How to sell online? Differences between e-commerce and marketplace
You’re probably going to start selling products online and you’re wondering what the pros and cons of selling through a proprietary ecommerce or a simple marketplace are. Importantly, many people mistakenly use the terms marketplace and e-commerce interchangeably when referring to an online store. However, depending on the products and business model, it might be more consistent to choose one term over another.
Marketplace and E-commerce platforms both serve similar business purposes: selling goods to people. Let’s see what are the pros and cons of choosing one or the other approach in the next few lines.
Marketplace vs. E-commerce platform: pros and cons
So, selling online means weighing a number of concerns such as profit margin, customer loyalty and product development and, of course, the choice between a marketplace or an e-commerce site. These two choices are not necessarily mutually exclusive. There are hybrid approaches that allow retailers to have both an e-commerce site and to sell their products on a marketplace.
Time and money
Generally, one of the immediate benefits of choosing to sell your products on an online marketplace is saving time and money. For example, you should know that creating a seller profile on a marketplace like Amazon or Etsy takes less time and knowledge than creating a site. This saves you time and allows you to concentrate on developing a product.
Conversely, developing an e-commerce website will cost you more than opening a seller account in the marketplaces. To get your website you will need to hire a developer or an agency. Another option is to take advantage of ecommerce platforms like Shopify through which you can create a website in just a few clicks. However, for a professional job that brings a real return over time, you’ll still need to turn to an expert (or several) for marketing strategy, design a brand-aligned design and integrate custom features.
There is another option, a hybrid strategy that combines an e-commerce website with marketplaces. In the long term, if your business model is successful, the hybrid strategy brings better profits since the entire sales structure generates revenue from multiple sources. Usually this solution (which is the one most used by large companies) requires a prohibitive investment for most companies. In fact, since we started Linkify, every company has the possibility to have a hybrid sales system at moderate costs and thus benefit from all its advantages.
Marketing and brand recognition
Online business people know that brand awareness is critical to success. In fact, investing only in an ecommerce does not mean getting customers automatically.
Once you have created your website, you have to spend time and money to make it known to the target audience. Users, therefore, must be able to find e-commerce through searches on Google and other search engines. This means optimizing the site in terms of SEO or pushing it with advertising on Google and Facebook.
Marketplaces, for example, allow online sellers to bypass the brand awareness process. In fact, marketplaces like Amazon, Etsy or Ebay already have brand awareness and you, as a retailer, can use it to immediately access a large audience of customers already inclined to purchase. These companies don’t even have to worry about SEO or paid advertising.
However, there is a downside to being part of a marketplace. You will have less chance of being able to connect with your customers as you would like. Marketplaces, in fact, focus on customers and products and not on their relationship with retailers. Platforms like Amazon offer little in the way of customization to allow your business to stand out from the rest of the market.
Instead, if you create your own E-commerce site, you have complete control over your brand and user experience. The ability to create custom themes and features for your customers is very attractive to many businesses. To make an informed choice, it is important to weigh immediate costs and time against the potential profit margins of the future.
Marketplaces offer sellers little or no access to their customers. This lack makes it difficult to market your products or create awareness and loyalty to your brand. If you can’t contact customers and inform them about promotions or new product releases, you’re forced to rely on new customers without being able to marketing past customers. The lack of direct access to analytics and customer communications is one of the main disadvantages of marketplaces.
E-commerce websites have full access to all this data and are able to contact old customers by informing them about promotions, new releases, abandoned carts, etc.
Direct access to your customers also means you can provide a higher level of customer service, get more insightful information and feedback on product development, and analyze buying behavior to improve the market and optimize your website user experience.
Are you interested in selling online through marketplaces or ecommerce? Contact us and you will talk to one of our experts who will be able to direct you to the best solution according to your needs!