A marketplace can be thought of as a stage for vendors to display their products, which can vary from physical goods to advertising services. Some percentage of the profit will go to the owner of the marketplace itself. A marketplace relationship can, therefore, be described as an act of making a purchase from a third party on a specialized website. The owner of the account from whom you ordered a product or a service is therefore directly responsible for its delivery – the platform on which they operate is not involved in the process. An example of a marketplace would be eBay or Airbnb.
It is different from an eCommerce platform, which is a single-seller online shop – the firm that owns the website are the only party listing products. An example of an eCommerce platform could be Zara or Samsung.
It is necessary to stress that any online marketplace can be considered an eCommerce website, although only certain types of eCommerce platforms can be viewed as marketplaces.
You can’t, however, say which one is better: it is all about your individual needs, goals, and preferences. Would you want to create a whole new website devoted to your services, or make an account on a marketplace-type platform to distribute your product?
What Are the Costs?
It is significantly cheaper to register as a merchant on a marketplace than create your own online shop. For the latter, there are additional costs aside from maintenance: hiring a team of developers, buying a domain, designing interface and logos. You will also probably have to find a group of specialists to help you run the store. Meanwhile, the only expenses that there are for a marketplace account are the actual product, shipping, and money transfer.
Competition is a crucial component of business development. Estimating it before launching your own project is a very important step for your project’s progress.
The problem with starting an eCommerce website business is in facing a large number of competitors that will have already established a solid base of audience and a consistent loop of product distribution. However, don’t be drawn back.
You will encounter much greater counteraction if you decide to make an online platform compared to an online marketplace shop, though it might be easier to examine the market for the former. This is because owners of marketplace store accounts often do not have the item on order in stock: they will fill up their shelves as soon as demand emerges. This is the opposite of an eCommerce website, which will always have the items and services listed in the inventory.
Advantages of Online Marketplaces
If you are thinking of your own merchandise line, you should consider an eCommerce platform rather than a marketplace to facilitate a more successful build-up of your brand name. Conversely, if you have several different product types in mind, you should opt for a marketplace, since it will agree with more customers’ needs.
A few other key advantages of marketplaces are outlined below:
- You will have a supplementary way of distributing your product at a lesser cost;
- It will facilitate your growth internationally;
- It’s convenient for your customers because it allows the comparison of product prices and a broad range of available options depending on various characteristics;
- You will gain more trust from customers due to being a part of a reputable organization;
- The option of reviews has the potential of increasing your sales because buyers show more trust to stores with high ratings;
- You will have a chance to build new connections and gain allies for trade and partnership;
- Your supply chain will be more transparent since an online marketplace provides an open domain;
- The timezone issue in business with overseas is eliminated;
- The trade movement is much faster in an online marketplace due to a large number of sellers available to consumers;
A marketplace is a more advanced structure than an eCommerce platform due to a highly extensive supply chain. Regardless, it is a simple and accessible option for online shopping, being supported by a variety of intelligible functions. The marketplace business model has major potential – no less than an eCommerce website, displaying great opportunities and perspectives.