The most critical decision is whether to sell products on established marketplaces like Amazon and Flipkart or to build and scale a direct-to-consumer (D2C) store. Both models have unique advantages and challenges, and the choice often determines a brand’s growth trajectory, profitability, and customer relationships.

This blog explores the dynamics of marketplace selling versus D2C ownership in India. It breaks down cost structures, customer acquisition strategies, and operational challenges while offering actionable insights into which route may suit different businesses.

Understanding Marketplace Selling in India

Marketplaces such as Amazon and Flipkart dominate India’s ecommerce landscape. According to Redseer, these two platforms account for over 60% of online retail transactions in India.

Advantages of Marketplaces

• Built-In Traffic: Millions of daily visitors reduce the need for upfront marketing.
• Logistics Support: Services like Fulfilled by Amazon (FBA) and Flipkart Smart Fulfilment simplify delivery and returns.
• Trust Factor: Customers trust established marketplaces for payment security and service reliability.

Challenges of Marketplaces

• High Commissions: Sellers often pay 15–30% in platform fees, logistics, and promotions.
• Limited Branding: Marketplaces restrict brand visibility, with most focus on price and reviews.
• Dependency Risk: Policy changes or account suspensions can halt sales overnight.

Building and Running a D2C Store

D2C brands sell directly through their own websites or apps, bypassing intermediaries. India’s D2C market is expected to touch USD 60 billion by 2027, driven by rising digital adoption, personalization, and brand affinity.

Advantages of D2C Stores

1. Higher Margins: No commission to marketplaces, allowing better control over profits.
2. Brand Ownership: Businesses have full control over branding, storytelling, and customer data.
3. Customer Loyalty: Personalized experiences encourage repeat purchases.

Challenges of D2C Stores

1. High CAC (Customer Acquisition Cost): Brands must invest heavily in marketing to attract traffic.

2. Logistics Burden: Unlike marketplaces, D2C stores must manage warehousing and delivery unless outsourced.

3. Scaling Difficulty: Competing with Amazon and Flipkart’s reach requires significant resources.

Cost Comparison: Marketplaces vs. D2C

For instance, a product priced at ₹1000 may leave a seller with ₹650–700 on a marketplace after deductions, while a D2C sale could retain ₹800–850 but with higher marketing spend.

Customer Acquisition Dynamics

Marketplaces

• Search-Led Discovery: Products are found through keywords and ranking.
• Price Sensitivity: Buyers often choose the lowest-priced option.
• Advertising: Sponsored listings increase visibility but add to costs.

D2C

• Performance Marketing: Relies on Meta Ads, Google Ads, and influencer campaigns.
• Content and Community: Blogs, newsletters, and loyalty programs drive retention.
• Organic Growth: SEO and social media presence reduce long-term CAC.

Control Over Branding

Marketplaces

• Limited ability to showcase storytelling or unique brand personality.
• Brand recall is weak as customers associate the purchase with Amazon or Flipkart.

D2C Stores

• Full creative freedom over website design, packaging, and customer journey.
• Better opportunities to upsell, cross-sell, and build an emotional connection.

Logistics and Returns Management

Marketplaces

Strong delivery networks covering Tier 1–Tier 4 cities.

Easy return management increases consumer trust but adds costs for sellers.

D2C

• Brands can partner with logistics providers like Delhivery, XpressBees, or Shiprocket.

• Returns and COD orders increase operational complexity, with return-to-origin (RTO) rates averaging 20–30% in India.

Profitability Analysis

A study by Bain & Company found that while marketplaces enable fast sales growth, they squeeze margins through fees and discount pressures. In contrast, D2C brands achieve stronger profitability per order but require scale to offset high CAC.

Example Calculation:

• Marketplace Sale: ₹1000 MRP → ₹700 after fees and logistics.

• D2C Sale: ₹1000 MRP → ₹850 after logistics → minus ₹200 marketing → Net ₹650.

In early stages, profitability may look similar, but long-term CLV (Customer Lifetime Value) is higher in D2C models due to repeat orders.

Market Trends Shaping the Decision

1. Tier 2 & 3 Growth: Over 50% of new ecommerce shoppers come from smaller cities. Marketplaces dominate this segment due to logistics reach.

2. Rising CAC for D2C: Meta and Google ad costs have increased by 30–40% in the past two years.

3. Omnichannel Strategies: Many brands adopt a hybrid approach—selling on marketplaces for reach and building D2C stores for loyalty.

Case Studies

boAt Lifestyle

Started on Amazon and Flipkart to gain traction, then scaled its D2C store for brand ownership. Today, over 35% of sales come directly from its website.

Mamaearth

Focused on its own D2C website while also selling on marketplaces. This hybrid strategy allowed rapid growth and strong brand identity.

Noise

Began with marketplaces to reach mass audiences but later emphasized D2C for profitability and better consumer engagement.

Future of Ecommerce in India

The debate between marketplaces and D2C will not end in the near future. Instead, hybrid strategies are becoming the norm. Brands launch on marketplaces to leverage their scale and then invest in D2C to build long-term profitability.

With India expected to have 500 million online shoppers by 2030, the key will be balancing reach and profitability. Marketplaces provide speed and scale, while D2C ensures sustainability and loyalty.

Conclusion

Selling on Amazon and Flipkart versus running your own D2C store is not a one-size-fits-all decision. Marketplaces offer reach and convenience but limit branding and margins. D2C requires upfront investments and sustained marketing but builds stronger customer relationships and long-term profitability.

For Indian businesses, the smartest approach may often be a hybrid strategy: consult ecommerce marketing agencies, start with marketplaces to establish sales and visibility, while gradually building a robust D2C store that fosters loyalty and maximizes lifetime value. In a market as dynamic as India, balancing both models is the true strategic advantage.