As a business owner selling online, you might choose to build your own store using customizable platforms like Shopify, Magento, or WooCommerce, or opt for one-size-fits-all marketplaces like eBay, Etsy, or Amazon. So, in today's competitive digital space, which is better?
Honestly, there's no definitive answer because each option has its pros and cons. What works for your online store may not work for someone else's. There are different factors to consider when making the right choice about which is best for your business, all of which we'll discuss below.
A marketplace platform is an online shopping platform where products sold come from a variety of different vendors. It’s like a digital mall where consumers buy products from multiple sellers and pay for them all together at checkout.
There are three parties included in most marketplaces: the marketplace administrator, the vendor, and the customer. These eCommerce platforms can exist on their own but are usually part of a bigger company or eCommerce platform already established as a trustworthy place to shop online.
Popular marketplace platforms include Etsy, Amazon, eBay, and Facebook. These larger companies maintain their platform’s functionality and ensure it’s safe to use for vendors and shoppers. Once a consumer makes a purchase on a marketplace, it’s the vendor’s responsibility to ship the item.
Online marketplaces profit either via commission fees, lead fees, or subscription fees and occasionally use a combination of these payment structures. Service-based marketplaces tend to have lead fees, whereas product-based marketplaces charge a commission fee-typically a percentage of the selling price.
Let’s examine the most popular online marketplaces and why they may be a good option for your online business.
Founded in 2005, Etsy is an American eCommerce company connecting millions of consumers from around the world to merchants selling thousands of unique items—many of them handmade.
According to the marketplace: “Etsy is home to a universe of special, extraordinary items, from unique handcrafted pieces to vintage treasures.” As such, it has a reputation for selling unique, hand-crafted, and one-of-a-kind collectibles.
Etsy charges $0.20 per listing and 6.5% 0f the price you display for each listing, plus the amount you charge for shipping and gift wrapping. Merchants with good standing may opt into Etsy Plus, a subscription package offering an expanded set of tools for growing brands, which costs an additional $10.00 per month.
Selling on Etsy has become popular because it’s easy to set up and learn. It’s a low-cost, low-risk sales platform that rewards volume sellers with low prices and 5-star reviews. If you sell unique items and gifts, then Etsy is your go-to platform.
What’s an article on online marketplaces without mentioning Amazon? While Amazon is a staple part of today’s consumer culture, not many know it has a marketplace where third-party retailers can sell their goods.
There are two different programs available; Amazon Vendor Central and Amazon Seller Central. The former is an invite-only program reserved for wholesalers to sell bulk inventory, without having to do extra work like marketing and logistics.
On the other hand, sellers on Amazon Seller Central sell products under their brands and maintain ownership of their inventory. Sales-related fees range from 6% to 45% of each product’s selling price, with the average merchant paying about 15%.
Additionally, there are account fees you also have to pay that range from $.99 every time an item is old (Individual Plan) to $39.99 for an unlimited number of sales (Professional Plan). A referral fee is also collected after each sale, and this amount depends on the product category in which you’re selling.
Both new and used items are available to purchase from Amazon Marketplace, unlike Amazon, which sells only new products. One of the advantages of selling on Amazon Marketplace is access to a massive base of potential customers that is larger than any other eCommerce platform, including eBay.
eBay is an online shopping site best known for its auctions and consumer-to-consumer sales. Instead of selling your products ad hoc, eBay gives you the option of subscribing to an eBay shop, which allows you to display your merchandise in one place. eBay shops also come with exclusive marketing and merchandising tools, as well as great customization features to build a strong brand.
For casual sellers, it’s free to list on eBay; however, if you upload more than 250 items per month, you’ll start paying a $0.35 insertion fee per listing. eBay also keeps 12.9% of the sale, or lower, plus $0.30 per order.
Although eBay is not quite equal to Amazon or Google, it still has great search engine optimization (SEO). Therefore, there’s a high chance that people searching on Google will wind up on your product listing without you ever building a website.
eBay is also famed for its auctions and still remains the top auction marketplace on the internet to this day. Auctions offer sellers more flexibility and often fetch a higher price when there are competing bidders. You can also set a reserve price to ensure you don’t sell items for less than what they’re worth.
The main advantage of online marketplaces is that a large, targeted audience can be reached in a cost-effective and measurable way. Others include increasing brand awareness and driving online sales while building a loyal customer base.
Amazon accounts for nearly $2 of every $5 spent online, making up almost 40% of all US retail eCommerce sales. Tapping into popular marketplaces will undoubtedly bring more eyes to your brand than if you had to build your own eCommerce website from scratch.
Changing consumer behavior is a challenging part of the marketing process, but digital marketplaces eliminate this need because they already have credibility. For small retailers and new online businesses, in particular, marketplaces solve the issue of reaching wider audiences while building an online presence.
Some marketplaces, like Amazon, make things easy: They handle shipping and inventory issues, SEO, fulfillment of orders, SEO, and even marketing strategies. All you have to do is create your shop, manage the products and prices you offer, and control the orders you receive.
You actually don’t have to spend much on launching your online business. There’s zero need for a designer, technical maintenance, or paying for hosting or domains. This means you can start selling with extremely low overheads.
Consumers generally trust marketplaces and their offerings, so if your brand is already associated with a reputable vendor like eBay, you’ll immediately gain a leg up on your competition. Payment is also a sensitive and less touched-upon aspect of building brand trust.
Advantageously, marketplaces often have secure, multiple payment options, making security a lesser concern for consumers. As professional marketers, we know how brand trust increases customer receptivity, loyalty, and advocacy and, therefore, how important established credibility is to the growth of online sales.
Depending on the complexity of a store, the process of designing and deploying a professional website developer or agency can take between five and six months. Yet, when you submit an application to sell on Amazon, it takes anywhere between two business days to two weeks to get your store up and running.
When building an eCommerce website, there are many considerations: Is it SEO-friendly? Does it adequately represent your brand? Is it easy to navigate? Are the images high-quality and properly optimized?
All these and a million other considerations are skipped when selling on an online marketplace. Platforms like Etsy, eBay, and Amazon take care of moving parts like financial transactions, hosting, processing orders, and design, making selling a lot easier.
To expand on a point briefly mentioned earlier, you don’t have to spend any money hiring a developer. The average website costs between $5,000 and $10,000, if not more! When vendors decide to sell through a marketplace, there is no need to build a website from the ground up.
Marketplaces are established and trusted websites that customers already know how to use. This speeds up the selling process. Additionally, many eCommerce platforms require merchants to create alternate versions of their websites in different languages, yet with larger platforms, such as Amazon or Etsy, language barriers aren’t an issue.
One-third of all US business flows through eCommerce, and 63% of that is via marketplaces. That’s because many merchants use a multichannel distribution system, i.e. more than one marketing channel to sell their products online. Essentially, this helps them penetrate a larger customer base.
An online marketplace is also useful for testing new products and market viability. If your sales increase, you can boost product manufacturing or imports. However, if it flops, you wouldn’t have wasted too much time or money. And hopefully, the consequent results factor into your business research and development.
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 a unique online experience for customers.
Of course, there’s a lot to think about, such as costs and time needed to establish an 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.
An eCommerce platform is an end-to-end software solution that allows online retailers to optimize and manage their businesses. This type of service includes website builders, accounting and inventory management systems, and customer service infrastructure.
eCommerce platforms have all the components you need to operate and grow your online store. While more expensive and time-consuming than using a marketplace, it is still cheaper than developing software from scratch.
An estimated 12 million to 24 million businesses use eCommerce platforms to operate their businesses. User-friendly, optimized templates coupled with strong AI capabilities give you insights into your customers’ buying habits and help you to not only personalize offers but also respond quickly to your customer’s needs and changing trends.
Before we get into the many advantages of commerce websites, let’s briefly go through the most widely-used platforms.
Shopify is easy to use and built for the average Joe, not skilled developers, which is why merchants love it. From web design to adding products and creating product discounts, Shopify is user-friendly, and its drag-and-drop editor makes website building pretty straightforward.
Because Shopify is a hosted platform, merchants are billed monthly for their services. The price of a basic subscription—$29.99 per month—covers customer support, access to software, web hosting, and security. Thereafter, prices vary depending on the features you require.
The platform’s built-in tools conform to a wide variety of business models and marketing approaches, allowing you to showcase sales prices or discounts on products or offer free shipping. Many Shopify themes also come with the ability to create advanced mega menu navigation systems, which is useful for stores selling a wide range of products.
Formerly called Magento, the Adobe eCommerce platform is an open-source website builder with a high conversion rate and threshold for heavy website traffic. Unlike Shopify, it’s less user-friendly in the sense that unless you understand coding, you’ll have to hire a professional web developer to create your own eCommerce store.
Adobe eCommerce has emerged as an advanced shopping cart platform with integrated image optimization and one of the best content management systems (CMS) to manage transactions and products. With it, you can create pages, blog posts, product descriptions, and more.
At the same time, the platform’s modular codebase lets developers integrate third-party modules and themes to extend the functionality and appearance of online stores. Perhaps the signature advantage of the platform is you can customize every aspect of your store and even create a custom marketplace.
While technically a WordPress plugin and not a platform, WooCommerce transforms WordPress websites into eCommerce stores. Some of the plug-in’s impressive features include a pre-installed payment gateway, geolocation support, advanced inventory management, and tools for easy tax calculations.
With WooCommerce, you can use both default and custom WordPress themes to build your eCommerce website. Furthermore, because it’s free, entrepreneurs can leverage its capabilities without having to commit to expensive support contractors or proprietary software licenses.
The plugin also makes it possible to sell physical and digital products. For instance, you can build a membership site, enable bookings and appointments, as well as sell subscription-based products. This option isn’t always possible on an online marketplace.
If you build your own site, you have more control over design, marketing, and SEO. More simply, it allows you to connect with prospective shoppers on your own terms.
Shopify, Adobe eCommerce, and WooCommerce are already established and capable of supporting businesses of all sizes. Generally, there are three types of eCommerce platforms: open-source platforms, software as a service (SaaS), and Commerce as a Service (CaaS).
Small startups may choose a turnkey solution like Shopify, while established eCommerce brands will likely opt for greater functionality and customization provided by Adobe Commerce. Regardless of the platform, you’ll always have complete control over your website when opting for an eCommerce web development platform.
eCommerce website pros include advanced SEO capabilities. Most selling platforms have built-in analytics where you can tailor your brand’s goals and carefully monitor business progress. Tracking keywords, purchase decisions, and creating a catalog of content is possible with these platforms’ advanced and sophisticated management systems. Over time, you’ll improve your business’s position in search engines and outrank marketplace competitors.
An obvious reason why companies prefer not to sell on digital marketplaces is they can’t show off their custom websites. Websites are important brand identifiers and builders, and, understandably, some companies aren’t willing to give up their digital storefronts, so to speak.
eCommerce websites provide the opportunity to connect with your audience through the right visuals, messaging, and overall branding. Eliminating this does more harm than good for some brands. A unique website creates brand recognition, shows off your products, and will ultimately differentiate your business.
eCommerce platforms display all the useful information you need on a central dashboard. Thus, your content marketing, SEO, PPC, email marketing campaigns, blogs, and any other channels you use, will be accessible from one spot. Instead of switching between different platforms, you can understand what’s happening with a particular department just by looking at your screen.
Keeping a close eye on your eCommerce dashboard allows you to monitor the performance of your own site in real-time, and of equal importance, ensure your customer journey is well-documented.
Google Analytics, Shopify, WooCommerce, and Shopify enable the use of a wide selection of tools for dashboard customization. Most eCommerce companies pull data from multiple sources for greater insight into the growth and success of their businesses.
You get access to endless amounts of customer data when you run your own eCommerce platform. Google Analytics is an especially helpful tool that tracks website traffic and lets you know how your customers like to spend their time and money online, so you can better meet their needs.
Using Google Analytics will give you a firm grasp of your website in terms of how its marketing, content, and products are performing relative to user engagement. Without analytics, you can’t draw conclusions about how people are using your website or improve your business going forward.
Customer brand relations results are more positive when businesses have their own websites. Shopping experiences are personable and customized, filled with more of the brand’s personality than when scrolling through products listed on marketplaces.
Moreover, if your customers have any queries or require more product information, they can easily get in touch with you, either via text, email, call, or chatbot. With digital marketplaces, it’s more difficult to contact brands directly.
It’s impossible to give a clear-cut answer without knowing a brand’s current market position and aspirations. Both a marketplace and an eCommerce site can work well for an online store. One approach is to start selling on a marketplace while you get your own website up and running.
Because there is significantly less work involved in selling your products on a marketplace, you can start right away. However, if you’re going to sell products in bulk or want to be a prestigious brand, it might be better to wait until your website is complete and sell on social media in the meantime.
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 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.
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