Running your business strictly on third-party platforms (Amazon, Etsy, etc.) is not the best move for your business in the long-term. Listen, first off, I’ll say this, I understand we all don’t have the capital to spend $50,000 on a business website that rivals an eBay or the websites of companies such as Express and H&M. But a professional, custom website for your business should be a long-term goal and can be very affordable. Also, you will have a major advantage because even in 2020, only about 50% of small businesses have a website, so you will have a great advantage over many competitors.
In my experience as a business owner, information is your best consultant and there are some drawbacks for small business owners to strictly using platforms such as Amazon and Facebook that most users don’t realize until they are 100% reliant on these companies. Remember, one major advantage as a small business compared to the large corporations is that when you get the right information and resources you can use it and adapt quickly to start succeeding swiftly. So, without further ado here is the information:
Drawbacks of Amazon:
Amazon is a tech company that focuses mainly on e-commerce, digital streaming, cloud computing, and AI. You might want to sell your products or services on Amazon apparently because of the massive customer reach it has. But how long do you think you will sustain in the business if you focus on short term gratification?
Amazon may provide you with decent sales in the beginning but if you want to stay in business for years and create your audience, then having your website is the way to go. After all, Amazon is just a ‘rented platform’, and your website gets owned by you.
Here are some of the substantial drawbacks of Amazon as a selling platform.
1 – You have no access to customer’s data
The most significant disadvantage of selling of Amazon is that you will never get access to the data of your customers. You will never know who bought your products, their contact information, and most importantly, their shopping patterns. When you are missing out on all such crucial data, consequently, you are also missing out on significant revenue opportunities. IN contrast, if you want to generate immediate sales for your online store, then you can send emails to your list and see your sales go up. But sadly, neither Amazon provides you with customer’s data, nor do the customers will ever know about your brand. Even worse, Amazon uses data from your store’s visitors to show them your competitors. This negatively can impact your sales without you even knowing.
2 – Zero product flexibility
You may find it easy to set up on rented platforms like Amazon and sell your goods, but here comes the twist; you will lose control and flexibility over your products. If you have opted for FBA or fulfillment by Amazon program, then they will have control over which warehouse contains your inventory. Often, Amazon will move your products from one warehouse to another, that too, without your permission. The worst part is, while the product is in transit, it will be unviable for selling. Thus, your product will suddenly go out of stock even before you realize it. Tough if you are running a promotion or ad to sale product swiftly.
Also, if your business offers personalized and customized goods to customers, then selling on Amazon will compromise on the personalization. If you want to sell on Amazon, then your product has to go through fixed procedures and fields; otherwise, it won’t get accepted by Amazon’s warehouse. Since Amazon’s listings are uniform, your brand’s online presence will be null. But, if you have your website, then you can sell personalized products, add various elements to your listing to boost sales, and even add photos/videos in product descriptions.
3 – Hard to build brand recognition
People think that Amazon is the primary seller and not the outside businesses or regular people selling products on Amazon. That is the biggest misconception out there, and hence, people will rarely know that it was your brand or business from where they bought the product. The reality is, Amazon comprises of individual sellers selling under the branding of Amazon itself. It gives you truly little brand recognition. Not to mention, Amazon receives 80% of the credit and praise for your sales. Also, customers don’t even care to find the business owner as long as they can spot the product on Amazon that they want. So, you will never be able to build your brand and online presence if you choose to sell on Amazon. The product may get a lot of praise, not the store. When there are negative reviews, those toward your store and product, not Amazon. So you as the business owner are getting the negative end of this deal.
4 – Unnecessary fees
Whether you own a professional account, or you go for FBA, you will end up paying a lot of unnecessary fees. When you choose FBA, you will not only have to pay for storage but for fulfillment fees as well. And it becomes challenging for any business to earn profits through selling on Amazon after paying for various fees. It hampers your ability to sell items at low-costs. Also, owing to the easy return process, you may also face more returns for your products. Even worse, Amazon may also charge you for the return shipping of your products.
Whether you choose to sell under vendor central or seller central, you are bound to face some harsh disadvantages. It includes no pricing control for your products, strict logistical requirements often leading to chargebacks. You will have no control over the inventory; it means you won’t know the number of products available, what you should order and what’s not selling, etc. Therefore, having your website is the best way to have control over the pricing and inventory.
Drawbacks of Facebook:
Facebook is a social media conglomerate with millions of users across the world. It does offer a massive marketplace for businesses to sell and promote their products, but is it effective in promoting your business on Facebook? Well, the answer might hurt you, but you cannot expect to build a massive online presence and brand recognition strictly using Facebook. To maximize your Facebook marketing, you will need your website to get the most bang for your buck.
The following are some of the drawbacks of strictly using Facebook for your business needs.
1 – Costly advertising
Facebook indeed has an enormous audience, but it doesn’t imply that they are the right audience for your business. It would help if you also considered that in recent years many young people have stopped using Facebook. The studies also state that Gen Z is likely to kill Facebook. So, the large numbers of the audience that may seem attractive right now might not even exist in the next few years.
Also, the advertising takes place using bid mechanisms. It means, even though advertising on Facebook may seem affordable, the chances are your ads can get outbid. And that’s why; your ads will run a few times in a month, which further reduces or nullifies the count of people who will see the ad. You need to watch the ad campaign and understand how to tweak it when the right customers are taking action. Also, never boost your post because it has too many limitations and you spend way more money than you will get as a result of the ad.
2 – No control over the spam
Facebook content demands significant maintenance; it can be interacting with users, deleting spam, etc. You have no control over the people who unnecessarily post negative and offensive comments over your posts. It will further deter your current audience from following your brand. Users can also attack your business page with a lot of spam, and then your business can come across as unprofessional and unreliable.
Your competitors, angry customers, or unhappy employees can easily like your page and comment on your wall. Also, once you start growing your presence, then you are likely to receive a significant amount of spam links and posts. Your competitors may also want to benefit from your popularity by taking a piggyback ride on your own. And sadly, you have no control over managing your business reputation.
3 – No control over services and changes in the algorithm
4 – Hard for businesses, not business owners
People sign up on Facebook to connect with their friends and family. The chances are people would want to subscribe to groups that affect their social life and not pay attention to business groups. You must also note that groups give you limited control unlike the blog or membership on your website; you will not even know whether or not you’re reaching your targeted demographic due to many users on Facebook joining groups but not engaging. Facebook values its users more than businesses organically growing, and they can also turn off updates from your business, they have done this before, so you won’t know who is viewing your content. If you’re into B2B, then you are expecting to grow your business organically in a very tough place.
5 – Time-consuming
If you want to successfully incorporate Facebook in your digital campaign, then you have to invest a substantial amount of time. Using Facebook for your business can be very successful, but it takes time, you will need to constantly watch out for negative comments, and promptly reply to any questions or suggestions. The fact is that you will spend 6x more working hours on social media than you will on your own website to convert leads into paying customers. Facebook runs 24/7, and posts can accumulate quickly, and you may even need to hire a team for social media duties, which becomes utterly unreasonable for any business. You also need to fulfill your customer engagement needs, content marketing, and at the same time keeping up with ever-updating Facebook policies. All such factors make Facebook for business unreliable.
Drawbacks of Pinterest
Pinterest is a visual discovery social media platform, with around 150 million monthly users and operates as a photo-sharing website. I personally love Pinterest, but I would never suggest using Pinterest over building a website for their brand, in fact, Pinterest is truly valuable when you have a website to connect with it. When you add Pinterest to your marketing plan, make sure that you are aware of a few shortcomings that may impact your marketing outcomes.
1 – Monetization is an issue
In 2015, the platform had stopped affiliate earnings through redirects, links, and trackers. As a result, influencers and bloggers who earned a commission through clicks on their accounts would no longer be eligible for these earning. The platform wants people to target other avenues for earning from it. They comprise of labor-intensive or expensive methods like paid ads, be paid to curate a board or create unique and original content for the platform. Now, that Pinterest has removed the affiliate links that identify which blogger posted what link, it becomes challenging to attribute earnings and commissions from the site. Unlike a website, you would have to spend a lot of time, money, and efforts to earn anything substantial from the platform. Also, they seem to be headed for a growth plateau in the coming years. Already its audience comprises 43% of American internet users. This figure means that the platform is nearing saturation here in the US. Thus, brands looking to ramp up their user base would find it hard to extract the same ROI from a given ad spend as they used to enjoy some years back.
2 – Detailed data analytics not possible
As an online business owner, you may need to track several KRAs (Key Result Area) such as acquisition overview, traffic sources, bounce rate, interactions per visit, and overall conversions. Unfortunately, marketers cannot extract such in-depth data from Pinterest. This means that they have no way of knowing how their Pinterest campaign is performing and if it is delivering on the results they expect to see. Their in-built analytics console focuses on scores and KPIs around Pins. The Pin metric allows your business to determine if the visual content on your brand’s website is appealing enough to let users pin it on their boards. The same is the case with another metric – repins. This metric allows you to see the amount of engagement secured by your brand in front of people who aren’t your followers but liked the visual content on their board of people they are following. These metrics offer a limited view as compared to the phenomenal insight and slice-and-dice options presented by Google Analytics for your website.
Drawbacks of Groupon:
Groupon is an e-commerce marketplace that offers affordable products or services once in a day. You might feel the urge to contact Groupon and feature yourself on their ‘deal of the day’ list. They offer considerable discounts to encourage people to shop, but their business model has some downsides that you should be aware of first. You may want your business to flourish, and if you want to accomplish that, then Groupon is not your option.
Below are some significant drawbacks of strictly relying on Groupon for your business.
1 – Great loss to your revenues
You might not know, but Groupon is painfully expensive, and you are likely to lose your significant revenues. Groupon takes 50% of your income as a fee for using their platform. Usually, Groupon offers 50% off to its end customer. So, here’s quick math to make things clearer – If the retail price of your product or service is $100, then you will earn $50 after giving a 50% discount to customers. Finally, Groupon will take $25 as their fees, and you will get only $25 for a product you would have sold for $100 otherwise. So, unless you have some unrealistic markup, you can never be profitable using Groupon.
2 – Deals attract unreliable bargain seekers, not customer loyalty
Bargain seekers and low-end deal seekers are the biggest consumer base of Groupon, and all they care about is getting a good deal. Such unreliable buyers are not willing to spend beyond the price of the coupon offered by Groupon. There are low rates of spending, and you are likely to get low returns. Your business will not be profitable if most of your customer base are low-end bargain seekers. In contrast, having your website help you control the pricing, and you can provide occasional discounts to retain the customers. Keep in mind, it costs you 3x more time and money to get a new customer than to retain a current customer. And a loyal customer has a 54% chance of getting you more business than advertising your business!
3 – Your brand can easily get ignored
People who use Groupon are there for the massive discounts they get offered. After the purchase, customers are not going to remember your brand. But what they will indeed remember is how amazing the deal they received on the product or service. Customers who buy your products from Groupon won’t even know the name of your business, but they will not fail to brag about the great discount they got from Groupon. Also, people will forget to look at the quality of the product or service that you provided; instead, they will notice the deal itself.
4 – Lowers your business value
There is a notion that, whenever a business offers a great discount, the markup has to be extremely high. If your products get sold at 50% off, then customers will believe that you must be jacking up the prices to earn a considerable profit. There’s also a harmful trait that gets followed by all customers in general. When customers receive significant discounts, then are likely to wait to buy until they receive the same offer again. Customers get so used to the discounted price that they refrain from paying the full price ever again. In all such ways, Groupon brings down your business value. It not only makes people think that you have high markups, but they may also feel that your products are not worth paying the full price.
5 – Your loyal customers get hurt
When you use Groupon, it has adverse effects on your loyal customers. You are using Groupon and bearing the loss to get new customers. And then, you are making up for those losses by charging your loyal customers with full price. That is exactly the opposite of how you should be doing the business. Your loyal customers are the ones who deserve discounts and perks. When your loyal customer notices the discounts you’re offering on Groupon, he/she may get hurt and end up shopping from your competitors. Or your loyal customers will also buy from Groupon and pay only a little fraction of the regular price they would have paid otherwise.
6 – Harder to retain the customers
Groupon has meager conversion rates for repeated customers. So, you are likely never to see the same buyer again, who once used the coupon at Groupon. In other ways, that buyers will not be willing to buy your products or services unless they receive the same coupon/offer again. The percentage of new customers who got converted into repeat customers for that business is painfully low. Owing to all such reasons, you should always consider having a website rather than using services like Groupon.
Yes, all of these platforms can benefit your business in one way or another, but the time that you need to invest in these platforms will only fully pay off if you have a fully-branded, dedicated website for your business. Therefore, starting with the website makes more sense, and then using these platforms as outlets to reach your target audience, increase brand awareness, create leads and sales pipelines are the formula for long-term small business success. When I found out about all these limitations I was just as shocked as you are right now. Like I said earlier, as a small business owner when you get the right information and resources you can use it to adapt quickly and start succeeding swiftly.
You have the information above, now here are some resources:
Do you have an e-commerce website and need more traffic? We got you covered, click here and start getting more leads, improve your Goggle ranking, and generate more sales. And this only works on a website that you own, so another benefit of having your own website.
If you need a website or updates to your current website, me and my team are here to help, just contact us for a FREE consultation!
Got questions about branding? Got some knowledge to drop? Hey, stay in touch. Drop me a line I'm always happy to work with entrepreneurs and help them accomplish their goals. It's my passion and a part of my brand.
I'm Ehren Muhammad, Founder of EMPro, Ltd
EMPro, Ltd - Branding & Digital Marketing
We Help Brands Grow