Amazon vs your own DTC store: margins, control and running both

Start with a $40 product that costs you $12 to make and $4 to ship in a box.

On Amazon (FBA) you typically give up a referral fee of around 15% in most categories, so about $6. FBA fulfillment fees for a small standard item land in the low-to-mid single dollars, plus monthly storage, and inbound shipping to Amazon's warehouses. Many sellers also spend 10% to 20% of sales on Sponsored Products to stay visible. After product cost, fees and ads, a $40 item often nets $8 to $12.

On your own store you keep the $40 less payment processing of roughly 3%, the $4 to ship, and your platform costs. The hard part is acquisition. If your blended customer acquisition cost on Meta and Google is $25 to $35 for a first order, a single $40 purchase loses money or barely breaks even. You make it back only if the customer buys again, which is exactly what Amazon makes hard.

So the real comparison is not per order. It is Amazon's fee stack versus your acquisition cost, and lifetime value versus one-time value. A brand with a 40% repeat rate and a $120 twelve-month customer value can afford a $30 acquisition cost and should lean DTC. A brand selling a one-time purchase with no natural reorder should probably treat Amazon as its primary channel and the website as a brand and support destination.

Build the model for your own numbers before deciding anything. Use contribution margin after fees and ads, not gross margin.

• Demand you did not create. A large share of US product searches start on Amazon. If you sell something people already search for, listing there is the fastest route to volume.
• Trust and convenience. Prime shipping, familiar checkout and easy returns remove most of the trust-building a new DTC brand has to do.
• Logistics. FBA handles storage, picking, shipping and customer service for the order.
• Fast validation. A new product can show real sales data in weeks.

• The customer relationship. You do not get the buyer's email, cannot build a list and cannot market to them off-platform except through strictly limited means.
• Pricing control. If a lower price appears anywhere, including your own site, Amazon can suppress the Buy Box.
• Margin. Referral fees, fulfillment, storage, and advertising that becomes mandatory as competition grows.
• Brand presentation. Even with Brand Registry, A+ content and a Storefront, your product sits next to competitors and knock-offs.
• Stability. Listings can be suspended, categories gated and fees changed with short notice. A business that is 90% Amazon has a single point of failure.

• Ownership of data. Every email, phone number (with consent) and purchase history is yours to use for retention.
• Margin on repeat orders. The second purchase from a customer you already own costs almost nothing to acquire.
• Merchandising freedom. Bundles, subscriptions, gift sets, limited drops, personalization, education, community.
• A brand that compounds. Content, reviews and search visibility accrue to a domain you control.

• Acquisition. Paid social and search have gotten more expensive and less precisely targetable. Email and SMS lists are the counterweight, but they take time to build.
• Operations. You run or contract fulfillment, customer service, returns and fraud handling.
• Conversion work. A new store converts a small fraction of visitors and improving that is continuous work.
• Compliance. Sales tax collection across states, accessibility expectations, privacy notices, CAN-SPAM for email and TCPA for texting all sit with you.

Use these rules of thumb to set the weighting between channels:

1. If the product is a search term (a category people type into a search bar), Amazon should be live and well-optimized. Do not fight for a keyword on your site that Amazon will win on the same search results page.
2. If the product needs selling (a story, a demonstration, a comparison, a routine), the website is where that happens. Amazon's listing format cannot carry it.
3. If repeat purchase is natural (consumables, refills, subscriptions), invest in DTC retention. Amazon's Subscribe & Save competes directly with you, so give customers a reason to subscribe with you instead.
4. If margin is thin (under 50% gross), Amazon's fee stack may leave nothing. Either raise price, change the product or keep Amazon as a secondary channel.
5. If you are over 70% dependent on either channel, the next year's priority is diversifying.

Keep prices matched; differentiate everything else. Price parity avoids Buy Box suppression. Exclusivity belongs on your site: bundles, sizes, colors, early access, loyalty points, free gifts at a threshold and subscriptions with real perks.

Use Amazon for discovery and the site for the relationship. Package inserts that invite registration, a warranty activation or a how-to guide on your site are allowed if they do not ask for reviews in exchange for anything and do not try to redirect the sale. Follow the rules exactly; Amazon enforces them.

Run Brand Registry and defend the listing. Register your trademark, lock down the detail page, report counterfeits, and use Sponsored Brands to own the search for your own name.

Measure the halo. Brands that advertise their DTC site often see Amazon sales rise, and Amazon advertising can lift branded search on Google. Watch the channels together in one report rather than optimizing each in isolation.

Unify inventory and reporting. A single inventory source feeding both channels prevents stockouts on one while the other sits on excess. Pull orders, fees and ad spend from both into one contribution margin view by product.

• Launching on Amazon with no advertising budget and assuming the listing will be found.
• Undercutting your own Amazon price on the website to drive DTC sales, then losing the Buy Box.
• Treating the DTC site as a brochure rather than a conversion-optimized store.
• Ignoring retention: a DTC store with no email and SMS program is paying full acquisition cost on every order.
• Letting Amazon reviews live only on Amazon when the same social proof could be presented on your site.

Discover: we build the contribution margin model per product per channel using your actual fees, ad spend and repeat rates, so the channel decision rests on numbers rather than opinion. Plan: our digital strategy and advisory team sets the channel weighting, the differentiation rules and the targets for each. Build: the Shopify and ecommerce team makes the DTC store convert and carry the offers Amazon cannot, while ecommerce growth runs acquisition and retention and coordinates Amazon advertising with it. Improve: one combined report tracks both channels monthly, and we shift budget and merchandising toward whichever mix produces the most margin. Because brand, web, growth and automation work as one team, the brand presentation stays consistent across both storefronts and the data flows into one place.

The Ecommerce Growth System engagement is the representative pattern: store, creative, paid media and commercial reporting run as one loop. In practice that meant acquisition spend was judged against margin after fees and fulfillment rather than against revenue, the store was merchandised to carry offers the marketplace could not, and reporting showed the channels side by side so decisions about where to push were made on contribution, not gut feel. The same structure applies whether a marketplace is 20% or 70% of a brand's sales.