Difference between selling on Marketplaces and E-commerce
The misconception of believing that marketplace and e-commerce website is the same thing has continued since forever.
It’s good to understand the difference between an online marketplace vs an e-commerce website before you start your online business.
What is a marketplace?
The Marketplace is a website where the products offered come from multiple sellers. Owner does not own the inventory nor needs to invoice the customer. In the process of selling on the marketplace there are three parties involved- the vendor, the customer, and the administrator.
What is an E-commerce website?
An E-commerce website is a single brand online store which means the specific brand sells its products on its own website. The owner of the invoice is the website owner only. A single vendor sells products and services to multiple customers. E-commerce website belongs to the vendor where only two parties are involved in the sale process – the seller and the buyer only.
Key differences to be considered on selling products at Marketplace vs. E-commerce website
- Market approach
- Selling on the marketplace is less cost consuming. E-commerce platforms allow making and managing an online store to create traffic on site.
- E-commerce focuses on targeting buyers whereas the marketplace not only attracts the buyers but also sells.
- Marketplaces benefits as there are several merchants available but in E-commerce, you need to keep generating.
- There are fewer financial risks in the marketplace to sell products whereas an e-commerce website has a constant investment in stock and may take time to see.
- Marketplace expands faster than e-commerce website as marketplace gain economy.
- In e-commerce websites, you will have to get rid of unsold products and you can do that by giving discounts or special offers whereas in the marketplace if some products aren’t sold, you can deactivate them with just a push of a button.
- Time and Money
- E-commerce is time-consuming because you have to maintain your e-commerce website. In the marketplace, the stock is ready so all you’ve to do is register, list and sell without spending much time.
- E-commerce websites have more initial investment but in the marketplace, you have a better profit margin because the revenue is the percentage of transactions
- Business Volume.
- Margins for each sale are lower in the marketplace as compared to e-commerce sales.
- E-commerce websites do not need to sell a greater volume of products as compared to marketplaces.
- Audience Engagement
Engagement is extremely important both in e-commerce and the marketplace.
- E-commerce business is hard, expensive and time-consuming. Different social media like Instagram or Facebook can help for engagement purposes. However, the marketplace regularly focuses completely on moving buyers towards purchasing and selling products and benefit more from network effects.
- Navigation and arrangements
- E-commerce website arranges their products based on categories as it is detailed, efficient and filtered. Whereas in a marketplace it is well organized because various sellers have their respective list of products.
Pros of selling on a Marketplace
- Selling on the marketplace is a low investment compared to the brand website.
- Marketplace has well established SEO reputation for their product.
- Shopping transaction is easy on marketplace so it’s easier for you to start a business.
Pros of selling on Online Store
- E-commerce website is controlled by you as you are free to design, feel, layout, navigate and control your content.
- You can keep a track of transactions, history, spending time and you’re completely aware of how customers behave on your website.
Hope this comprehensive guide will enable you to decide where to maximize the selling on the marketplace or own brand store.