You may have used “ecommerce website” and “marketplace” interchangeably. At first glance, they may appear to be the same, but they are not.
If this statement appears confusing to you, then you have come to the right place.
Let’s discuss the difference between an ecommerce website and a marketplace and determine which option is better for you.
Defining the ecommerce website and the marketplace
An ecommerce website is just like a brick-and-mortar store — only that it’s found online.
Aside from selling products, the seller is also involved in building and maintaining the ecommerce website.
What about the marketplace?
If an ecommerce website is a brick-and-mortar store for a brand, then a marketplace is a mall.
It’s an online platform where many sellers can sell their products. Such portals attract a more extensive customer base due to the variety of products offered.
Marketplaces involve the tripartite participation of vendors, customers, and marketplace managers. Ecommerce websites only involve the vendor and customer.
READ: How to Setup an Ecommerce Website that Sells
Comparing ecommerce websites and marketplaces
By now, you understand how ecommerce websites and marketplaces differ from each other. So, let’s compare them based on the vendor’s top concerns.
1. Revenue model
Marketplaces charge a percentage of your sales as a commission — between 5% to 25%! Meanwhile, some marketplaces charge a membership fee or a fee for product listing. Thus, marketplace sellers will experience erosion in their revenue.
In the ecommerce environment, you keep what you earn.
While sellers don’t pay any commission, they have to pay for domain sale and hosting, and website maintenance. But this amount is comparatively low in the long run. Following best practices will reward the seller with a handsome return on investment.
With ecommerce websites, you’re building everything from scratch using an intuitive ecommerce website builder. Hence, you get complete and absolute control over how you want the website to turn out.
You may choose themes and extensions that will make your website (and your products) stand out. You may also organise your products based on their categories. This allows your customers to sort and filter all your products.
With such user-friendly features, you can provide a good shopping experience for your buyers, build brand loyalty, and establish customer satisfaction.
In contrast, marketplaces have a set template against which sellers need to feed in data. Thus, sellers have little to no scope to personalise their selling page.
Plus, filtering and sorting products would mean your competitor’s products may gain an edge over your
3. Marketing strategies
Any ecommerce store or marketplace should have a clear marketing strategy.
Ecommerce websites have the advantage of having a defined target audience. With a set demographic on hand, sellers can formulate a winning recipe to attract them to their website and convert them to customers.
A successful and reliable marketing strategy also helps with brand building. An established brand is a good foundation for customer loyalty.
On the other hand, marketplaces have a vast and diverse set of users. They may find it overwhelming to decide on a marketing strategy that will work for everyone.
Fortunately, marketplace sellers may opt to put up ads to increase their visibility throughout the platform. Although, they’ll have to shell out more money and consider complex marketplace algorithms.
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The marketplace may seem like a convenient way to kickstart your online selling business. But you have to sacrifice your independence.
For example, marketplaces manage the positioning of sellers and their products. Thus, sellers have to depend on metrics like sale volumes or customer feedback to appear useful to the marketplace.
At the same time, marketplaces don’t share customer details with sellers. Thus, sellers will find it difficult to conduct market research or inform their buyers about new arrivals, restocks, or special offers.
Meanwhile, ecommerce website owners enjoy absolute sovereignty in all matters. You get to control how you list your products and own your customer data.
What platform will you use?
If you are a beginner looking for a quick start, you may consider a marketplace. But if you look forward to scaling your business, opt for a tailor-made ecommerce website.
In the end, when choosing your selling platform, it’s essential to consider your losses and gains — both short and long-term.