An online marketplace is an e-commerce site or application that makes it easy to shop from many different sources. The market operator does not own any inventory, but instead shows other people's products to customers and allows transactions.
What is the difference between e-commerce and an online marketplace? Most people would presume that they are different names of the same thing. Although it may seem that this is the case, there are some important differences between them. The marketplace is essentially a way for retailers to participate in the traditional “e-commerce” environment, without the need to spend time and resources creating their own website.
Among the most well-known online marketplaces right now are Amazon, Alibaba, eBay and Etsy. Below is a summary of the different benefits offered by both an e-commerce platform and an online marketplace. Once you can fully determine the needs of your online business, it will be easier to identify what benefits would most apply to your business.
Advantages of an E-Commerce Website
Having your own e-commerce website creates a unique focus on your business and only on your business. This helps foster brand loyalty among your customers. Whereas in an online marketplace, all brands and businesses are grouped according to their categories, creating significant competition for retailers to rank higher than other products.
Advantages of an Online Marketplace
With an online marketplace, the platform owner has a responsibility to maintain the website and offer a secure purchase and payment process for everyone. As a retailer, you won't have to worry about troubleshooting technical issues related to site functionality.
The variety of products sold is one of the main attractions for customers. This is similar to a shopping mall, but in an online space. Marketplace platforms charge businesses when they list items; they charge a commission for each sale made, and depending on the platform you choose, you will also be charged other fees.
The entire market runs on a software infrastructure, allowing all sellers to sell their products under the umbrella of a website. In addition, many consumers who shop in marketplaces assume that they are buying in that market, even though they are buying your products.
The e-commerce market can generally solve the problem by providing an easy way to engage sellers with relevant buyers and consecutively provide them with additional features and benefits to expand their business on this platform. For example, creating a seller profile and a retail store on platforms such as Amazon or Etsy will require very little time and technical skills.
In the comparison of e-commerce with the online market, creating an online store on the market can save more time and money initially. In addition, you can easily start selling and reach potential customers who have already purchased on the online marketplace.
Marketplace sellers can use consumer trust and market recognition and access a large audience of potential buyers immediately, but when a seller creates an e-commerce site, they have to spend money and time to market the website, brand, and product.
There are hybrid approaches that allow retailers to have an e-commerce site and sell their products on a marketplace platform. When merchants advertise products on marketplaces, they have to pay a commission for each sale, and depending on the platforms you choose, you'll also have to pay other fees.
Online marketplaces are a great starting point for e-commerce beginners, as they allow you to reduce costs, risks and time needed to set up a business in advance. The main benefit of selling in a marketplace is that sellers don't have to worry about website maintenance or performance.
The benefits of selling in the marketplaces speak especially to sellers who are taking their first steps in sales and those who love the convenience of never worrying about website performance, maintenance and the on-site shopping experience. Instead of devoting time and resources to staff, space and actions, marketplace platforms can spend more time developing web and mobile applications to create a rich user experience.
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