Is it profitable to sell products online
What is better for my products, for my sales / profits, sales platform or online shop and when do I start planning? We give answers.
An article about a study by the cashback portal Shoop.de (October 2018) sums it up: “With advice and customer service, good prices, transparency in terms of terms and conditions, return and cancellation, payment options, shipping costs as well as good working conditions and sustainability, German online retailers can compete with the big player Amazon made one more trick. ”Personal and competent advice has replaced the criteria of a wide range and fast delivery in the top premise. 6 out of 10 respondents said that better specialist knowledge of the retailer would take them away from Amazon and into an online shop. Oh, but of course 24/7 customer service!
For those who have not yet lost their courage for e-commerce, we would like to offer an initial weighing up between the two options from different points of view.
Investment costs in an online shop are not the costs up to the day the shop opens. The costs for one of the numerous online systems from Jimdo to Magento to Shopware are comparatively low. With stringent development, it can take a good two years for the shop to get up and running. That means: with good marketing, constant learning pace and reliable partners and staff. The number 1 cost factor is shop and customer support.
In terms of start-up costs, selling via a platform like Amazon attracts with a freely available, functioning shop system and tried and tested server technology. Although there are costs for the inventory control system, storage and logistics, retailers can generate profit more quickly through the immediate use of a finished virtual infrastructure.
But be careful! Earning a quick profit does not necessarily mean making more profit. Because a platform like Amazon naturally charges usage fees for the technology and a commission per item sold. There it is between 7 and 20 percent. The usage fee is either 39 euros per month or 99 cents per item sold.
An example shows the difference: an item, a silver ring with the sales price of 60 euros in direct comparison. Let's estimate the purchase price at 29 euros. In both cases, there is also 19 percent sales tax as well as packaging and shipping of 4.25 euros. At Amazon, however, there is now a commission of, with this product even 20 percent. Not including the monthly fee, that makes a difference in profit of around 12 euros - per 60 euros item.
The better your products sell, the more profitable your own online shop is in the long run.
In addition to start-up costs, you also need a certain start-up time for your own web shop. Anyone who wants to run an online shop needs basic knowledge of shop systems, shop designs and servers. Not much is possible without a trained IT specialist.
Apart from the technology and the knowledge that you may already have about offline customers of your products, two questions should be at the center:
- 1. What requirements do interested parties and customers place on my online shop?
- 2. How can the shop meet these needs - both technically, for example using filter functions, and in terms of customer service?
Market research as well as marketing professionals, graphic designers and copywriters should be involved in the structure.
Setting up a merchant account on Amazon only takes a few minutes and two cups of coffee for most people. Both eBay and Amazon mean that you are guided through the system in a self-explanatory manner.
But not only the mentioned profit margin, but also other aspects show the advantages of your own web shop.
If we take another look at what you can score with customers as a retailer with your own shop compared to the platforms, you will see that a lot is in your hands. Expertise, customer service, transparency in terms of terms and conditions, returns, termination, payment options, shipping costs, good working conditions and sustainability.
You set the standard. And those who are willing and transparent can rely on a certain amount of patience on the part of the customer. It looks different with the platforms. Such a seller account is quickly blocked if promises are not kept. The possibilities of objection are limited and blocked is blocked for the time being. Not to mention seller ratings of dubious origin.
Even within the tried and tested technical infrastructure of eBay, Amazon & Co., you are on the same page as experienced competitors.
Not only because of this, but also for this reason, developing a regular customer base on Amazon, for example, is an effort that rarely justifies the effort. Especially when the price is a central purchase criterion and the prices of the competition are right next to yours, online customers are sometimes gone faster than you realize.
Nevertheless, large platforms can also be worthwhile for small providers, because Amazon in particular has concentrated on its core competence in recent years: technology.
Amazon itself sets alarming standards as a product search engine for Google: According to the Institut für Handel (IFH), about a third of German online retail was influenced by Amazon in 2017 because customers used the platform as a product search engine as well as to price and compare goods. At the Christmas business became even clearer: According to a representative Christmas study, 82 of the Germans started their search for a gift on Amazon and 72 percent also made the purchase there. The relevant difference as a search engine to Google: On Google I can only find one link, on Amazon I can find it and buy it immediately.
But eBay did not stand still either. For a long time one had the image of a pure flea market, but times have changed. The range now offers 80 percent new goods. And comparable to Amazon's own brand Basics, offers eBay Every Day has been offering everyday products free of charge since April.
There are good reasons to use multiple tracks. If you don't allow yourself the time to test some things in e-commerce first, you will always have a time problem later. For example, there is nothing wrong with starting on a sales platform under certain conditions and trying out aspects of implementation before setting up your own web shop, for example:
- Are the internal processes working?
- Is the customer service / communication working?
- Are the goods packaged quickly enough?
- How reliable is the logistics partner?
A study by the Händlerbund has already shown in 2017 that around two thirds of retailers with their own eBay shop also run their own online shop. 35 percent were also represented on Amazon. And stationary retail also plays a role in around 20 percent.
Your own online shop is the best test of how far you have internalized digitization in your own industry. Lead times and content-related and technical planning, good monitoring and marketing as well as an understanding of comprehensive customer relationship management (CRM) can be reflected here relatively quickly and completely measurable after the start. Flexibility and reaction to technical changes is a principle for successful e-commerce. In addition, there are always further developments with which you can also push your own online shop.
Now all you need is good products from you. Without it, any further thought is obsolete, if one wants to express it boldly.
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