = $10 in ad spend per sale.

E-commerce store

Unlike marketplaces with built-in traffic, your Shopify store requires a proactive approach to attract customers. This means investing in various marketing channels to drive visitors to your site.

Paid advertising

Platforms like Google Ads offer a powerful way to reach potential customers actively searching for products like yours. Let's illustrate the costs with an example:

• Monthly Google Ads budget: $500
• Average cost-per-click (CPC) for "brake rotor": $0.40
• Total clicks: 1,250 ($500 / $0.40)
• Conversion rate: 2% (industry average)
• Sales generated: 25 (1,250 clicks x 2% conversion rate)
• Cost per sale: $20 ($500 budget / 25 sales)

While paid advertising can deliver results, it demands ongoing investment to maintain visibility. The cost per sale can fluctuate significantly based on factors like your industry, competition, and the effectiveness of your campaigns.

SEO is also necessary 

Search Engine Optimization (SEO) is crucial for long-term, organic traffic growth. By optimizing your website and content for search engines, you can attract free, consistent traffic over time. However, SEO requires dedicated effort and resources.

• SEO agency: The cost of hiring an agency for professional SEO services can range from $3,000/month and upwards, depending on the scope of work.
• SEO tools: Specialized tools like SEMrush or Ahrefs provide valuable insights and data, costing between $100 and $300/month.
• Content creation: Producing high-quality, SEO-optimized content, such as blog posts and product descriptions, can cost $100 to $500 per piece if outsourced.

Don’t forget about social media! 

Building a presence on platforms like Instagram and Facebook also requires investment in paid ads or content creation. Social media ad costs can range from $200 to $1,000+/month, depending on your target audience and goals.

The Challenges of Competing as a Small eCommerce Business

Image source: FreePik

Now that we’ve broken down the costs, you can see that running your eCommerce store involves significant expenses and challenges, especially when driving traffic and managing logistics. 

Unless you're a large, established brand, the odds in the eCommerce space are increasingly stacked against small businesses. 

Current trends like shopper convenience, personalized experiences, and aggressive return policies are becoming the norm. While these features are great for attracting customers, they can be difficult and expensive to implement on your own. 

Marketplaces like Amazon, however, have the infrastructure to offer these at scale—making them a more feasible option for many small sellers.

For instance, handling returns can be a logistical nightmare, and personalized shopping experiences often require expensive tools and data analytics. 

On your own platform, managing these tasks without economies of scale can quickly eat into your profits, making it harder to compete with larger players. That’s where marketplaces offer significant advantages: 

Benefits of selling on marketplaces

✅ Easy and cost-effective setup: Marketplaces provide a ready-made platform, so you don’t have to worry about building and maintaining a website.

✅ Access to a large audience: Millions of shoppers visit these platforms daily, giving you immediate access to potential buyers without needing to drive traffic yourself.

✅ Built-in consumer trust: Buyers trust established platforms like Amazon, making converting visitors into sales easier.

✅ Low overhead for testing new products: Marketplaces are great for testing the viability of new products without needing a significant investment in website infrastructure or marketing.

Downsides of selling on marketplaces

❌ High fees: Marketplaces often take a significant cut of your sales through referral fees and fulfillment costs.

❌ Intense competition: You’re competing with countless other sellers offering similar products, making it harder to stand out.

❌ Account risk: Marketplaces can shut down your account or remove your listings without notice, leaving you with little recourse.

❌ Limited branding and customization: Marketplaces restrict how you present your brand, making creating a unique identity or customer experience harder.

Finding the Perfect Fit: Choosing the Right Marketplace for Your eCommerce Business

Hopefully, you're already leaning towards choosing a marketplace to kickstart your e-commerce store. But with so many options, how do you pick the right one?  

It's more than listing your products—it's about finding the platform that best aligns with your target audience and business goals.  

Each marketplace has its own unique strengths and weaknesses, catering to different types of sellers and shoppers. Let's explore some of the most popular options and see which one could be the right fit.

Amazon

Source: Amazon

Amazon is the go-to marketplace for a vast range of products, making it ideal for businesses selling mass-market goods. 

If you want to sell consumer electronics, home goods, apparel, beauty products, or automotive parts, Amazon’s massive reach and built-in trust can help you scale quickly. However, competition is fierce, so strong branding and competitive pricing are essential.

✅ Ideal for: Sellers looking for a high-traffic platform to handle competitive pricing and fees.

eBay

Source: eBay

eBay is known for auctions but also supports fixed-price listings, making it suitable for new and used products. 

This platform is particularly popular with sellers of collectables, antiques, refurbished items, and niche products. eBay's audience may be a perfect fit if your business deals with unique or hard-to-find items.

✅ Ideal for: Businesses specializing in second-hand, vintage, or specialty items.

Walmart Marketplace

Source: Walmart Marketplace

Walmart Marketplace is a growing competitor to Amazon, focusing on various everyday products at competitive prices. It's well-suited for sellers of household goods, electronics, groceries, and health and wellness products. 

Walmart’s trusted brand and massive physical presence can be a significant advantage for businesses in these categories.

✅ Ideal for: Sellers who want to reach Walmart’s customer base and are prepared to meet strict pricing and inventory requirements.

Etsy

Source: Etsy

Etsy is the marketplace for handmade, vintage, and artisan goods. This is the perfect platform if your business focuses on crafting unique, creative, or personalized items. Etsy shoppers often seek one-of-a-kind products, so small-scale artists, makers, and vintage sellers thrive here.

✅ Ideal for: Small businesses and individual creators offering unique, handcrafted products.

When Should You Create Your Own eCommerce Site?

While marketplaces offer ease and access to large audiences, some businesses are better suited for their own eCommerce site. 

For instance, if you sell restricted items (like firearms) or have a unique business model (like subscriptions), these often aren’t supported on marketplaces. Additionally, creating your own store can give you more control if you’re an existing business with an established order flow. 

Below, we’ll discuss the pros and cons of having your own store. 

Benefits of your own eCommerce site

✅ Full control: You decide how your website operates without restrictions imposed by marketplace rules.

✅ Branding: You have complete control over how your business is presented, including design and messaging.

✅ No account risks: No risk of your listings being removed or your account suspended due to marketplace rules.

✅ Direct customer access: You can collect customer data, build email lists, and retarget customers directly, leading to better marketing opportunities.

Cons of your own eCommerce site

❌ Higher setup and maintenance costs: You’ll have to pay for web development, hosting, and upkeep.

❌ Increased marketing costs: You'll need to drive traffic to your store through SEO, advertising, and social media marketing.

❌ Security responsibility: You’re responsible for maintaining the security of your website, including protecting customer data.

Sample use case: Handcrafted jewelry

Let's say you create beautiful, handcrafted jewelry. You're proud of your unique designs and the quality of your craftsmanship.

Do you envision your creations displayed among thousands of similar items on a massive marketplace or showcased in your own online boutique?

Here's a necklace listed on Etsy:

Source: Etsy

And here's a similar necklace presented on a personalized website:

Source: GLDN

Which presentation better reflects your products?

The Etsy listing might get your jewelry in front of a large audience quickly, but does it allow your pieces to shine?  

The eCommerce store, on the other hand, provides a canvas to tell your brand story, highlight the unique qualities of your jewelry, and create a more personalized shopping experience.

Consider these questions:

• What kind of image do you want to project?
• How important is brand storytelling to your business?
• Are you comfortable investing the time and resources to build and manage your own website?

There's no right or wrong answer. The best choice depends on your priorities, resources, and long-term goals.

Choosing the Right Shopping Cart/eCommerce Platform

Selecting the right platform is crucial for your online store’s success. Here’s a look at four popular options:

🛒 Shopify: Best for ease of use, Shopify offers an all-in-one solution with built-in hosting, security, and a range of themes. It is ideal for businesses looking for a plug-and-play option.

🛒 WooCommerce: Perfect for those already using WordPress, WooCommerce is flexible and highly customizable but requires some technical know-how.

🛒 BigCommerce: A scalable solution with built-in SEO tools and multi-channel integration. Great for growing businesses.

🛒 Subbly: Designed for subscription-based companies, Subbly offers tools tailored to recurring billing and subscription management.

Conclusion: Marketplace vs. eCommerce Store—Which Strategy Is Right for You?

Depending on your business needs, you can choose between selling on a marketplace or creating your own eCommerce store. 

Marketplaces offer access to large audiences with minimal setup but come with fees and limited control. On the other hand, running your own store gives you complete control over branding and customer data but requires more effort and cost.

Ready to streamline your marketplace operations? Spark Shipping automates everything from order syncing to tracking updates so you can focus on growing your business. Request a demo today!