Internet sales continue to gain momentum as a way to expand and grow businesses, but What is the best way to do it, between a proprietary eCommerce platform and a marketplace? We tell you below the meaning of each option and the differences so that you know which is the best decision for your business:
What is an e-commerce?
An eCommerce platform is an online store or own virtual store, where a company or brand sells its own products or services.
It is one of the most disruptive commerce practices in recent years, because it has revolutionized traditional commerce. It offers an unprecedented level of comfort and customization. This makes it the basis of the business model for many brands and companies.
What is a marketplace?
A marketplace, on the other hand, is a kind of “macro-store” that includes several sellers. In other words, it brings together several on line stores with a wide variety of products and categories in one place. Some examples are Amazon, eBay, Alibaba.
Most marketplace platforms charge a fee, although there are others that do not charge any type of commission, or that allow you to publish a limited number of products for free.
Differences between an e Commerce and a marketplace
Some differences between these two business models are:
1. Domain name and Hosting
This is one of the main differences since, with an e Commerce platform you can have a personalized domain name, which can be the name of your brand or company, and have your own space on the network, with a direct administration panel. The marketplace, on the other hand, is not, since it is a general domain and hosting, with a generic name and limited content management.
2. Customization
The identity of your business or branding, including the values and the differential of your brand or business, it is possible to have it in your own e Commerce platform, since the development is done based on your audience, needs and objectives, at least that’s how we do it in EtyaLab. While with a marketplace you do not have this option, since the brand identity will not be yours, and the design and customization parameters correspond to that of a third party.
3. Visibility
A vital element to increase sales is undoubtedly the visibility of your products or services on the Internet. In this case, much depends on the degree of positioning and trust of the marketplace. It can be a great advantage over a proprietary e Commerce platform, which has to work on positioning from scratch. However, your own platform can get top search positions, if you work at it.
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4. Investment
Creating an e Commerce platform from scratch requires more investment than a marketplace. This is because the latter already has a consolidated platform. The reality is that, although in the short term it is much more expensive to invest in developing your own website for your on line store, in the long run the profit margin of the sales you make through it will be much higher than those produced through a marketplace.
5. Competition
For a user who does not know exactly what to buy, it may be more practical to use a marketplace, because of the endless options. However, this is not an advantage for sellers because a larger catalog means more competition. In this sense, in a marketplace the attention time of visitors on the same product will decrease, while in an e Commerce, the opposite happens, since the user is browsing directly on your website.
6. Earnings
You should know that what you earn for a sale in your e Commerce platform is 100% for you, while in a marketplace, as they are intermediaries, they usually charge for lists of items, they take a commission for each sale and depending on the platform, they can add some additional costs.
7. Relationship with customers
The relationship with customers in the case of marketplaces is limited to the purchase process. You will not be able to communicate with customers outside the platform, i.e., you will not be able to rely on sending emails or newsletters, announcing new launches or promotions. In the case of e Commerce, you can have a more direct communication with the customer, and with their permission, you can contact them through various channels, and keep up to date with your news..
8. Shipping and warranty
There is no difference in shipping responsibilities. Both in the e Commerce and in the marketplace, the brand from which the purchase has been made is directly responsible for the shipment and warranty of the product or service.
Conclusions
Both business models consist of on line stores. The main difference is that an e commerce is proprietary, while a marketplace allows several owners to offer their products or services on the same website. There is no practical difference in the purchasing process for the end customer.
However, while this difference may be irrelevant to the consumer shopping experience, for business owners it is quite the opposite. Choosing between one model or another has a major impact on the operation.
We hope this article will help you define which business model suits you best, or if you can use both as a strategy. It is advisable not to look only at the short term, but to broaden expectations.
Remember also that marketplaces reach a lot of people, but many times users make purchases without knowing who the seller is, since they only remember the platform through which they make their purchases.
If you would like to receive a free personalized consultation with one of our e commerce experts you can schedule an appointment through the web here or on Calendly here.
