Today you’re going to learn the three tiers of e-commerce that you can use to start and grow your business.
By ecommerce I mean a direct transaction between you and a customer. Making money form affiliate links or monetizing a youtube channel with ads and sponsors is a topic for another day.
Tier 1: The e-commerce marketplace
Etsy, eBay, Amazon and Swappa are all examples of e-commerce marketplaces where you don’t need your own website.
A marketplace gets traffic by virtue of its popularity. It’s then your job to get noticed within the marketplace.
Platforms make money from featured product fees and from transaction fees on your sales.
With the exception of Amazon, these platforms make it easy to get started. There’s no coding and no monthly cost, all you have to do is upload pictures of your product and write the descriptions, then ship the product when it sells.
Amazon has more requirements and rules to navigate than Etsy and Ebay; it’s a more challenging marketplace to get started with and operate in but it is the #1 ecommerce marketplace so definitely worth considering.
Swappa is a great example of a niche marketplace where sellers list used cell phones, tablets, and a few other personal electronic devices.
The main benefit of selling in a niche marketplace is visibility; it is much easier to get your products seen than with the big 4 marketplaces.
An e-commerce marketplace is a great way to learn how online business works.
- You’ll learn how to write concise, accurate, and hopefully compelling product descriptions.
- You’ll learn about inventory, shipping, return policies, payments, sales taxes, and business operations.
- And at the end of the year how business income and expenses work with your personal taxes.
Finally a marketplace is a low risk way to gauge interest in your product or service before stepping up to a more challenging e-commerce platform.
There are a couple of drawbacks to these marketplace platforms.
- It can be hard for customers to find your business by product search because there is usually a massive amount of competition selling items similar to yours.
- The platform owns the customer relationship. There is not much opportunity for your own branding to take root in the customers mind because they’re thinking “I’ll see if eBay or Etsy or Amazon has it” instead of “I’ll see if Jane’s Jewelry has it “.
- Finally, you’re subject to the rules and fees of the platform which can change at anytime.
As for the fees. The platform takes a percentage of the transaction on each sale, which can be as high as 5%. If you sell enough product you will reach a point where it makes financial sense to open your own website.
Tier 2: Website builder platforms
With the site builders you start your ecommerce journey with your own brand. It’s then up to you to get traffic to your site, learn from what site visitors are doing, and make adjustments to improve results.
Getting started with ecommerce this way is more involved than the marketplace approach because there are more options versus a marketplace.
Wix, Squarespace, and Weebly are popular site builder platforms. Another company, Leadpages is a hybrid site builder and lead generation platform that I’ll cover below.
Some pluses to site builders
- Your site features your branding and domain name if you have one.
- You can sell a service instead of just products.
- Starting with a website template makes it fairly easy to customize the look of your site – you don’t need any specialized knowledge or outside help to do it and there are plenty of nice looking templates from which to choose.
- Once your products or services are on your site, you can add ecommerce and other functionality with add-ons.
Leadpages takes a different approach. Their templates are designed specifically for lead generation. So instead of building a standalone website to which you add ecommerce, with Leadpages you are building a customer generation process that is front-ended with a web page that you customize.
Web hosting is almost always included in site builder services so you won’t have to deal with that.
There are some drawbacks to the site builder approach.
- You are confined to their way of doing things. For example site design methods, payment providers, available integrations, template capabilities.
- You must pay more per month to unlock extra features, sometimes noticeably more.
- If you decide to move off the platform, you can take your content but you can’t take your website. You will have to make a new website and add that saved content to it. You’ll also have to re-connect to any external services you were using like an email list provider or a payment provider.
- You are responsible for driving traffic to your website. SEO, social media, and pay-per-click ads are a few ways to do that.
Finally, site builders are DIY platforms. While they are fairly easy to learn, the time you spend tinkering with a website is time spent working in your business instead of one it.
Michael Gerber’s classic book the E-Myth Revisited teaches the concept of working ON your business versus working IN your business. If you have not read it, I highly recommend grabbing a copy.
Tier 3: The dedicated e-commerce engine
This last category features the two major e-commerce engines, which take separate paths to the final outcome, your online store.
Shopify and Woo Commerce are the two most widely used dedicated e-commerce engines.
The Shopify approach is similar to the template site builders I mentioned earlier. The difference is that you start with your products and create your online store around them versus starting with your website and adding products to it.
Woo commerce is free add-on (“plug-in” in WordPress lingo) for WordPress, which is the most widely used website software. WordPress is also free.
Shopify is easier to get started with if you’re starting from scratch because it includes hosting, which eliminates the extra step of setting up and managing a WordPress site as you must with Woo commerce.
A WordPress/Woo commerce store is the most flexible and cost effective e-commerce choice between the two.
Shopify is easier to get started with and includes hosting and maintenance, freeing you to focus on merchandising.
Use a marketplace if you just want a simple venue to sell or try to sell products without having to learn about websites and spend money upfront.
It’s an easy, low cost way to sell products if you are willing to spend the time or money required to be found amidst a lot of competition.
If you are committed to developing your own brand and are looking to get started quickly and fairly easily, then a template-based site builder is a good choice for a service business.
If you have many products to showcase and are building your brand then consider an e-commerce platform like Shopify or Woo commerce. They are more demanding in terms of time and resources but are built specifically to be an online store.
Do you have an online store? if so, tell us about your platform experience in the comments below.