A Digital Marketplace vs. Your Own Website: Which Is Better for Ecommerce?

What Is an Online Marketplace?

A marketplace platform is an online shopping platform where products from varied vendors are sold. It’s like a digital mall where buyers can purchase products from numerous sellers and make a single payment at checkout.

The marketplace administrator, the vendor, and the customer are the three parties involved in most marketplaces.

Etsy, Amazon, eBay, and Facebook are just a few examples of popular marketplaces. These larger companies ensure safety and functionality for both vendors and consumers. These marketplaces profit through commission fees or subscription fees.

Let’s take a closer look at why your business may be able to benefit from these online marketplaces.

Etsy

Founded in 2005, Etsy is a popular American eCommerce company connecting consumers to merchants selling thousands of handmade and unique items. Etsy charges $0.20 per listing and 6.5% of the listed price, plus shipping and gift wrapping fees.

There’s also an additional subscription package called Etsy Plus for $10.00 per month, which provides extra tools for growing brands. It’s a low-cost, low-risk platform that’s easy to set up and learn. Etsy is best for online retailers selling unique items and gifts.

Amazon

Amazon has a third-party marketplace where retailers can sell their products online. Two programs are available: Amazon Vendor Central and Amazon Seller Central. The former is invite-only and for wholesalers, while the latter enables sellers to maintain brand ownership.

Sales fees range from 6% to 45% depending on the product category. Account fees start at $.99 per item sold (Individual Plan), but also include a $39.99/month plan for unlimited sales (Professional Plan). Amazon Marketplace offers both new and used items and is a large platform for potential customers, unlike Amazon which only sells new products.

eBay

eBay is a well-known eCommerce company that operates on one of the top marketplace platforms, primarily known for its auctions and consumer-to-consumer sales. You can subscribe to an eBay shop for exclusive marketing tools, or sell casually for free (charges apply for over 250 items per month).

eBay takes 12.9% of the final sale, plus $0.30 per order. It has good search engine optimization and is a top auction marketplace. Auctions offer flexibility and competitive bidding, and you can set a reserve price to ensure you get what your item is worth.

Selling on an Online Marketplace: Pros & Cons

Digital marketplaces offer multiple sellers’ benefits like wider audience reach, cost-efficiency, a loyal customer base, and established brand trust. However, high fees and limited customization options are potential drawbacks. Evaluate these pros and cons to determine if a marketplace is right for your business.

Pros:

• Online marketplaces like Amazon offer unparalleled popularity, reaching almost 40% of all US retail eCommerce sales.
• They are cost-efficient – you don’t have to spend much on launching your business or hiring a developer.
• Baked-in brand trust is an advantage as consumers trust established marketplaces, such as eBay and Amazon.
• Digital marketplaces are easy to set up and enable easy selling due to established financial transactions, hosting, and design.
• They provide an additional marketing channel to penetrate a larger customer base.
• Marketplace platforms are useful for testing new products and market viability.

Cons:

• Marketplace platforms fees can be high, cutting into your profits.
• It’s hard to stand out from the competition in a crowded marketplace, making it a challenge to build your brand.
• Marketplaces have the power to shut down your account or remove your listings, which can be devastating if you rely heavily on them for sales.
• You may be limited in terms of customization options and branding compared to running your own eCommerce store.

Building and Running Your Own Ecommerce Website

Instead of selling your products through shared digital space, you can build your online store from the bottom up. This approach offers limitless customization and branding options, giving you the opportunity to create your own store and a unique online experience for customers.

Of course, there’s a lot to think about, such as the costs and time needed to establish an eCommerce market or online business presence, as well as functionality and scalability. Opting to run an eCommerce store is more time-consuming than using an online marketplace, especially in the beginning.

Retargeting customers, personalized buying experiences, and having a tailor-made solution that perfectly responds to your business needs may be some reasons why you’d prefer to build your eCommerce website on platforms like Shopify, Magento, or WooCommerce.

What Is an Ecommerce Platform?

An eCommerce platform is a comprehensive software solution for optimizing and managing online retail businesses with features like website builders, accounting and inventory management systems, and customer service infrastructure.

Online eCommerce platforms are cheaper than developing software from scratch but still more expensive and time-consuming than using a marketplace. Many businesses, estimated at 12-24 million, use eCommerce platforms for their user-friendly templates, AI capabilities, and personalized offers. Next, let’s explore the most widely-used platforms and their advantages.

Shopify

Shopify, a user-friendly and hosted e-commerce platform, is designed for ease of website building and product management. Basic subscriptions start at $29.99 per month and include customer support, access to software, web hosting, and security, with pricing variations based on specific features.

The platform also offers built-in tools for showcasing sales prices, discounts, and free shipping, along with customizable mega menu navigation systems.

Adobe Ecommerce

Adobe eCommerce, previously known as Magento, offers an open-source website builder with a high conversion rate and a superior content management system for building your own eCommerce platform. However, it requires coding knowledge, and many retailers may need to hire professional web developers to build their eCommerce stores.

Adobe eCommerce also offers integrated image optimization and a modular codebase that enables third-party module and theme integration for expanded store functionality and custom marketplace.

WooCommerce

WooCommerce, a WordPress plugin, enables transforming WordPress websites into eCommerce stores with impressive features like a pre-installed payment gateway, geolocation support, and advanced inventory management.

Its free-to-use capability with both default and custom WordPress themes for building eCommerce sites saves entrepreneurs from expensive contracts and proprietary software licenses. It also allows merchants to sell a range of products, from physical to digital, including subscription-based ones.

Selling on Your Own Ecommerce Website: Pros & Cons

If you’re considering building an eCommerce website, you’ll have more control over design, marketing, and SEO for your online store. However, building and maintaining a website can be costly and time-consuming, and you’re solely responsible for driving traffic. In the next paragraph, we’ll look at the pros and cons in more detail.

Pros:

• Build your own e-commerce website and have more control over the design, marketing, and SEO.
• eCommerce platforms like Shopify, Adobe eCommerce, and WooCommerce provide turnkey solutions for selling products.
• Advanced SEO capabilities for monitoring business progress and improving website ranking.
• Highly customizable websites with unique branding that differentiates your business.
• Integration of multiple marketing channels accessible from a central dashboard, allowing greater insight into the growth and success of your business.
• Better analytics power through tools like Google Analytics for tracking website traffic and customer engagement.
• More personable relationships with customers through customized shopping experiences and direct communication channels.

Cons:

• Building and maintaining your own website can be costly and time-consuming, especially when compared to selling on a marketplace platform.
• You are solely responsible for driving traffic to your website, unlike on a marketplace where customers are already searching for products.
• Maintaining e-commerce websites requires ongoing upkeep, from updating inventory to managing customer support, which can be daunting for some businesses.
• eCommerce sites are at risk of cyber attacks and fraud, as they store sensitive customer information and financial data.
• Running an eCommerce store requires more technical knowledge and expertise than selling on a marketplace, which could lead to errors or complications if not handled properly.

Marketplace vs Ecommerce: Which Is the Right Choice?

When deciding whether to sell your products on marketplace platforms or on an eCommerce platform, there is no one-size-fits-all answer. Consider the following factors:

• Traffic

Marketplace platforms have a high volume of traffic due to name and brand recognition, with the potential for greater sales. An eCommerce website’s initial traffic will depend on the business’s marketing efforts.

• Marketing

A marketplace offers small businesses an established website to sell their products with higher traffic than an eCommerce platform. However, this can also mean more competition. eCommerce sites have full creative control to hone their brand, but require strong marketing strategies to make up for the lack of marketplace exposure.

• Costs and Expenses

Most digital marketplace platforms charge a commission on each sale and hidden fees may apply in some cases. eCommerce websites may have higher initial costs due to website development and monthly expenses for hosting, marketing, payment processing, and security certificates.

• Management

Online marketplaces handle order fulfillment while eCommerce websites are responsible for marketing, order fulfillment, and customer service.

Is It Possible to Transition from an Online Marketplace to Your Own Online Store?

Yes, it is possible for online businesses to go from being on a marketplace to owning their own e-commerce store. In fact, many online shops start on marketplaces like Amazon or Etsy and then create their own eCommerce website as they grow. This allows them to have greater control over branding, design, and customer experience, as well as avoid paying marketplace fees and competition from other sellers. However, making this transition also requires strong marketing efforts like:

1. Establishing a strong brand identity
2. Launching targeted marketing campaigns (SEO, PPC advertising, email marketing, and also content)
3. Creating a social media presence
4. Conducting market research (Identifying your target audience, studying competition, and understanding consumer behavior)
5. Automating processes and customer support

Optimize your digital marketing strategy, boost your business. Simple as that

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Finding the right selling method may take a bit of trial and error, but your niche audience is out there! The appropriate tools and the right team can make all the difference to your brand’s success. After all, handling both your own site and the business’s operational demands and marketing needs isn’t realistic.

Our team at Comrade Digital Marketing would be happy to chat with you about your marketing goals and determine which approach is best for your company. If you’d prefer to get started with a free full marketing assessment, fill out your information, and we’ll gladly report back on the status of your business’s online presence and provide you with a non-obligatory plan of action to increase sales.