E-commerce vs. Marketplace – Which one is better?

Marketplace – what is it?

As an online seller, you may have heard of the term “marketplace” and wondered what it entails. Simply put, a marketplace is an online platform where you can sell your products without the need for an e-commerce website. This means that you can easily list your products alongside other sellers on the platform, regardless of your business niche or product offering.

Each marketplace platform operates with its own set of unique rules and regulations. These differences may include delivery terms, return policies, product offerings, and item quality. However, if you come across such a place, you will surely recognize it.

Marketplace – examples of platforms

Marketplace platforms have become increasingly popular due to their convenient transaction processing, automation, and trusted services. If you’re looking for the best marketplace platforms, check out these top examples that you may have already encountered:

• Etsy – an online marketplace that focuses on handmade, vintage, and unique items. Etsy strongly emphasizes community, creativity, and sustainability and offers a range of tools and resources to help sellers grow their businesses. Independent sellers can set up a shop and sell their handmade or vintage products to a global audience.
• eBay – an online marketplace where buyers and sellers can buy and sell a wide range of products. The platform offers both auction-style and fixed-price listings, and buyers can purchase items using various payment methods. The platform also offers sellers tools and resources to help optimize listings and manage sales. eBay has a global presence, and sellers can reach a large audience of potential buyers.
• Amazon – once just an online bookstore – has since grown into a popular platform for sellers worldwide. It provides a vast selection of goods for customers to choose from, including books, electronics, clothing, and more.
• AliExpress – an online marketplace based in China that offers a wide range of products at competitive prices, including electronics, clothing, home and garden items, and more. It allows businesses and individuals to sell products to consumers all around the world. AliExpress is known for its buyer protection policies, which offer refunds or returns if the product is not as described or if it does not arrive within the specified delivery time.
• Facebook Marketplace – an online platform where Facebook users can buy and sell goods and services within their local community.

E-commerce vs. Marketplace – What to consider?

Are you stuck between choosing an e-commerce store or a marketplace? Making the right choice requires careful consideration of your business needs and your target audience’s expectations. To help you make an informed decision, it’s crucial to consider the strengths and weaknesses of both platforms. Keep reading to learn about the most critical aspects of selling on e-commerce and marketplaces.

Ease of implementation

If you are a beginner in the world of online sales, your top priority should be making the process of starting your business as simple as possible. However, simplicity does not always equate to quality. Despite this, it should be taken advantage of if there is an opportunity to reduce the complexities involved in starting an online business.

In terms of ease of implementation, the marketplace has a significant advantage over other options. All you need to do is register on the portal and start selling. Just fill out the form, add your products, and provide their descriptions, photos, and prices to help customers make informed decisions. With a marketplace, payment, and shipping are automated, making it an incredibly convenient option.

When it comes to setting up an online store, many find it to be a challenging task. Fortunately, there are various automated solutions available to simplify the process. By using Software as a Service (SaaS) programs, you can easily add your products, descriptions, and prices. Integrating your online store with courier services and marketplace platforms can also simplify operations. While creating an e-commerce website from scratch provides greater customization opportunities, it may take longer to complete. With SaaS software, however, you can significantly reduce the time and effort required to establish a successful online store.

Store structure

When it comes to creating an online store, the appearance and structure of your website can make all the difference in attracting and retaining customers. You can boost your online visibility and achieve better results by customizing your store’s background, font, images, menu structure, and navigation system to fit your industry and target audience.

However, if you’re using a marketplace platform, you’re limited to the design and sales format provided by the platform. You can only add selected photos and descriptions of your products. This means that it will be difficult for you to stand out from other brands and attract consumers’ attention.

Brand image

Building a strong brand image is fundamental for any business seeking to succeed in the competitive world of online marketplaces. It can be challenging to differentiate your brand among a sea of product offers, where price, shipping options, reviews, and return policies dominate customer attention.

However, launching an online store can improve brand trust and awareness and grow a loyal customer base over time. While it may take a little longer to see the first results, investing in an online store is a wise move for any business looking to establish a strong and recognizable brand image.

Costs

If you’re considering entering the world of online sales, you’re likely wondering about the costs involved. A marketplace typically requires a smaller financial investment when launching a platform than an online store. In fact, you can start selling on a marketplace with minimal capital.

However, if you want to open your own online store, be prepared for significant expenses reaching tens of thousands of dollars. But don’t worry. There are automated software solutions available that can help you reduce the costs of online sales. While using a marketplace can help you save money, an online store will give you more control over your brand and user experience. Remember that regardless of your chosen approach, the cost of an online store will be slightly higher than a marketplace. So, make an informed decision based on your business needs and budget.

Pricing strategy

Choosing between an online store and a marketplace for your e-commerce business? Pay attention to the critical role of pricing systems in your decision-making process. While these channels may seem similar at first glance, the truth is that marketplaces typically require a margin for platform fees to be factored into your product prices. Carefully consider this factor when selecting your sales service, as the margin can vary significantly between platforms.

Opting for a marketplace requires considering its level of competitiveness. Cheaper products tend to attract customers, making it challenging to differentiate oneself from the competition without focusing on pricing. Hence, pricing strategy is a critical aspect to consider.

Sales Channel Effectiveness Analysis

When selling on a marketplace, it can be challenging to measure the effectiveness of your approach and identify what factors influence consumer behavior. Typically, your outcomes depend on the platform’s promotional offerings, leaving you with limited options for personalizing your strategy to improve your results.

Luckily, establishing an online store effectively solves these challenges, enabling you to monitor your real-time performance using intuitive tools. With your own website, you can adopt various strategies, including email marketing, SEO, Google Ads, and social media promotions, to reach a broader audience and increase sales.

Business Conditions

When deciding on the best eCommerce strategy for your business, it’s important to consider the limitations of using a marketplace platform. Marketplaces often have strict rules and regulations that can restrict your ability to present your products in the best way possible. These limitations include being forced to accept the platform’s terms and conditions and adhering to their product descriptions.

On the other hand, an online store offers much more flexibility and freedom. With your own store, you have the ability to develop your own terms of sale and product descriptions that align with your brand’s messaging. Additionally, you can create valuable content that speaks directly to your target audience, increasing the likelihood of making a purchase. Platforms like Amazon have restrictions on certain words that can be used to describe products. Having your own online store ensures complete control over product descriptions, making it a clear winner for businesses looking to maximize their online presence.

Competition

Marketplace competition can be highly competitive, and simply relying on low prices to differentiate yourself from other brands is not always the most effective approach. While offering competitive pricing may be a short-term solution, it can ultimately lead to financial challenges down the road.

Fortunately, there are other ways to differentiate your brand and attract customers. By emphasizing the benefits of your products and the quality of your assortment, you can provide customers with a compelling reason to choose your brand over others beyond just the price.

E-Commerce Website Vs. Marketplace – A comparison of benefits

If you’re still struggling to choose between a marketplace and an online store, let’s take a closer look at the benefits of each. By comparing these advantages, you’ll be able to make an informed decision that is perfect for your business needs.

Advantages of an e-commerce website

• No commission fees – one of the most significant benefits of selling in an online store is that you don’t have to pay any commission fees to the payment provider. This means that all the revenue generated goes straight into your pocket. The only fixed costs you have are related to maintaining the store and online payment services.
• Flexibility in branding – with an online store, you have complete control over how you present your brand to your customers. You can personalize your message, add selected graphic designs, and create unique product descriptions. An individual approach to customers is always more effective in driving sales.
• Access to analysis and statistics – one of the most significant benefits of an online store is access to real-time analysis and statistics. You can track your marketing campaign’s effectiveness and monitor traffic and conversion rates. By leveraging this data, you can make informed decisions and optimize your store’s performance for better SEO results.
• Low competition – an online store allows you to promote your brand creatively and innovatively. Although you need to analyze your competitors’ strategies, you have various tools at your disposal to differentiate yourself in the market. These include price, quality of products, descriptions, reviews, photos, and promotions. You can attract and retain customers by leveraging these elements while minimizing competition.

Advantages of marketplace

• Lower start-up costs – compared to starting an online store, selling on a marketplace platform is much more affordable. The initial fee is considerably lower, and you won’t have to worry about marketing expenses, courier costs, or pricing strategies, as the platform typically covers these.
• More customers – by joining a marketplace platform, you don’t have to build a customer base from scratch. You will have access to a wide range of customers who regularly visit the portal to make purchases. With the right product offer, attractive photos, or competitive pricing, you can attract these customers to your business.
• High trust – customers are more likely to trust a marketplace platform than an online store they have never heard of before. By selling on a marketplace, you can leverage the platform’s high trust and reputation to attract new customers and build credibility for your brand.
• Easy implementation – setting up your business on a marketplace platform is easy and straightforward. You don’t have to worry about programming, creating store structures, or positioning your store in search results. The platform authority you choose will handle all the work, leaving you to focus on growing your business.

What to choose?

When deciding between selling on marketplace platforms and using an online store, consider your business goals, values, customer expectations, and product characteristics. Both options can generate profits, but your choice depends on your situation.

Marketplace platforms may bring quick profits but don’t help build brand awareness or customer trust. On the other hand, using an online store can offer numerous long-term benefits.

To maximize the benefits of both channels, consider using them simultaneously. This approach allows you to redirect customers from the marketplace to your online store, increasing website traffic and conversion rates. However, developing a precise strategy is important before you choose this approach. While using both the marketplace and online store can bring in double benefits, it can also result in double losses if not done correctly.