The choice between marketplaces and your brand’s website needs careful analysis of costs versus benefits. Amazon dominates with 40% of U.S. ecommerce sales and attracts nearly 900 million monthly visitors. Yet marketplace fees eat up 15% per sale on average, which can substantially cut into your profits. Most brands’ marketplace revenue ranges from 0-50%. A balanced approach to multichannel selling becomes vital to grow sustainably.
Our deep dive into multichannel selling will help you decide when to use marketplaces versus your own website. You’ll learn to track real costs across channels and build a profitable strategy that expands your reach without sacrificing margins.
The Direct-to-Consumer (DTC) model isn’t the golden child it used to be. What once helped brands skip the middlemen and reach customers directly now shows serious limits in today’s retail world.
The DTC model that worked well at first now faces big hurdles. Social media ads cost way more than before, venture money has run dry, and shipping costs keep rising. Brands hit their growth limits faster than anyone predicted. Studies show a basic problem with going DTC-only—companies that switched completely to direct sales didn’t make more money, profit, or better margins.
One market expert puts it well: “DTC went from being almost the darling or hero of retail, to being a channel that had a lot of challenges and problems”. The numbers just don’t add up. Higher customer costs eat into profits while shipping and returns create a “Rubik’s Cube of diminishing profitability”.
Modern shoppers use many channels before they buy. They might find products on Instagram, look up prices on Amazon, check Google reviews, and buy from brand websites finally. Recent data shows mobile commerce makes up over 60% of global e-commerce sales.
Shopping habits changed a lot after the pandemic. A study of 3,074 people in 15 countries found that one in five bought groceries online for their first time during lockdowns. About 37% said they would keep shopping online afterward. Customers now want brands to sell wherever they like to shop.
Big brands tackle these challenges by mixing different approaches. Nike pulled back from its DTC push and renewed deals with Foot Locker, Macy’s, and DSW. Peloton started selling through Amazon and Dick’s Sporting Goods to reach more customers.
Running brands Hoka and On found success with balanced sales models that blend direct sales with strong store presence. Warby Parker’s co-founder summed it up: “It’s never been cheaper to start a business, although I think it’s never been harder to scale a business”.
Tomorrow’s successful brands will make wholesale a key part of their sales strategy, not just a side project.
The promise of marketplace access comes with a complex web of fees that can severely hurt your bottom line. Sellers need to understand these costs to create a working multichannel strategy.
Marketplace platforms charge different referral fees for product categories. Amazon imposes 8-15% on each sale, Walmart takes between 5-15%, and Etsy has a flat 6.5% transaction fee for all categories. Facebook Marketplace’s selling fee for shipped items rose to 10% (or minimum $0.80).
“Online marketplaces give companies access to a global audience of hundreds of millions of potential customers, so they’re naturally attractive… but sellers should know about the overhead costs,” says Tom Kiddle, UK general manager at WorldFirst.
Sellers face many hidden costs beyond referral fees. WorldFirst’s data shows a typical cost breakdown: goods (22%), returns and chargebacks (3.5%), ads (16%), staff and software (7%), marketplace fees (7-15%), plus variable fulfillment and storage costs.
Returns create major headaches for sellers. To name just one example, a Walmart seller paid $58.24 in fees for returning a $119.95 chair cushion—almost half the item’s value. Most marketplaces also charge $20 when customers dispute transactions.
These fees add up fast. Amazon now takes over 50% of sellers’ revenue, up from 40% five years ago, according to Marketplace Pulse. This includes transaction fees (8-15%), fulfillment costs (20-35%), and ad expenses (up to 15%).
“Sellers must understand all costs – both obvious and hidden – to avoid losing money on marketplaces,” explains Alex Avramenko from GoDaddy.
Success in multichannel selling depends on tracking variable costs at the SKU level. A clear view of unit economics helps calculate real profit margins across platforms and optimize pricing strategies.
Let me show you how to make your multichannel selling profitable through careful financial tracking and smart decision-making. Here’s everything you need to build an eco-friendly multichannel selling strategy.
Your multichannel profitability starts with a solid understanding of cost structure. Fixed costs stay the same whatever your sales volume—rent, insurance, and base salaries. Variable costs change based on production—labor, commissions, packaging, and raw materials. When you track these costs separately, you can find break-even points and make better pricing decisions. Your fixed costs per unit drop as production grows, which can lead to economies of scale.
Each platform comes with its own reporting formats and payout schedules, making multichannel accounting tricky. Modern accounting tools sync your sales data, fees, and taxes automatically across platforms. These tools help map income streams, settle bank deposits, and organize sales tax data. They ended up reducing manual work by up to 60%. Regular checks prevent revenue mistakes and catch missing transactions or duplicate entries.
Multichannel sellers can choose from three main pricing approaches. Omnichannel pricing keeps similar prices on all platforms, giving customers a unified shopping experience. Hybrid pricing maintains steady baseline pricing with strategic exceptions for specific channels or customers. Channel-specific pricing maximizes margins based on platform fees but might confuse customers who compare prices.
SKU-level profitability analysis shows exactly what you make from each product after expenses. Your calculations should include COGS, platform fees (like Amazon’s 8-15% referral fees), fulfillment costs, and advertising spend. Products making over 40% post-advertising gross profit deserve more investment. Take a closer look at products below 20%. This detailed analysis often reveals that just three SKUs can make half your total revenue.
Your brand’s website is a powerful tool that complements your marketplace presence in any multichannel selling strategy. You can create substantial competitive advantages in today’s complex e-commerce world by understanding how to use your own website effectively.
Your own website gives you complete control over your brand’s presentation, messaging, and customer experience. You can create a unique storefront that reflects your brand identity with endless customization options, unlike marketplace restrictions. Direct access to customer data helps you create customized marketing and build stronger relationships. The customer data platform market will grow from $2.4 billion in 2020 to $10.3 billion by 2025. This growth shows how crucial these platforms have become. Companies that focus on customer experience see their revenue soar by 80%.
The benefits come with challenges. Your website needs substantial marketing investment to attract visitors. Building trust and credibility takes time, unlike marketplaces that already have built-in traffic. Cart abandonment rates hover around 70%. Keeping bounce rates between 26-40% remains a big challenge. The technical setup adds complexity with domain purchases and security certificates, while marketplaces offer a ready-to-use solution.
Your website becomes the better choice when brand identity and customer relationships matter most. Products that need detailed explanation, customization, or emotional connection work better on your platform. You save on marketplace commissions, which can offset your marketing costs. Your website protects against unauthorized sellers, who make up 20-30% of marketplace sales. These sellers can lower product ratings and cause a 5-9% drop in sales for each lost star.
Successful e-commerce businesses adopt a hybrid approach. They use both channels to maximize reach while retaining control of their brand. Marketplaces help with customer acquisition and visibility, while your website builds lasting relationships and repeat purchases. This approach lets you benefit from marketplace traffic without depending entirely on their policies or algorithms. You can fine-tune your multichannel selling strategy by tracking performance across channels.
The e-commerce world needs a smart approach to selling on multiple channels. The real question isn’t about choosing between marketplaces or your own website – it’s about how both can work together to maximize profits. Marketplace platforms give you unmatched visibility and customer reach. Your own website lets you control your brand and collect valuable customer data without paying commission fees.
Making it in today’s competitive market means knowing the real costs of each channel. You need to track variable costs, use proper accounting tools, and look at SKU-level performance to grow sustainably. Many brands find that some products sell better on specific platforms, which helps them place items strategically.
A mix of both channels proves to be the smartest strategy. Marketplaces help you get new customers and visibility. Your website builds relationships and encourages repeat purchases. This balanced approach protects your profit margins while reaching more customers.
Customer shopping habits keep changing. People want to buy from brands wherever they prefer – Amazon, Instagram, or brand websites. This makes selling on multiple channels essential for growth.
Successful brands carefully monitor costs on all platforms. They understand their unit economics and stay flexible with their selling strategy. Without doubt, striking the right balance between marketplaces and your website builds strong foundations for e-commerce success. This creates lasting brand value and sustainable profits.
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