Marketplace vs. eCommerce: What are the differences?

Written by Dynamicweb on 16.06.2022, 00:00
Marketplace vs. eCommerce: What are the differences?

When it comes to selling online these days, sellers have more flexibility and go-to-market advantages than ever. You can sell on third-party marketplaces that connect buyers and sellers, like Amazon and Facebook, or you can sell directly through your own eCommerce storefront. And for a truly omnichannel strategy, you can do both! Marketplaces like Amazon even offer fulfillment and drop-shipping services that eliminate inventory headaches.

Even though “online marketplace” and “eCommerce” might sound like they refer to the same concept, they are distinct online sales solutions. To choose the best approach for your business, you need to have a strong understanding of a marketplace and eCommerce and the differences between the two. 

What is a marketplace?

 

A marketplace is a website that carries products from multiple sellers. A marketplace typically attracts various customers because it has a wide assortment of products. Sort of like an online version of a shopping mall. 

Marketplaces include three different parties: the administrator who owns the website, the vendors who sell products, and the customers who purchase products. The owner maintains the website and cultivates potential clients by offering a safe and pleasant shopping experience. Once a customer makes a purchase, the marketplace does not handle the products. Instead, the seller ships the products. 

Marketplaces profit from commissions, membership fees, or a combination of the two. The commission percentage and flat fee amount vary from marketplace to marketplace. 

Settling in a marketplace is beneficial for vendors because they can leverage the high volumes of organic traffic already being generated, and do not have to maintain the website or monitor website performance. Additionally, many marketplaces offer vendors access to free stores. In fact, the process of creating a store is designed to be as easy and simple as possible. 

What is an eCommerce?

Contrasting against marketplaces, ann eCommerce storefront is a website that sells products from a single vendor directly to their specific customers. In an eCommerce environment, there are only two parties involved: the vendor who owns the website and sells the products and the customer who purchases the products. eCommerce sites are owned by vendors, and they must be set up and maintained by the vendor. Vendors also have to make sure the site is secure and properly functioning. Thankfully there are platforms that facilitate low/no code eCommerce site creation and maintenance so that vendors do not have to code the site from scratch. 

What is the difference between a marketplace and eCommerce?

Parties

In a vendor-owned eCommerce site, there are only two parties: the seller and the buyer. In a marketplace, there are three parties: the marketplace administrators, the sellers, and the buyers. 

Inventory

Marketplaces do not hold inventory (except in Scenarios like Amazon Fulfillment Services). Alternatively, eCommerce sites do need to hold inventory in order to meet customer demand unless they utilize drop shipping methods for order fulfillment. 

Cost

Setting up and maintaining an eCommerce site requires some time and investment to design the store to your liking and to integrate to systems like your ERP, which house your financials and inventory.. By selling through an online marketplace, companies can save time and money because the website administrator covers the cost of website creation and maintenance. 

Control

When vendors sell their products through a marketplace, they must follow the guidelines and protocol established by the marketplace administrator. When companies establish their own eCommerce sites, they have full control over the presentation, logistics, and protocol of their online store. 

Marketing

When a seller builds an eCommerce site, they also need to invest in a strategy to market the website, brand, and products. Although the marketing required to attract customers to an eCommerce site may be a lot of work, it does allow the company full control over their branding and reach. When vendors sell through a marketplace, they can use the consumer trust and recognition of the marketplace. 

Learn More About Dynamicweb's eCommerce and Marketplace Capabilities

Many companies with their own eCommerce store also sell on third-party marketplaces, leveraging what’s called an omnichannel selling strategy. With this approach, sellers can get their products placed wherever the customer may be shopping so all the bases are covered.

Dynamicweb is a comprehensive eCommerce platform that includes a built-in Product Information Management (PIM) system. This enables sellers to connect their products to virtually any marketplace, so they can centralize their product information and manage their entire online selling strategy from one platform.

To take your business to the next level with integrated eCommerce and marketplace services, contact Dynamicweb today.