Today, online shopping is as much customary as offline/conventional shopping. It can be an alternative for people who don’t have much time to shop directly at physical stores. This shopping habits change is one of the triggers for the growth of e-commerce and online marketplaces that are increasingly rampant. But, as an owner of the business itself, have you considered which one is the best to have and manage? Here is where we will learn about e-commerce vs. marketplace platforms for your business.
What’s E-Commerce? What’s Marketplace?
For ordinary people, both e-commerce and the marketplace seem like two similar things. In a way, indeed. They are online sales platforms. However, in more business-oriented and functional, they are quite different.
An E-commerce website is a website or platform owned by one business owner to promote its brand with custom features. Meanwhile, a marketplace website is a website or business platform consisting of different vendors with different buyers in one place. Traditionally speaking, e-commerce is a stand-alone official store with its building, and the online marketplace is a market, like malls and supermarkets, with various stores and brands.
6 Key Differences of E-Commerce vs. Marketplace
Choosing a sales platform is crucial for a new business owner. Whichever platform you choose will ultimately affect your sales levels. The problem is whether for the better or worse. Although both have the same goals, with your business in mind, you must choose the right one to gain the maximum result.
Marketing and Brand Awareness
When you have decided on a sales platform, you have to take into account what marketing strategy you will apply. Not to mention considering the brand recognition of the products you offer, whether your brand is well known by the market so they want to buy your product or not. Let’s take a look at what e-commerce vs. marketplace has to offer with those things in mind.
An e-commerce platform allows you to access all the customer analytics. The analytics data will help you generate a better marketing strategy and release promotions to a more fitting target market that will help in brand awareness. Unfortunately, you will not gain full access to customer analytics on an online marketing platform. That way, selling your products on this platform will be more difficult, especially if you also want to generate brand awareness.
Traffic and Audience Engagement
The sales rate usually will increase alongside the platform or website traffic. Since the online marketplace is a transactional-oriented platform, with various stores and products or services, it has more traffic to the site than e-commerce. You will need to spend more effort on your website to have the same amount of traffic that marketplace can achieve easily. However, if you can use social media well, you can increase traffic faster.
Expanding business is one of the ways to reach more sales. In this regard, marketplace owners have the upper hand. They can increase the economic scale easily since they have fewer financial risks. It is all because the store owners in the marketplace don’t involve themselves in the activities that can increase the business scalability. Therefore, the marketplace can focus on expanding and growing faster.
On the other hand, e-commerce owners have to divide the finances owned in various sectors to support the development and growth of the business. Then again, it will take more time. As an e-commerce owner, if you want your online shop website scale to grow faster, you have to focus on improving user experience instead of other sectors, like employees.
As an online marketplace owner, you do not need any inventory to store the products. It is the merchants’ responsibility in your marketplace to manage their inventory. You also will not face any financial burden. It will be another story if you are one of the merchants of that marketplace. You will have almost the same responsibility in managing inventory as someone with e-commerce. The difference between this e-commerce vs. marketplace will affect the profit margin.
Speaking of profit margins, online marketplaces have lower margin profits. How so? The marketplaces gain profits from listing and commission fees. To have huge profits, they must have tons of listings and transactions. It also applies to the sellers since they have to share their sales profits with the marketplace management.
How about selling volume and profit gain on an e-commerce website? When you have your online shop website like e-commerce, you will not need to sell a bunch to gain much. You can have high-profit margins from individual sales since you don’t have to share profit or give a commission fee to a third party. However, when you do business on your website, your customers will concern more with quality than quantity.
Time and Money
As someone who is just in the start line, opening an online store on an online marketplace will save you time and money. The marketplace already has regular customers that can be your potential buyers. This initial move is crucial in gaining back the money you spend quickly. However, as mentioned in point one, you can’t build good brand awareness. The marketplace has its template store design, so you can’t pick or adjust the online store appearance as you like.
A different story comes up when you have your e-commerce website. You can have your custom website design as you like and need, including the navigation, theme, branding tone, and so on. However, it will cost more. You have to hire a professional website developer to meet your conditions. Not to mention the time you need to spend to grow the traffic, brand, and more. You can consider having your e-commerce when your business has stabilized for long-term profit.
E-Commerce vs. Marketplace: Have You Decided What the Best for You?
Both e-commerce and online marketplace can be a good choice for your business. You only have to consider which one to prioritize first to have and manage by considering the e-commerce vs. marketplace differences above. And, when you decide to have your online shop website, you can pick the ready-to-use e-commerce template or hire a pro web designer to have the custom design.