In recent years, e-commerce has undergone a seismic shift, primarily driven by the growing influence of big tech companies like Amazon, eBay, and Google. Initially lauded for their innovative solutions and customer-centric approaches, these giants now face criticism for practices that prioritize profit over user experience. Sellers and buyers feel the pinch as fees increase, services decline, and the market becomes more saturated with cheap products, often from overseas.

Amazon: A Focal Point of Discontent

Amazon, once hailed as a revolutionary platform for small sellers, has become a focal point of discontent. Many long-time sellers recall the early days of the Fulfillment by Amazon (FBA) program, which provided an efficient and affordable way to manage inventory and logistics. However, these same sellers are grappling with escalating fees and a marketplace dominated by low-cost, often low-quality products from international sellers. This shift has not only squeezed profit margins but also diminished the overall quality of goods available to consumers.

The ripple effects of these changes extend beyond Amazon. Platforms like eBay and Etsy are also experiencing similar trends, with increasing fees and declining service levels driving frustration among users. Sellers find it harder to maintain profitability, while buyers face longer shipping times and questionable product quality. This broader trend, often referred to as the “crappification” of big tech, highlights a growing disconnect between these companies’ corporate strategies and their users’ needs.

Future of E-Commerce Remains Uncertain

Looking ahead, the future of e-commerce remains uncertain. As regulatory pressures mount and new competitors emerge, the industry may be poised for another wave of transformation. However, the lessons from Amazon and other tech giants are clear: sustainable success in e-commerce requires balancing growth and maintaining high service standards. For now, sellers and buyers are left navigating a complex and often frustrating digital marketplace, hoping for better days ahead.

Amazon’s Transformation

When Amazon launched its Fulfillment by Amazon (FBA) program, it revolutionized e-commerce. “You could send your products to Amazon, and they’d handle storage and shipping at a very reasonable price,” Chou recalls. The fees were a small fraction of a seller’s revenue back then, making it an attractive platform for new businesses. “Everyone was making money hand over fist,” Chou noted.

The Rise of Fees

However, as Amazon grew, the costs for sellers began to rise. “Amazon charges a 15% referral fee, about 10-15% for FBA, and another 20-30% for advertising,” Chou explains. This year alone, Amazon introduced a new receiving fee, adding to the financial burden on sellers. “Now you have to pay a fee between $2.10 to $6 per unit for Amazon to accept standard and large bulky products into their warehouse,” Chou points out. This fee reflects the cost of distributing inventory to multiple fulfillment centers, but many sellers feel squeezed.

Impact of Chinese Sellers

Another significant change came with Amazon’s aggressive recruitment of Chinese sellers. “In 2016, Amazon’s Dragonboat program allowed Chinese sellers direct access to U.S. fulfillment centers,” Chou says. This influx of Chinese sellers, often offering lower-priced products, has made it difficult for U.S. sellers to compete. “They started knocking off existing sellers, blatantly copying their IP, gaming the reviews, the rankings—everything,” Chou observes. Despite these practices, Amazon did little to protect legitimate sellers, focusing instead on keeping prices low for buyers.

Quality and Service Decline

Service quality also suffered as Amazon tightened its grip on buyers and sellers. “Back in the day, you could get a hold of a human on the phone, but today it’s impossible,” Chou laments. The company’s focus shifted to maximizing profits, often at the expense of the sellers who helped build its platform. “It’s always a canned response if you manage to get a reply at all,” Chou adds, highlighting the deterioration in customer service.

The Future for Sellers

For sellers, adapting to these changes has become crucial. “The secret to long-term success is to ride the wave as it comes and then jump on newer waves as they appear,” Chou advises. This means diversifying sales channels and investing in owned marketing platforms to reduce dependency on Amazon. “Focus more of your efforts on your own website that you physically own,” Chou suggests, emphasizing the importance of building a direct relationship with customers.

Impact on Sellers and Buyers

The evolving landscape of Amazon and other big tech platforms has profoundly affected both sellers and buyers. For sellers, the increased fees and the influx of low-cost Chinese products have made it increasingly difficult to maintain profitability. “Sellers are getting squeezed on fees and barely making any profit,” Chou notes. The competitive environment has intensified, pushing many small businesses to the brink.

Challenges for Sellers

Sellers now face a multitude of fees that erode their margins. In addition to the referral and FBA fees, Amazon has introduced fees for receiving inventory and maintaining stock levels. “Amazon charges a low inventory search charge if your stock levels are below what they expect, adding to the financial strain on sellers,” Chou explains. This fee applies if a seller’s inventory levels are consistently low relative to their sales, which can be particularly challenging for small businesses with limited resources.

Deteriorating Product Quality

For buyers, the quality of Amazon products has also declined. “Most of the products on Amazon are now just cheap repackaged products from Alibaba,” Chou points out. This has led to an increase in counterfeit and low-quality items, undermining consumer trust. “You can’t really trust what you are buying anymore,” Chou adds, highlighting a growing concern among shoppers.

Customer Service Woes

Furthermore, Amazon’s customer service has deteriorated, affecting sellers and buyers. “It’s impossible to get a hold of a human on the phone, and if you do, it’s always a canned response,” Chou remarks. This decline in service quality has frustrated many users who once relied on Amazon’s reliable support.

Despite these challenges, sellers are finding ways to adapt. Many are focusing on building their websites and utilizing owned marketing platforms to reduce dependency on Amazon. “The key to long-term success is to diversify and not rely solely on one platform,” Chou advises. This strategy allows sellers more control over their business and builds direct customer relationships, fostering greater resilience in an ever-changing e-commerce landscape.

Broader Tech Industry Trends

The trends affecting Amazon are not unique to the e-commerce giant but reflect a broader pattern across the tech industry. Many major tech companies initially gain traction by offering exceptional services and support. However, their practices often shift as they grow and seek to maximize profits, leading to increased costs and reduced service quality. “Every big tech company follows the same pattern,” Chou observes. “They start off great and then go to crap as they become more successful.”

Nickel and Dime Approach

This shift is characterized by a “nickel and dime” approach, where companies introduce numerous small fees that collectively add up. “Google, Facebook, and other big tech companies are all guilty of this,” Chou notes. “They start charging higher fees and offering less in return, which hurts both sellers and buyers.” For instance, Facebook’s decision to limit the reach of fan pages and groups unless users pay for ads has frustrated many businesses that rely on organic reach.

Increasing Fees and Declining Service

eBay and Etsy have also followed similar paths. Sellers on these platforms have seen fee increases and more restrictive policies that make it harder to operate profitably. “eBay and Etsy have become more expensive and less supportive over time,” Chou says. This trend of increasing fees and declining service quality is a common complaint among users of various tech platforms.

Impact on Small Businesses

Small businesses, in particular, are feeling the squeeze. “Big tech’s practices are making it increasingly difficult for small businesses to survive,” Chou emphasizes. Many small businesses have had to adapt by diversifying their marketing strategies and seeking alternative platforms to reduce their dependency on major tech companies. This includes focusing more on owned marketing channels like email and SMS, which provide more control and stability.

Adapting to Change

As the tech landscape evolves, businesses must stay agile and ready to pivot. “The secret to long-term success is to ride the wave as it comes and then jump on newer waves as they appear,” Chou advises. This approach ensures that businesses remain resilient and can continue to thrive despite the challenges posed by big tech companies’ changing practices.

In summary, the broader trends in the tech industry show a clear pattern of initial user-centric growth followed by profit-driven changes that can disadvantage both sellers and buyers. This has significant implications for the future of e-commerce and tech services, underscoring the importance of adaptability and diversification for businesses.

Future Outlook

Looking ahead, the landscape for e-commerce and tech companies remains dynamic and unpredictable. Many industry experts predict further consolidation and increased regulation as governments worldwide scrutinize major tech firms’ practices. “Regulatory pressure is likely to increase, especially in the EU,” said technology analyst Karen Smith. “We could see more stringent rules aimed at protecting small businesses and consumers from unfair practices.”

Potential for New Entrants

New entrants could also disrupt the market. “Innovation never stops, and there’s always room for new players to shake things up,” noted Chou. Emerging platforms prioritizing transparency, fairness, and user experience could carve out significant market shares by addressing the shortcomings of established giants. “Businesses need to stay agile and be ready to pivot to new opportunities,” Chou advises.

For sellers, the emphasis will likely shift toward owned marketing channels. As reliance on platforms like Amazon, eBay, and Facebook becomes more costly and less reliable, businesses invest more in direct communication channels such as email marketing and SMS. “Building a strong, direct relationship with customers is more important than ever,” Chou asserts. “It’s the best way to ensure stability and control over your business’s future.”

Technological Advancements

Technological advancements, such as AI and blockchain, could also significantly shape the future of e-commerce. These technologies have the potential to enhance transparency, reduce costs, and improve efficiency. “AI can help businesses optimize their operations and provide better customer experiences,” Smith explains. Meanwhile, blockchain offers promising solutions for ensuring fair practices and transparency.”

Continued Adaptation

Ultimately, the key to thriving in this evolving landscape is continued adaptation. Businesses that can stay ahead of the curve, anticipate changes, and leverage new technologies and platforms will be well-positioned to succeed. “The tech industry is always changing, and the only constant is the need to keep evolving,” Chou concludes. “Those who adapt will thrive, while those who resist change may struggle to survive.”

This future outlook underscores the importance of vigilance, innovation, and strategic planning for businesses navigating the complex and ever-changing tech landscape. As the industry transforms, staying informed and adaptable will be crucial for long-term success.

I started my ecom store for $630.
I started my blog for $10.

Both now generate over $1,000,000/year.

What have you got to lose?

— Steve Chou (@mywifequit) January 31, 2024

“If you’re selling old clothes or running an online business, this video will show you how to use Facebook Marketplace correctly,” says Bali. Whether you want to make a few extra bucks or generate thousands in revenue, mastering the art of selling on Facebook Marketplace is essential for success.

Connecting with Targeted Audiences

Facebook Marketplace’s potential is not just about reaching more customers; it also allows you to connect with highly targeted audiences. The platform caters to various products and interests from furniture to electronics, vintage fashion to handmade crafts. The built-in search and filtering features make it easy for customers to find exactly what they’re looking for and for sellers to reach those interested in their products.

Standing Out in a Competitive Space

Bali emphasizes the importance of standing out among the competition. “Why do some people make tons of money with Facebook Marketplace while others struggle?” she asks. Optimizing your posts with high-quality photos, compelling descriptions, and strategic pricing is the answer. By leveraging these tactics, sellers can significantly increase their chances of success and create a sustainable income stream.

Integrating with Shopify for Business Growth

Moreover, Facebook Marketplace’s seamless integration with Shopify and other e-commerce platforms means that established businesses can use it as a powerful tool to drive traffic and boost sales. With the right approach, Facebook Marketplace can be a game-changer for both new and experienced e-commerce entrepreneurs.

Photos: High-Quality Images Matter

“The photos are crucial,” Bali emphasizes. Good lighting, high resolution, and multiple angles are essential for attracting buyers. If you are reselling, she recommends including images from the original seller to give potential buyers more context.

Description and Title: Optimize for Search

Your description and title should be optimized for search terms. Bali suggests listing short and long keywords that people will likely type into Facebook. For example, “iPhone 12 mini green” is better than “used phone.” Be honest in describing the item’s condition and reasons for selling. “Honesty is the best way to get customers and even repeat customers,” she says.

Five Tips to Turbocharge Sales

To ensure success on Facebook Marketplace, Bali provides five practical tips:

1. Timing: Post in the evenings and on weekends when people are more likely to browse.
2. Fast Responses: Respond to inquiries quickly to avoid potential buyers changing their minds.
3. Negotiation: Be open to negotiation, as buyers on Facebook Marketplace are looking for deals.
4. Freebies: Offer a free item related to the product to entice buyers and clear out additional inventory.
5. Patience: Success takes time. Sometimes, you’ll get many responses, and other times, none. It’s all part of the process.

Using Facebook Marketplace to Promote Your Shopify Store

If you have a Shopify store, Facebook Marketplace can be a powerful tool for attracting customers. Here’s how:

Setting Up Your Facebook Shop

1. Go to your Commerce Manager on Facebook.
2. Click on “Catalog,” then “Products,” and select “Add products from a different platform.”
3. Choose Shopify, enter your URL, and click “Connect.”
4. Select the products you want to add and click “Next.”
5. Review the information and click “Publish.”

Choosing Your Checkout Option

Customers can check out directly on your Shopify store or use Facebook’s built-in checkout feature. While Facebook’s checkout is convenient, Bali advises sticking to your Shopify store for a more secure transaction. Adjust your checkout preferences in Shopify’s settings to reflect your choice.

Running Facebook Ads

Facebook Ads are a great way to drive traffic to your Shopify store. Use high-quality images and target your ads carefully to reach the right audience. You can track conversions using Facebook’s tools to see how many people click through your store.

Using Facebook Live

If your budget is tight, use Facebook Live to connect with potential customers in real time. Promote your live events in advance and have a clear plan for what you want to discuss. This way, you can engage with potential buyers directly and answer their questions.

Building Trust and Security

Transparency and Honesty: Key to Success

One of the most important aspects of selling successfully on Facebook Marketplace is building trust with potential customers. According to Michelle Bali, trust begins with transparency and honesty in every listing. “Be upfront about the condition of the item you’re selling and why you’re selling it,” Bali advises. A detailed and accurate description helps buyers make informed decisions and reduces the likelihood of disputes or returns.

Honesty is crucial for creating repeat customers, as satisfied buyers are more likely to recommend your products to others and come back for more. Bali shares a personal experience that underscores this: “One time, I was trying to buy a custom dining table from a woodworker on Facebook Marketplace, but I realized it was a total bait-and-switch situation. It bugged me so much that I decided to take my money elsewhere.” This example serves as a reminder that deceptive practices can alienate potential buyers and harm your reputation.

Secure Transactions: Protecting Buyers and Sellers

Security is another critical factor in building trust on Facebook Marketplace. Unfortunately, scams and fraudulent activity can occur, making it essential to safeguard transactions. Bali recounts an incident where she almost fell victim to a scam involving a fake PayPal payment email. “Something inside me told me to wait, so I called PayPal to confirm the payment. They told me it was totally a scam,” she explains.

Facebook Marketplace offers a range of safety features to protect buyers and sellers. These include user ratings and reviews, secure payment options through PayPal and Facebook Pay, and a dedicated customer support team. Additionally, sellers can further enhance security by connecting their Shopify store to Facebook Marketplace, protecting Shopify’s payment gateway and fraud detection features.

Managing Buyer Expectations and Communication

Effective communication is another cornerstone of trust-building. Bali emphasizes the importance of responding promptly to buyer inquiries. “If someone messages you, message them back as quickly as possible. You don’t want them to change their mind,” she advises.

Setting clear expectations regarding shipping times, payment methods, and return policies also helps to build credibility. Providing accurate delivery estimates, offering flexible return options, and maintaining open lines of communication foster a positive customer experience that encourages repeat business and word-of-mouth referrals.

Facebook Marketplace Policies and Seller Guidelines

Finally, understanding and adhering to Facebook Marketplace’s policies and seller guidelines is crucial for maintaining a trustworthy reputation. This includes avoiding prohibited items, following fair pricing practices, and respecting buyer privacy. By operating within these guidelines, sellers can ensure a positive experience for themselves and their customers, paving the way for sustainable success on the platform.

Big Marketplaces Can Drive Big Business

The allure of Facebook Marketplace lies in its massive user base and unique position as a trusted platform for connecting buyers and sellers. This presents an unprecedented opportunity for new and established businesses to reach a broad audience and generate significant revenue. Michelle Bali, Creative Strategist at Shopify, stresses the importance of taking advantage of the opportunity presented by this vast marketplace. “Whether you’re selling old clothes you don’t wear anymore or actually have a business, getting good at Facebook Marketplace can earn you hundreds, even thousands of dollars,” she emphasizes.

The platform is evolving rapidly, and sellers must adapt proactively to the changing landscape. By mastering the art of creating compelling listings, communicating transparently, and leveraging Facebook’s suite of advertising and live-selling tools, businesses can tap into this marketplace’s vast potential.

Building Long-Term Success with Shopify Integration

Integrating a Shopify store with Facebook Marketplace is a game-changer for those looking to take their business to the next level. It provides seamless inventory management, secure transactions, and automated advertising campaigns that can drive significant traffic and sales. “By connecting your Shopify store to Facebook Marketplace, you just get that added layer of security,” notes Bali. This integration simplifies the selling process and ensures a consistent platform experience.

Moreover, the ability to redirect customers to a branded Shopify store provides a strategic advantage. Sellers can establish their brand, build customer loyalty through email and SMS marketing, and offer exclusive deals to their best customers. Bali says, “The goal is to establish your own brand, control the customer experience, and differentiate yourself from your competitors.”

Leveraging Big Marketplaces for Sustainable Growth

Success on Facebook Marketplace requires patience, persistence, and a strategic approach. Sellers must remain flexible, willing to negotiate, and responsive to customer inquiries. Businesses can stand out in a crowded marketplace by continually refining their listings, offering top-notch customer service, and adopting innovative marketing techniques like Facebook Live.

Ultimately, the key to long-term success is viewing Facebook Marketplace as a gateway to sustainable growth rather than a short-term sales channel. By leveraging the platform’s massive reach and integrating it with their broader e-commerce strategy, sellers can build a thriving business that capitalizes on the opportunities provided by big marketplaces.

In Bali’s words, “Whether you’re just starting or already have a business, there’s no reason not to tap into the potential of Facebook Marketplace. With the right strategy, big marketplaces can truly drive big business.” So, gear up, refine your listings, and embrace the opportunity—because the world is watching, and there’s plenty of room for growth.

The Changing World of E-Commerce

Starting an e-commerce business today is fundamentally different from a decade ago. The rapid evolution of technology and changing consumer behavior have made entrepreneurs need to stay agile, innovative, and strategically focused. According to data from Statista, global e-commerce sales are projected to surpass $8 trillion by 2026, with digital transformation pushing traditional businesses to explore online markets. However, with this massive growth comes an equally massive increase in competition.

Steve Chou, a successful ecommerce entrepreneur, emphasizes the importance of having a clear roadmap to navigate this challenging landscape. “It’s not just about finding a product to sell,” he explains, “but building a sustainable business that can weather market fluctuations and evolving consumer preferences.”

Shifting Business Models

Traditional business models like dropshipping or retail arbitrage, once seen as quick paths to online success, are no longer sustainable due to increased competition and shrinking profit margins. Meanwhile, Amazon’s dominance in e-commerce has rendered these models less viable than in the past. Chou advises focusing on private labeling to establish a unique brand identity and maintain control over products and pricing.

“Owning your own brand and products is crucial for long-term success,” Chou emphasizes. “The market is constantly changing, and you need to build a business that can adapt.”

This article outlines Chou’s comprehensive strategy for launching a successful e-commerce business, from choosing the right product to scaling through content marketing and customer retention. By following these steps, you can establish a resilient online store that thrives in the rapidly changing world of e-commerce.

Navigating the Evolving Landscape

New entrepreneurs face a significant challenge in understanding market trends and adapting to them swiftly. Social media and search engine algorithms constantly change, impacting organic traffic and customer acquisition strategies. “It’s not enough to simply create a website and list products,” says Chou. “You have to be strategic about how you reach your customers and stand out from the competition.”

Moreover, consumer behavior has shifted dramatically. Today’s customers are more discerning, seeking personalized shopping experiences and unique brand stories. They expect fast shipping, exceptional customer service, and seamless mobile shopping. Therefore, building a strong brand identity and customer loyalty is more critical than ever.

Building a Loyal Customer Base

“Investing in customer experience and building a loyal customer base should be at the forefront of your strategy,” Chou advises. “Repeat business and word-of-mouth recommendations can significantly impact your bottom line.”

In the following sections, we’ll delve into the steps you can take to start and scale your e-commerce business, ensuring you’re well-prepared for the challenges and opportunities ahead.

Choosing the Right Business Model

Selecting the right business model is a foundational step for any aspiring e-commerce entrepreneur. In today’s competitive landscape, traditional models like dropshipping and retail arbitrage have declined profitability due to market saturation and aggressive pricing strategies. Steve Chou firmly believes these models are no longer sustainable for long-term success.

“Sure, you might make a quick buck here and there, but it won’t be sustainable,” Chou says. “You need a business model that gives you control and longevity.”

Private Labeling: Building a Unique Brand

Private labeling is one of the most effective approaches to building a lasting e-commerce business. By creating your own brand and controlling product quality, pricing, and customer experience, you can differentiate yourself from competitors and establish a loyal customer base.

“Private labeling allows you to own your brand and product line,” Chou explains. “You can tailor your products to specific customer needs and control every aspect of the business, from design to pricing.”

Successful private labeling requires finding reliable suppliers who can produce high-quality products at a reasonable cost. Chou recommends platforms like Alibaba and attending trade shows to establish direct relationships with manufacturers. Once a supplier is identified, obtaining product samples is crucial to validate quality and ensure it aligns with your brand’s vision.

Navigating the Amazon Marketplace

While private labeling is essential for long-term success, leveraging existing marketplaces like Amazon can provide a valuable stepping stone. Amazon’s massive customer base and trusted brand can offer immediate exposure and validation for your product.

“Listing on Amazon is a great way to validate demand before committing fully to your website,” says Chou. “But don’t rely solely on Amazon—use it as a testing ground.”

Amazon’s marketplace provides a valuable opportunity to gauge interest in your product, refine pricing strategies, and gather customer feedback. By using Amazon’s pay-per-click advertising program, you can increase visibility and drive initial sales. However, Chou warns against over-relying on this platform, as it limits your ability to build direct customer relationships.

Building a Resilient E-Commerce Ecosystem

Ultimately, the right business model involves a blend of private labeling and strategic use of marketplaces like Amazon and eBay. By building a unique brand and simultaneously leveraging these platforms, you can create a resilient ecosystem that thrives in today’s changing e-commerce landscape.

“Your goal should be to establish a brand that customers recognize and trust,” Chou advises. “Combine that with strategic marketplace use, and you’re on your way to building a lasting e-commerce business.”

Choosing a business model that aligns with your vision and market dynamics is critical to ensuring the success of your e-commerce venture. In the next section, we’ll explore the importance of finding the right product to sell and how to identify opportunities that match your skills and interests.

How to Pick a Marketplace

Selecting the right online marketplace is a critical decision for any e-commerce entrepreneur. With various platforms offering unique features, fees, and customer demographics, choosing the right one can significantly impact your success. Steve Chou offers valuable insights on navigating the marketplace landscape.

Amazon: The E-Commerce Giant

Amazon remains the dominant marketplace, with over 50% of the total e-commerce market share in the U.S. Its vast customer base and trusted brand provide an unparalleled opportunity for exposure and sales.

Pros:

• Massive Audience: Access to millions of potential customers.
• Trust and Convenience: Buyers trust Amazon’s fulfillment and customer service.
• Advertising Tools: Powerful pay-per-click (PPC) advertising to boost visibility.

Cons:

• Competition: High competition due to many sellers and similar products.
• Fees: Referral fees, FBA (Fulfillment by Amazon) fees, and other charges can add up.
• Brand Control: Limited ability to directly engage customers and build brand loyalty.

“Amazon is a great place to validate your product,” says Chou. “But once you’ve proven demand, focus on building your own website and brand.”

eBay: The Auction and Resale Marketplace

While eBay is known primarily as an auction and resale platform, it’s also a valuable marketplace for new goods, especially for niche products and collectibles.

Pros:

• Flexible Selling: Supports both auctions and fixed-price listings.
• Global Reach: Access to international customers.
• Niche Markets: Ideal for collectibles, vintage items, and niche products.

Cons:

• Lower Buyer Trust: Not as trusted as Amazon for new goods.
• Fees: Listing and final value fees can cut into profits.
• User Experience: Less intuitive interface compared to other platforms.

“eBay is fantastic for niche products that have a dedicated following,” Chou notes. “But it’s not as effective for building a brand.”

Etsy: Handmade and Vintage Specialization

Etsy has carved a niche for itself by specializing in handmade, vintage, and unique products. For sellers with creative or artisanal products, it’s a valuable platform.

Pros:

• Niche Audience: Dedicated customer base for handmade and vintage goods.
• Custom Branding: Offers customization and brand-building opportunities.
• Global Reach: Access to international markets.

Cons:

• Fees: Listing fees and transaction fees apply.
• Limited Categories: Focuses primarily on handmade, vintage, and craft supplies.
• Competition: High competition within specialized categories.

“Etsy is ideal for creative entrepreneurs with unique products,” says Chou. “But it’s essential to stand out in a crowded market.”

Walmart Marketplace: Emerging Competitor

Walmart’s marketplace is gaining traction, offering an alternative to Amazon with a growing customer base and reputation for low prices.

Pros:

• Brand Trust: Trusted by millions of customers.
• Brick-and-Mortar Integration: Option to offer in-store pickup.
• Low Fees: Competitive fees compared to other marketplaces.

Cons:

• Strict Requirements: Application process requires established business credentials.
• Limited Seller Tools: Fewer advertising and marketing tools than Amazon.

“Breaking into Walmart’s marketplace can be challenging, but it offers great potential for growth,” says Chou.

Shopify: Building Your Own Marketplace

While not a traditional marketplace, Shopify empowers entrepreneurs to build their own e-commerce stores with complete control over branding, customer relationships, and pricing.

Pros:

• Full Control: Complete control over branding and customer experience.
• Scalable: Supports businesses of all sizes.
• Marketing Tools: Access to robust marketing tools, including email and social media.

Cons:

• Traffic Generation: Requires significant effort to drive traffic.
• Subscription Fees: Monthly fees and additional app costs can add up.

“Ultimately, every brand should aim to own their website,” advises Chou. “Shopify is the best platform to build a thriving e-commerce business.”

Conclusion: Finding the Right Fit

Each marketplace offers unique advantages and challenges, and choosing the right one depends on your product type, target audience, and long-term goals. Chou recommends starting with a marketplace that aligns with your business model and using it as a stepping stone to build your own brand.

“Validate your product on marketplaces like Amazon or eBay,” Chou advises. “But always work toward creating a brand that customers recognize and trust on your own website.”

Step 1: Finding a Product

The first step to starting an e-commerce business is finding a product to sell. Chou recommends looking at everyday problems and finding products that solve them. By identifying a problem you or people around you face, you can ensure a market for your product.

“You can be sure that there’s a market for that product,” Chou says, citing his example of selling handkerchiefs online because he couldn’t find them elsewhere.

If you’re unsure what to sell, tools like Jungle Scout can help you find products with high demand and low competition. Other research tools like Ahrefs and Terapeak provide valuable insights into market trends and customer needs.

Step 2: Finding a Supplier

Once you’ve identified a product, the next step is finding a reliable supplier. Your goal is to achieve at least a 66% gross margin on your sales.

Chou advises using platforms like Alibaba to find manufacturers or attending trade shows to meet suppliers in person. Hiring a sourcing agent is another option that can save time and effort. “Usually, these sourcing agents cost around five percent of your cost of goods,” Chou notes.

When working with a supplier, communicate expectations clearly and request samples to validate product quality before making a large investment.

Step 3: Validate Your Product

Validating your product is crucial before committing to large inventory orders. Chou suggests selling samples on Facebook groups, eBay, Amazon, or Etsy to gauge demand.

“Sell a couple of samples and test the waters,” he advises. Early feedback helps refine your product and pricing before scaling up production.

Step 4: List Your Product on Amazon

Chou recommends listing your product on Amazon first to generate immediate sales and validate demand. With over 50% of the e-commerce market share, Amazon provides access to a vast customer base.

Chou emphasizes optimizing your product listing with relevant keywords, high-quality images, and compelling descriptions. He also suggests using Amazon’s pay-per-click (PPC) advertising program to boost visibility.

“Amazon’s PPC ads can be a great way to generate sales for your product,” he says.

Step 5: Start Your Own Website

Once your product has been validated, it’s time to start your own website. This allows you to build your brand, control the customer experience, and foster a loyal customer base.

Chou recommends Shopify for ease of use and support, while WooCommerce or Shift4Shop are budget-friendly alternatives. BigCommerce also offers robust functionality without extensive reliance on third-party apps.

“Make sure you incorporate your value propositions and why you are different on your website,” Chou advises.

Step 6: Implement Email Marketing

Email marketing helps retain customers and encourages repeat business. Chou recommends setting up automated email campaigns for abandoned carts, pre-purchase sequences, post-purchase follow-ups, and win-back campaigns.

“The goal with email marketing is to retain customers and encourage repeat business by sending targeted automated email campaigns,” Chou explains.

Step 7: Content Creation

Generating organic traffic is essential for long-term success. Chou suggests a three-pronged approach to content creation:

Blogging: Share tips, reviews, and behind-the-scenes insights to engage your audience.
YouTube: Create informative videos related to your product or industry.
Podcasting: Establish authority and build a dedicated following with audio content.
By consistently producing valuable content, you can attract a large audience and drive traffic to your website.

Step 8: Advertising

Paid advertising on Facebook, Google, and Amazon is a quick way to generate immediate sales. Chou emphasizes the importance of tracking results and adjusting strategies to optimize performance.

“By advertising on Facebook and Google, you can generate immediate sales and reach a large audience quickly,” he says.

Step 9: Focus on Your Best Customers

Repeat business is the cornerstone of a successful e-commerce business. Chou advises identifying your best customers based on lifetime value, purchase frequency, and average order value.

“Once you’ve identified your best customers, you can start building relationships with them by providing excellent customer service, special offers, and exclusive access to new products,” Chou explains.

Time to Get Started

Now that you understand the steps required to launch a successful e-commerce business and how to choose the right marketplace, it’s time to take action. The world of e-commerce is dynamic and constantly evolving, but with careful planning and execution, you can build a thriving business.

Define Your Business Model: Choosing the right business model is crucial. Consider the long-term potential and select a model that gives you control over your brand and products. Whether it’s private label, wholesale, or dropshipping, understand the pros and cons of each.

Find the Perfect Product: Identify a product that solves a problem or fulfills a need. Your personal experiences, skills, and market research tools like Jungle Scout and Ahrefs can guide you toward the right choice.

Pick the Best Marketplace: Choose a marketplace that aligns with your product and business model. Amazon offers unmatched visibility, while Etsy caters to creatives and Walmart presents an emerging opportunity. Remember, the ultimate goal is to build your own brand on a platform like Shopify.

Validate, Then Scale: Start small by validating demand through samples and limited inventory on marketplaces like Amazon or eBay. Once you’ve proven demand, focus on scaling your operations by building your own website and establishing a strong brand identity.

Automate Marketing: Implement email and SMS marketing campaigns to engage customers and drive repeat business. Create valuable and informative content to attract organic traffic, and consider paid advertising for immediate sales.

Focus on Customer Loyalty: Identify and nurture relationships with your best customers through exceptional service, special offers, and exclusive access. Build a community around your brand to drive repeat business and increase customer lifetime value.

Starting an e-commerce business can be challenging, but the rewards are substantial with the right strategy and determination. As Steve Chou puts it, “Validate your product on marketplaces like Amazon or eBay, but always work toward creating a brand that customers recognize and trust on your own website.”

The roadmap is clear, and the opportunities are vast. It’s time to start your e-commerce journey.

Understanding the Low Inventory Fee

The low inventory fee is applied to products that fall below a threshold set by Amazon, which varies depending on the product category and market demand. According to Amazon, this fee aims to optimize the distribution of products across its warehouses, ensuring that items are readily available to ship to customers across different regions. This strategy is intended to improve Amazon’s supply chain efficiency and enhance customer satisfaction by reducing delivery times.

Seller Concerns and Challenges

Critics of the new fee, including the owner of the RockstarFlipper YouTube channel, argue that it places an undue burden on smaller sellers. The channel, which provides insights and advice to online sellers, recently discussed how these changes impact the business dynamics on Amazon’s platform. “This low inventory fee is yet another hurdle for small business owners operating on Amazon,” the channel’s owner explained. “It forces sellers to either overstock items to avoid the fee or face additional costs, which can be particularly challenging for businesses with limited capital.”

The discussion also highlighted that while the fee might be intended to ensure product availability, it could inadvertently pressure sellers into maintaining higher inventory levels than necessary, potentially leading to overstock and financial strain.

Impact on Marketplace Dynamics

The fee raises questions about the balance of power between Amazon and its sellers. There is concern that it may benefit larger sellers who can afford to meet higher inventory requirements without financial strain. “Amazon’s policies often favor big players or those with deeper pockets. This new fee could push smaller sellers out of the platform, reducing the diversity of available products,” noted the RockstarFlipper.

Adapting to New Policies

Some sellers are exploring new strategies to manage their inventory more efficiently in response to the fee. Advanced forecasting tools and tighter inventory controls are among the methods adopted to align with Amazon’s expectations without incurring additional costs. However, these tools represent an extra expense, adding another layer of complexity to operations.

Looking Forward

As feedback on the low inventory fee continues to surface, it will be crucial for Amazon to engage with its seller community to address their concerns. Balancing operational efficiency with a supportive environment for sellers of all sizes will be key to maintaining a healthy and competitive marketplace.

The RockstarFlipper’s discussion ends with cautious optimism: “It’s important for sellers to voice their concerns and for Amazon to listen. The platform’s success relies on a diverse range of sellers, and policies like these should support, not hinder, their ability to do business effectively.”

This ongoing debate underscores the need for Amazon to find a middle ground that accommodates the needs of its diverse seller base while striving for logistical excellence. How the e-commerce giant responds to these concerns could shape its relationship with small businesses and its reputation as a fair and equitable marketplace.

Instacart is preparing to go public, leading to a disclosure of the startup’s finances. The grocery delivery service is already setting itself apart from many startups seeking to go public by being a profitable company after reporting a $73 million loss the previous year.

Nonetheless, according to The New York Times, the company’s growth is slowing. Instacart benefited greatly from the pandemic, but as life has returned to normal, fewer people are relying on the startup’s service.

As a result, the company has diversified into other areas, most notably advertising. The advertising business now makes up almost 30% of its total revenue.

“They’re not facing a future of significant growth in their core business,” Brittain Ladd, a grocery industry consultant, told the Times.

Washington AG Bob Ferguson launched an investigation into Amazon’s “Sold by Amazon” program. The program effectively amounted to price-fixing, as Amazon and third-party sellers agreed to a specific price, rather than compete with each other.

Amazon has agreed to shut the program down, and pay $2.25 million to the Attorney General’s office.

“Consumers lose when corporate giants like Amazon fix prices to increase their profits,” Ferguson said. “Today’s action promotes product innovation and consumer choice, and makes the market more competitive for sellers in Washington state and across the country.”

The investigation is not the only such legal challenge the company is facing. Washington DC AG Karl A. Racine filed a similar lawsuit against the company, accusing it of using its “most favored nation” (MFN) agreements to price-fix.