Ecommerce is the activity of buying or selling goods or services online through electronic data or currency. These pre-built platforms make it easy for retailers to get up and running with their own online stores. E-Commerce is a website where a single vendor sells his products/services to multiple customers. As the website belongs to the vendor, only two parties are involved in the sale process – the seller and the buyer. Online marketplace activity happens on a third-party platform. It is an alternate way of taking part in that traditional “ecommerce” environment without your own website as a marketplace. You still sell your own goods or services, but you are part of a larger shopping ecosystem, owned and operated by the larger seller. In the simplest terms, a marketplace is a website where the products offered come from multiple sellers. The variety of assortment a marketplace offers is exactly what attracts customers – just like a shopping mall does in real-life.
Benefits of ecommerce platforms
Complete control over site functionality, design, and navigation
You’re allowed to collect customer data for future marketing
There is no on-site competition
You can build your own brand recognition
You don’t rely on another company for fee structure and pricing
Benefits of an online marketplace
It’s easy to start right away
No tech experience or marketing resources required
No site or server maintenance is necessary
You get access to a large customer base
There is existing brand familiarity
How they function in terms of:
Traffic– Target audience is bigger as marketplaces offer a huge choice whereas for ecommerce, the store owner needs to attract traffic to the website.
Marketing- Marketplace supports sellers’ marketing efforts through attracting, nurturing, and engaging leads on the site whereas for ecommerce, the seller needs to take care of lead generation/nurturing him/herself.
Time-to-launch– Marketplace store is quick to set up. In most cases, you can do so in a day or less. For an Ecommerce site you have to set up the entire site yourself; it can be time-consuming upfront.
Costs- Marketplace’s charge commissions (usually between 5-15%); some charge for membership. Low or no costs upon setup. While for the ecommerce site No commission; seller pays for hosting/maintaining the site online.
In the battle of marketplace vs ecommerce, there may not be a clear winner. That’s because they both offer some very attractive benefits for specific businesses. You’ll have to decide which attributes are most important to you.