Marketplaces take so much. Why do brands keep selling there?
Originally written in Chinese. Translated with AI, reviewed by Gary. Read the Chinese original →
If you sell on Shopee or TikTok Shop in Malaysia today, once you add up commission, platform fees, affiliate commission, vouchers and so on, sometimes 20%–25% of GMV is already gone.
Add digital marketing, and that may be another 7%–15%.
If your business ends up with a net profit margin of only 12%–15%, you'll naturally ask:
Then why bother?
Why not open your own Shopify store and bring all your customers to your own website? Wouldn't that be better?
I used to think that way too.
But after these past few years running a consumer brand, marketplaces and D2C ourselves, and doing e-commerce for other brands, I've slowly come to feel we may be asking the wrong question.
The real question isn't:
Why are marketplaces so expensive?
It's:
Without a marketplace, how much would it actually cost me to get the same customer?
Saving the 20-plus percent doesn't make customer acquisition free
Take a fashion brand doing its own D2C.
You don't pay Shopee or TikTok a 20% commission, but you have to buy your own traffic.
Meta, TikTok, Google, creators: all of it costs money.
If a campaign hits 5x ROAS, it looks great. RM100 in sales, about RM20 in advertising.
The problem is, once you start scaling, I personally wouldn't use 5x or 6x ROAS for a long-term financial model.
At a more realistic 3x ROAS:
RM100 in sales, and about RM33 is already advertising.
That's before payment gateway, fulfilment, customer service, content and technology.
So saving the 20-plus percent from the marketplace doesn't mean customer acquisition becomes free.
It's a lot like opening a physical store.
Why are brands willing to pay very high rent at Pavilion or Mid Valley?
Because the traffic is already there.
Of course you can rent a much cheaper standalone shop, but from that moment on, traffic becomes your own problem.
Marketplaces are the same.
The 20-plus percent you pay isn't just a transaction fee.
In a sense, you're buying traffic + discovery + trust + payment infrastructure + reviews + logistics ecosystem + customer acquisition.
Shopee is intent, TikTok is discovery
This is even more obvious in Malaysia.
Shopee is very much an intent platform.
Consumers roughly know what they want to buy. They go in, search, compare, read reviews, check vouchers, then order.
TikTok is a bit different.
It's more like discovery + entertainment + commerce.
Someone may not have been planning to buy clothes at all. They were just scrolling videos, saw a creator, a LIVE, a host wearing something that looked good, and suddenly demand appeared.
That's why I increasingly feel TikTok LIVE can't be judged on GMV alone.
In a sense, it's also media.
Our own TikTok operation over the past 12 months had roughly:
513.7 million product impressions. More than 15.5 million unique product-page visitors. More than 818,000 orders. About 453,000 customers.
Of course I can't claim all 513 million impressions came from LIVE, and I have no way to calculate what each impression was ultimately worth.
But if I just took TikTok GMV × net profit margin and said:
"That's the value TikTok gives me."
I think that would definitely be an underestimate.
A consumer sees your LIVE today and doesn't buy.
Tomorrow they see a short video.
The day after, they search for your brand.
A week later, they might walk into your physical store.
Traditional last-click attribution struggles to capture all of that.
You need both
So these days I like the debate less and less:
Marketplace vs D2C, which is better?
I think you need both.
Marketplaces help you win the first customer.
Your own CRM, WhatsApp, membership, website and physical stores then slowly keep the customer relationship.
Especially for a new brand, the hardest part usually isn't selling to a customer the second time.
It's:
How to get someone who has never heard of you to buy from you for the first time.
That's why I think a marketplace taking 25% may not, in itself, be the biggest problem.
The real problem is:
You paid that 25%, but you have no idea what you actually bought.
If paying 25% helps you acquire new customers, increase searches, build brand awareness, drive offline traffic, even build repeat customers for years to come, the calculation is completely different.
Of course, I'd never suggest a brand be 100% dependent on marketplaces.
Platforms can change commissions, algorithms, vouchers and policies.
So in the long run you still need your own customer relationships.
But at least now I no longer see a marketplace as just a sales channel.
It's also a distribution channel, a customer acquisition channel, even a media channel.
A quick introduction
Most people know me because of ZUCCA. I'm a co-founder of ZUCCA, and we've always run a consumer brand ourselves, starting mainly with modest fashion. So many of these questions about marketplaces, TikTok LIVE, inventory, margin and customer acquisition are ones we face ourselves every day.
At the same time, we have another business behind it called Labu-Labu.
Labu-Labu is a TikTok Shop Partner (TSP), a TikTok MCN and an e-commerce enabler. Besides selling ourselves, we help other brands with TikTok Shop, livestreaming, affiliate, marketplace operations and social commerce as a whole.
So a lot of what I write about retail, TikTok and marketplaces doesn't come purely from "how an agency sees it".
More often, it comes from the perspective of an operator who is in there selling too, who has burned money, made money and stepped on plenty of landmines.