Are you thinking of starting a business online? You’ll need an online store for your customers to purchase your products or services from. There are 2 types of websites you can create an online store on: marketplace platforms and ecommerce platforms. Read on to find out everything you need to know about the main difference between ecommerce platform and marketplace and which option is a better choice for your business.
What Is A Marketplace?
Marketplaces are websites which host multiple sellers. Users are able to buy products from different sellers and pay for them together on a marketplace website. Some popular examples of marketplace websites are Amazon, eBay, Etsy, Shopee and Lazada.
Marketplace websites are owned and managed by administrators from their own companies and they are able to host thousands of different sellers all on the same platform. The marketplace company is responsible for managing their website. This includes investing time and money to maintain their platform and provide a seamless, safe online shopping experience for their customers.
Marketplaces are typically not involved in the shipping and delivery process. Each individual seller is responsible for storing their own inventory and shipping their products to customers.
The main difference between ecommerce platform and marketplace is the number of parties involved in the website. A marketplace has 3 main parties:
- Vendor – people who sell products on the website
- Customer – people who buy products from the website
- Marketplace Administrator – people who own and manage the website
Meanwhile, ecommerce platforms leave out the middle-man, with only 2 parties involved:
- Vendor – people who own, manage and sell products on the website
- Customer – people who buy products from the website
Marketplaces generate revenue by charging a commission fee, flat membership fee, or some combination of both, to their vendors and customers. Generally, most marketplaces charge a 5-15% commission fee, including Amazon and eBay.
As a vendor, one benefits of selling your products on marketplaces is that you only need to focus on your inventory and shipping as the marketplace administrators will handle and maintain the website performance. Another benefit for vendors is how easy it is to set up an account and online store on these marketplace platforms. Most marketplace websites even allow vendors to link their social media accounts in their online store.
What Is An Ecommerce Platform?
Now you have a better understanding of marketplace websites, let’s turn our focus to ecommerce platforms. Read on to find out everything you need to know to break down the difference between ecommerce platform and marketplace websites.
An ecommerce website is owned and managed by the vendor directly and on this platform, individual vendors can sell their own products to customers. As we mentioned earlier, the main difference between ecommerce platform and marketplace websites is the number of parties involved. On ecommerce websites, there is no administrator acting as the middle-man between the vendor and the customer.
Vendors who possess the technical capabilities and want to provide a highly personalized shopping experience for their customers will benefit from using ecommerce platforms for their online stores. However, this also means more work for the vendors.
Ecommerce websites are set up, owned and managed by vendors so platform management and performance falls under the vendor’s responsibilities for this type of online store. For instance, it is up to the vendor to ensure that their ecommerce website is up and running at all times to provide a secure online shopping experience for their customers.
Thankfully, you won’t have to set up your ecommerce website completely from scratch if you don’t want or have the skills to. There are various ecommerce platforms nowadays with existing templates and user-friendly features to help you set up your online store. Some popular examples of ecommerce platforms are WooCommerce on WordPress, Shopify and Wix. Ecommerce platforms are fully customizable and vendors can take advantage of this to get the most out of their online stores. For instance, you can add lead forms, such as newsletter sign up forms, to collect the contact information of your potential customers on your website. Ecommerce vendors can collect this data and build their audience on Google Ads to further promote their service and products effectively.
8 Biggest Differences Between Ecommerce Platforms And Marketplace Websites
Now that you know the difference between ecommerce platform and marketplace in terms of their definitions and have a better understanding of how both types of online stores work, you are ready to get started on your journey as a vendor.
However, if you still need more clarity, here’s a complete list breaking down the difference between ecommerce platform and marketplace website for you to decide which option is best for your business:
1. Number of vendors
Marketplaces sell products from multiple vendors while ecommerce platforms only sell products from one vendor.
2. Revenue stream
Marketplaces generate revenue from commission or membership fees from vendors and customers while ecommerce vendors earn revenue directly from sales.
3. Size of inventory
Marketplaces have a much larger inventory than ecommerce websites due to the number of vendors, providing customers more variety of products.
4. Platform management
Marketplace administrators manage the online stores for all their vendors while ecommerce vendors are responsible for managing their own websites.
5. Initial investment
Vendors require less capital to create an account and online store on a marketplace compared to creating a store from scratch on an ecommerce platform.
6. Platform traffic
Marketplaces tend to have more website traffic than ecommerce websites due to the number of vendors and size of inventory.
7. Customer’s trust
Marketplaces have administrators ensuring the safety and security of their platform so first-time customers tend to perceive marketplace vendors as being more reliable and secure than individual ecommerce vendors.
8. Mobile shopping
Mobile commerce is a fast-growing online shopping trend so optimizing your online store for mobile buyers is highly important. Marketplaces are already optimized for mobile commerce while ecommerce vendors will have to optimize their platforms independently.
Marketplace VS Ecommerce: Which Platform Is Best For Your Business?
After breaking down the difference between ecommerce platform and marketplace websites, you now have a better understand of how both platforms have their own pros and cons, each with different benefits and drawbacks.
There is no set answer for which platform is better than the other. Rather, you should evaluate your business expectations and goals to have a better understanding of which platform will work best for you specifically.
Of course, the ideal solution would be to work out a hybrid strategy that allows you to sell your products on both platforms, with an online store on a popular marketplace as well as a personal website on an ecommerce platform. If going hybrid is too challenging for you to handle on your own, you can also turn to outsourced digital marketing services to help your business achieve its goals. You can set up a consultation with marketing experts to find out which platform is the right one for and help you set up a digital marketing strategy to grow your business online.
You can also adjust your audience targeting parameters to have excluded audiences. This allows you to exclude specific topics and websites so you don’t waste your budget and time advertising to people who are unlikely to become your potential customers.
How Our Digital Marketing Services Can Help You
Now that you have a better understanding of the difference between ecommerce platform and marketplace, are you ready to get started on your online business journey?
Get in touch with our expert consultants from Premia TNC to assist you step by step, from the very beginning of registering your business to helping you set up your online store and grow your online presence through digital marketing strategies.
Our team of marketing professionals can help grow your business through Google Marketing solutions. Let us handle the implementation of your digital marketing strategy, from the setup and management of your Google Ad campaigns to the tracking and monitoring of campaign performance to ensure your target audience is reached.
We also provide a full, comprehensive suite of digital marketing services, including social media management, website development, content and creative design solutions. Contact us for a FREE consultation today to find out more about how to take your business online!
