Introduction
When building an eCommerce business, sellers often face a critical decision: should I scale on Amazon or invest in my own website? Both options have advantages and hidden costs. Amazon provides instant access to millions of customers but takes a significant cut of every sale. Running your own website offers more control, but demands investment in traffic, fulfillment, and infrastructure.
Let’s break down the real costs of each channel—so you can make data-driven decisions for your brand.
The Cost of Selling on Amazon
- Referral Fees
- Average: 8–15% per sale, depending on category.
- Non-negotiable and automatically deducted.
- Fulfillment by Amazon (FBA) Fees
- Pick, pack, and shipping fees charged per unit.
- Storage fees based on cubic feet, with surcharges for aged inventory.
- Advertising Costs
- Sponsored Products and Brands are critical to visibility.
- TACoS (Total Advertising Cost of Sales) can range 10–25% for many sellers.
- Other Fees
- Returns Processing Fees (for high-return-rate categories).
- Low-inventory-level fees or inbound placement service fees.
Total Impact: For many sellers, Amazon fees + ad spend consume 30–50% of revenue.
The Cost of Selling on Your Own Website
- Platform & Hosting
- Shopify: $39–$399/month depending on plan.
- Add-on apps (subscriptions, reviews, email marketing): $50–$300/month.
- Payment Processing
- Stripe/Shopify Payments: ~2.9% + 30¢ per transaction.
- Fulfillment Costs
- Third-party logistics (3PL) or in-house fulfillment.
- Pick/pack fees, storage, and shipping rates.
- Customer Acquisition
- Google, Meta, TikTok ads required to drive traffic.
- CAC (customer acquisition cost) often $20–$60+ depending on niche.
- Ongoing Marketing
- SEO, content, email marketing, and loyalty programs to retain customers.
Total Impact: Costs are front-loaded, but customer retention and repeat orders can improve lifetime value dramatically.
Comparing Margins: Amazon vs. DTC
- Amazon Pros:
- Massive built-in traffic
- High conversion rates (shoppers are ready to buy)
- Logistics handled by FBA
- Amazon Cons:
- High fees
- Competitive pressure and constant repricing
- Limited control over customer data
- DTC Pros:
- Full control over branding and customer experience
- Direct access to customer data for retention strategies
- Higher long-term margins if CAC is managed
- DTC Cons:
- Expensive customer acquisition
- Requires operational infrastructure
- Lower conversion rates without strong trust signals
Hybrid Approach: Why Most Brands Do Both
For many sellers, the best strategy isn’t choosing one channel—it’s combining both:
- Use Amazon for discovery, velocity, and brand exposure.
- Use your website for retention, upsells, and lifetime value.
- Drive repeat customers to your DTC site with inserts, loyalty programs, or email marketing.
Real-World Example
A kitchenware brand sold exclusively on Amazon, with 42% of revenue eaten up by fees and ads. By building a Shopify site, they began funneling repeat customers to DTC. Within 12 months, 30% of their revenue came from their website—where margins were 15% higher, and they owned the customer relationship.
Conclusion
Selling on Amazon and running your own site both come with hidden costs. Amazon charges for access to its traffic, while DTC requires you to buy your own traffic.
The smartest sellers don’t think Amazon vs. website—they think Amazon + website.
By mastering both channels, you can:
- Maximize reach
- Balance margin with velocity
- Build a resilient brand that scales sustainably
The bottom line: Amazon builds visibility, DTC builds longevity.
