Marketplace vs Direct-to-Consumer: Comparing Performance

Many eCommerce businesses sell on both marketplaces (Amazon, eBay, Etsy) and direct-to-consumer (Shopify, WooCommerce). The temptation is to focus on total revenue across all channels — but this masks very different unit economics.

Marketplaces typically deliver:

• Higher volume (access to a large existing audience)
• Lower margin (15–20% referral fees plus FBA fees if applicable)
• No customer relationship (you cannot email your Amazon customers)
• Commodity pricing pressure

Direct-to-consumer typically delivers:

• Lower volume (you build your own audience)
• Higher margin (no marketplace fees, just payment processing)
• Full customer relationship (email, retargeting, loyalty)
• Brand premium opportunity

Knowing which is more valuable for your business — in the long run, not just this month — drives major strategic decisions.

Connect Shopify, Amazon, and other channels to see a side-by-side margin comparison in Finance → Channel Comparison → Gross Margin by Channel.

AskBiz calculates margin per channel accounting for:

• Amazon: referral fees (8–20% by category), FBA fees (fulfilment + storage), advertising costs (if Amazon Ads is connected)
• eBay: final value fees (10–15%), payment processing fees, promoted listing costs
• Shopify: payment processing fees (1.5–2.9%), app costs allocated by channel

A typical finding: Amazon gross margin is 8–15 percentage points lower than Shopify DTC margin. If your Shopify margin is 45% and Amazon margin is 30%, every £ of revenue shifted from Amazon to Shopify adds £0.15 in gross profit — a powerful argument for DTC investment.

Margin is a point-in-time metric. Customer quality is a long-run metric. AskBiz compares customers acquired via marketplace vs DTC on:

• Repeat purchase rate: DTC customers almost always have higher repeat purchase rates because you can market to them directly
• LTV at 12 months: DTC LTV is typically 30–50% higher than marketplace LTV for this reason
• Return rate: varies by category but marketplace customers often have higher return rates due to more impulsive purchasing behaviour
• Average order value: typically higher on DTC, where customers browse your full catalogue rather than a search results page

Go to Customers → Channel Comparison to see these metrics side by side.

The data will often show that DTC customers are more valuable. But that does not automatically mean you should exit marketplaces. Consider:

Why to stay on marketplaces:

• Marketplaces provide discovery — many customers find you on Amazon first, then buy DTC on repeat
• Marketplaces provide volume — if DTC cannot yet support your overhead, marketplace revenue is valuable even at lower margin
• Marketplaces provide social proof — reviews on Amazon improve your brand credibility across all channels

Why to shift toward DTC:

• Every customer you convert from marketplace to DTC improves LTV significantly
• DTC margin funds more marketing investment, compounding growth
• Marketplace dependency is a business risk — algorithm changes or policy updates can remove revenue overnight

AskBiz models the impact of channel mix scenarios in Finance → Scenario Planner → Channel Mix — model what happens to revenue, margin, and LTV if the marketplace/DTC split shifts from your current position.