If a company wants to venture into e-commerce for the first time, it must define a digital marketing strategy taking into consideration the products and services to be offered, and above all the target consumer. With this strategic base, the company has several options to take the step to implementation: It can hire the construction of a custom-made online store (an alternative being to use its own staff), it can use a quick online construction platform, or it can subscribe and sell its products in an existing marketplace. There are advantages and disadvantages to consider to make the decision that best suits the needs of each business.

Build a custom store

The most flexible alternative is to opt for a tailor-made store customized to the needs of the business. A specialized company can be hired to implement the solution, a project can be carried out with in-house staff, or a combination of both. Some of the advantages of this option are:

• The proprietary website is designed for the brand and allows for a high degree of branding and customization, allowing you to differentiate yourself from your competitors. The customized store allows you to better segment your target audience and reach diversified and niche audiences.
• The company has full control: the store can quickly adapt to new needs and changes in the market.
• You have direct access to shoppers to better serve them and perform marketing activities, behavioral analysis such as shopping cart abandonment, among others, generating loyalty and long-term relationships.
• It is possible to implement an analytics and executive reporting system that best suits the decision making needs of the company.
• Hiring specialized personnel for design and development can leverage the experience of the experts on the supplier’s team and save valuable time to market.
• Store hosting costs are fixed regardless of the volume of sales (without considering the charges for payment methods that apply to all schemes). In any other scheme the monthly costs increase significantly along with the level of store sales.

What are the disadvantages of a custom-built store?

• Requires a higher level of initial investment and time.

Affiliate to an existing marketplace

The fastest alternative to start online sales is to join a virtual marketplace, or marketplace, such as Amazon, Facebook, E-bay, Linio, Etsy, among many others. There are many factors to consider before making the decision to join one of these services. The main advantages of a marketplace are:

• Speed in getting your products or services to market.
• Buyers already have confidence in certain marketplaces. You may already have potential customers on this network and do not need a marketing plan and budget to attract the first visitors to your store.
• The amount of investment to start selling in a marketplace is less than that of an own virtual store, however, do not lose sight of the investment needed to attract customers to your products (different in each marketplace).
• Proven and effective customer service, complaint handling and satisfaction measurement.
• Management tools available for various administrative tasks.

It is also important to mention some of the main disadvantages of a marketplace sales strategy:

• In a marketplace there is inherently a high degree of competition, including from suppliers offering equivalent or alternative products at more competitive prices. It is largely a price competition and margins may be lower.
• Marketplaces typically charge for listing products, regardless of whether you sell or not, and commissions per transaction. Additionally there are costs to “advertise” your products (preferably to be listed).
• In a marketplace it is more difficult to develop the brand, differentiate from the crowd or offer personalized services to build loyalty, so once again, it becomes a price competition.
• Being successful in a marketplace requires a high degree of specialization in that specific provider, which is not necessarily applicable when migrating platforms.

Ecommerce service platforms

A practical alternative can be an existing service that allows you to develop online stores in a simple and fast way, without technical knowledge. This kind of software is called Ecommerce Platform, some examples being Wix and Shopify. Some of the advantages of this option are:

• The initial investment to build an online store using such a platform is lower. Several of these platforms offer fixed costs that scale to manageable monthly amounts for any medium or small business as functionality is added. In some cases the store can be created in hours if an existing template is used for the design.
• These platforms allow you to incorporate many of the features that can be achieved by building a custom online store, from simple to sophisticated. Among them:
  • Shopping cart
  • Diversity of payment methods and currencies
  • Management of products, orders, recurring orders
  • Cart abandonment recovery
  • Loyalty programs, gift cards and discounts
  • Easy to use Content Management System (CMS). The CMS allows the user to make certain modifications to the organization and functions of the store, update content such as texts, images, videos, etc.
  • Analytics tools on how users use the store, marketing tools such as emailing and search engine optimization (SEO)
  • Compliance with information security standards

An ecommerce platform has some disadvantages compared to other alternatives:

• Compared to a marketplace, this option is a tool to develop a store and does not offer a massive commercial environment that includes existing potential buyers.
• Compared to a custom-made online store, the store owner will always depend on the supplier company for innovation, improvements and bug fixes of the software and his store.
• The ecommerce platform is not as flexible as a custom-made store since the templates and themes have some restrictions to incorporate adaptations, and it is not always possible to make them. It will be more difficult to differentiate your brand with eye-catching designs.
• On these platforms you pay a fixed monthly fee, a percentage of sales, and also the cost of the payment gateways. When the online store increases its sales (starts to be successful) the monthly costs rise rapidly when compared to a customized store.
• It is not possible to migrate the online store between platforms. If you want to take advantage of better costs or features of another platform, or if you want to move to a store built on average, you have to start from scratch the effort.

Conclusions

Once the store is implemented, it is necessary to execute the digital marketing strategy to attract the first buyers and keep them as loyal customers. One should never lose sight, regardless of the option selected, that an online store without traffic does not sell. The decision on the best strategy to venture into e-commerce depends a lot on the type of product to be marketed, the target audience, the budget and the strategies of each business. A strategy of long-term brand development and sustained growth favors a customized store even if it requires a higher initial investment. A low-cost target, able to compete on price and monetize on volume, where differentiation is not a goal, can accommodate and benefit from the features offered by a marketplace. Finally, for validation efforts or when there are doubts about whether an online store is a valid sales medium for the company, an ecommerce platform allows to start with lower initial costs.

Enrique Valdez
Founding Partner