More and more shops run out of business in these uncertain times if they don’t operate online. So finding out where you can sell your products online is more important than ever. There two choices you can either choose a marketplace or build an e-commerce store. But what is the difference between ecommerce vs marketplace?
What is a marketplace?
A marketplace is simply a website where products are offered that come from all types of sellers. The variety of selections is exactly what attracts customers, similar to a shopping mall in real life.
In the process of selling on a marketplace, there are three parties involved the vendor, the customer, and the marketplace.
The setup of your own store is relatively easy because you only need a user account, and then you can get started.
Marketplaces are especially for beginners who want to make their first steps in sales and for those who don´t want to worry about website performance, maintenance, and on-site shopping experiences.
The company will take care of maintaining the website, invest the time and money to attract potential customers, and provide a safe shopping experience and payment process.
But once the sale happens, the products, most of the time, aren´t shipped by the marketplace. Rather, all items are stored and sent by the seller.
To make money marketplaces charge a commission for each transaction, a membership fee, or a combination of both.
The following platforms are marketplaces where you can sell your products:
Clickbank is a popular online marketplace where can sell both physical and digital products. What makes the platform special is that many use it to earn money with Affiliate Marketing. If you sell your product there, you can pay a percentage of the price to other people when someones buy your product through their affiliate links.
These affiliate marketer can help you do marketing and sell your products, so you don´t need to worry about advertising your product. But you still need to create a good landing page for your offer. To do this, you can either use WordPress and pay for a hosting service or find a landing page builder.
There is a one-time activation fee of $49.95 for your first product. Because there are no monthly fees, you need to pay a period of $2,50 for every issued payment.
Amazon Seller Central gives you the opportunity to sell all types of products on the biggest online marketplace in the world. There are two different selling plans either the individual, which costs $0.99/item sold +additional fees or the professional plan, which costs $39.99 /month + additional fees but has many advanced selling tools like API and reports.
On eBay Seller Center, you can also sell all kinds of different products. As a seller, you can find a five different subscription plan that starts at $4.95/month and can cost up to $2,999.95/ month, which is for the largest retailers. Which plan is the best depends on how much and what you want to sell and also what features you need.
Etsy is a marketplace to sell all types of creative products like decoration, accessories, clothing, and much more. The selling fees vary depending on your country in the US; the fees are 3% of the total product price + 0,25 USD.
What is an e-commerce website?
E-commerce is a website of a single vendor who sells his products/ services to different customers. There only two parties involved in the sales process the seller and the buyer.
An e-commerce website is potentially required if you work in a specific industry or niche that needs customs features like tracking of inventory.
Unlike marketplaces, you as the seller need to set up your e-commerce website and make sure your site is always robust and running.
It sounds extremely complicated to set up your own online store, but you don´t need to code it from scratch. There are many e-commerce platforms that offer useful features and ready-to-use templates you can choose from.
Shopify is an all-in-one e-commerce solution where you can create an online store, manage your products, and handle orders in a single dashboard. You get a free myshopify.com subdomain for all plans, and you can also use your own domain. There are many different shop apps and themes, both free and premium, that you can customize to your liking.
The Shopify plans start at $29 per month for the Basic Shopify plan, and for the Shopify plan $79 per month, and the advanced plan costs $299 per month. The expensive plans give you more features like reporting tools, multi-language domains, and exchanges.
WooCoommerce is an open-source e-commerce plugin for WordPress. The plugin can be installed in WordPress and enables you to run a functional online store with all of the features you need to make an e-commerce platform.
The software itself is free, but you need a Website domain and hosting to run it. There are many free and premium WordPress themes and plugins that support WooCommerce. It is a cheaper solution for people who are not afraid to build their online store with WordPress.
Magento is an e-commerce platform for companies that use web development to build larger online stores. The solution offers many advanced features that are ideal for stores with high traffic.
The platform is mostly used by web developers. The price depends on the annual Gross Merchandise Value and the Average Order Value
Differences between Ecommerce vs Marketplace
Before you start selling your products online, it is good to know the differences between ecommerce vs. marketplace.
1. Marketing and Targeting
For both marketplaces and e-commerce businesses, you need a clear marketing strategy and targeting. In e-commerce, you focus on targeting buyers; in a marketplace, you must attract not only buyers but also sellers.
On an e-commerce store, you need to spend time driving traffic to your site. However, once the buyer finds your site, the selection is simpler. Because the customers in most cases only see the products offered by one company.
But, on the other hand, marketplaces benefit from various users buying and selling on their site. Many sellers individually advertise their offers, which can cause a viral spread of awareness. The more customers are happy and buying, the more recognition the marketplace gets.
2.Scalability
While you need constantly invests in your product stock if you sell physical products for both marketplace and e-commerce. There is less financial risk on a marketplace than on an e-commerce website because it takes time to sell this inventory. Marketplaces grow faster, so they expand faster than e-commerce websites.
When the traffic grows faster, it may be easier to sell your stock on a marketplace because you don´t need to invest as much in marketing your products as you wood for your own shop.
3. Inventory
Having a larger inventory makes it easier for the customer to find what they are looking for. But it also means you need to put in the effort to draw the attention of your visitors.
The 80/20 rule applies to the marketplace as the minority of products will amount to the majority of sales. Keeping a larger inventory can sometimes cause problems in a stocking when something else sells better.
On e-commerce websites, the rule means you need to get rid of unsold products by lowering the prices. At a marketplace, you can deactivate a product that doesn’t sell.
4.Time and Money
An e-commerce website can be simple or complicated, but there are always issues you need to solve. It will take a lot of time to set up and maintain the website. While on a marketplace platform, everything is ready; you can register, list, and sell without needing to do too much extra work.
For e-commerce, you need to make more investment so it can take longer to make enough sales to break even. On marketplaces, you get lesser revenue because the platform also gets a percentage of the transactions.
5. Trend
Marketplaces use trend indicators to detect a trend in business markets that help track sales and show which products are the best and which vendors are more efficient. These effective measures can identify and promote the content that users want to see and buy.
You can also integrate this trend indicator into your own e-commerce website, but this can cost a lot of money depending on how you do it.
6. Audience
The engagement of the audience is very important for every online business so for both marketplaces and e-commerce websites. A marketplace focuses more on moving buyers to make purchases and sellers toward listing more products and services. The marketplace benefit from the network effect, so more buyers attract more sellers and vice versa.
In an e-commerce business, it is very hard, time-consuming, and expensive to engage your audience. You need to gain enough experience, so you don´t target the wrong people. To do this, you need to create a targeted audience and a buyer persona.
7.Trust
Building trust with people is very important for both marketplace and e-commerce. Customers come back to marketplaces they already are familiar with and had a good experience.
On an e-commerce website, it a bit more challenging to get trust, but it will get easier if you grow your customer base and get good reviews.
8. Navigation
A marketplace is organized in one set because the various sellers have their own list of products. An e-commerce website has different categories that are more detailed, with various filters and research bars. It gives users the option to refine their search more accurately. So there are many differences in terms of navigation process and patterns.
Conclusion
It is important to identify your needs and preferences and target audience before you start an online business. To become successful, you need to create an effective shopping experience with good customer service, a fitting logistical solution, and a good marketing strategy.
Selling physical products is more work, especially with logistics and stocks. It is easier to offer digital products because you only need to provide a download link where the customer gets access to your products.
But whatever you choose an online marketplace or to build an e-commerce solution depends on how much time and money you want to invest.
