Ecommerce basics FAQ.

Both serve different purposes. Marketplaces provide immediate traffic but you don't own the customer relationship. Your own site gives you data, brand control, and margin, but requires you to generate all traffic. Most operators start on marketplaces for cash flow, then add a direct channel once they understand their customer.

A marketplace (Amazon, eBay, Etsy) connects sellers with buyers and charges fees per transaction. A retailer (John Lewis, Tesco) buys your product wholesale and sells it themselves. With a marketplace, you control pricing and listing. With a retailer, they do.

Landed cost (product + freight + duties + packaging) + platform referral fee + fulfilment fee + estimated return rate cost + advertising cost per sale. Many sellers forget to include returns, storage fees, and ad spend. Your true cost is almost always higher than you think.

After all fees and costs, aim for at least 20–30% net margin to sustain the business. Below 15%, you're one fee increase or return spike away from unprofitability. Margins vary by category: electronics run thin (8-12%), while consumables and private label can achieve 35%+.

Technically you can start as a sole trader, but a limited company provides liability protection and looks more professional to suppliers. You'll need to register for VAT once you exceed the threshold (currently £90,000 in the UK). Platforms will require tax information regardless of business structure.

Launching without validating demand. New sellers often invest in product, packaging, and branding before confirming that customers are actively searching for what they're selling. Use search volume data, competitor analysis, and small test orders before committing significant capital.