Are you torn between choosing a marketplace or your e-commerce online store for your online business? 

Whether you’re into cosmetic products, food supplements, or private label products, you will have to choose any (or both) of the two platforms to sell your products if you must do business in today’s digital world.

Most people believe that online marketplaces and e-commerce stores are interchangeable. Although they are both used for online business, there are some key differences between them. 

A marketplace is an online platform where the website owner allows third-party sellers to sell and invoice customers directly. The company that owns the marketplace does not own the inventory, nor does it bill the customer.

It is a marketplace for both sellers and buyers, much like a physical market.

An e-commerce website, on the other hand, is a single or multi-brand online store where a specific brand sells its products on its website. The website owner solely owns the inventory. Moreover, the website owner invoices the customer and pays the value-added tax.

While it may initially appear confusing, here are some key differences between a marketplace and an e-commerce website that you should know to help you decide.

1. Marketing Strategy and Targeting

In the online marketplace and e-commerce business, it is critical to understand your marketing strategy and target audience clearly. While e-commerce online stores must focus on attracting buyers, a marketplace must attract buyers and sellers, who will be the heart of your platform.

Individual merchants using an e-commerce online store must spend more to drive traffic to their site. Marketplaces, on the other hand, benefit from a diverse set of users.

Because there are so many merchants, they each advertise the marketplace’s existence, causing a viral spread of awareness. The more satisfied buyers who transact on the site, the more they help spread the news about the marketplace.

2. Money and Time

Building your e-commerce online store can be as simple or as complex as you want. Generally, setting up and maintaining your e-commerce store will take a significant amount of time and effort.

However, once you invest your time and effort right, the results will be directed at your e-commerce business alone. This is different from marketplaces, where many online sellers are sharing the same platform.

For marketplaces, as far as time and money are concerned, you can register, list, and sell in a marketplace without spending much time or effort because everything is ready.

3. Audience Engagement

Engagement with the audience is critical in online business, whether it is a marketplace or an e-commerce store. Marketplaces frequently focus solely on directing buyers to make purchases and sellers to list more products or services. Network effects favour marketplaces: more consumers draw more sellers and vice versa.

It isn’t easy to engage an audience in the e-commerce business. In fact, it can be time-consuming. However, once you invest the effort, you can enjoy the powerful effect of branding, especially if you own an e-commerce store. 

To achieve audience engagement, make full use of different social media platforms, such as Facebook, Twitter and Instagram. 

4. Trust

It is essential to build trust in both a marketplace and an e-commerce platform if you want to sell online. Your users must have faith in your platform and one another. Even if the merchants selling the product are unfamiliar to them, 67% trust a purchase on a familiar marketplace. 

If a purchaser has a positive experience, 54% will return to buy from the same marketplace again, and trust is an important component of this experience. 

For an e-commerce store, customer trust and loyalty may take some time to come. However, once it is achieved, your business will be the sole beneficiary of the effect of customer trust and loyalty. This is unlike on marketplaces where numerous merchants are found selling the same products. 

5. Navigation

A marketplace’s products are organized in one well-organized set because it primarily has various sellers, each with its product list. On the other hand, in an e-commerce store, the product arrangement is based on categories.

Both interfaces allow the user to refine his search precisely. Although the choices at marketplaces are richer, it also means stiffer competition. 

Verdict

Before you start an online business, whether cosmetic or food supplements, it’s a good idea to understand the distinctions between selling on an online marketplace and your own e-commerce store.

The success of the marketplace development is regularly increasing, while the e-commerce online store trend is constantly evolving.

Marketplaces are an excellent starting point for e-commerce newcomers because they allow you to reduce the costs, risks, and time required to set up a store.

However, if you do not wish to share your profits with a marketplace, or if you require a custom-made solution that will perfectly meet your needs, then starting your e-commerce store may be the way to go.

As the saying goes, why choose when you can go for both? Indeed, as the online population is on the rise, many businesses that sell on marketplaces now own an e-commerce store.

At the same time, businesses that own an e-commerce store have also gone to build a strong presence in online marketplaces.