The Difference Between Marketplace and eCommerce Websites
                     The Difference Between Marketplace and
eCommerce Websites
After launching our first marketplace last week, we realised, from the comments of our
clients and entourage, that most people are confused about the difference between a
marketplace and eCommerce. That’s understandable, nowadays, the digital world offer
thousands of options and features for websites. Thus, we find importance of sharing
difference  between  both.  Let’s  explore  the  difference  between  marketplace  and
eCommerce websites.
“They both sell stuff online, so why aren’t they the same?”
Despite the fact that they are both used for online business, their concept is different. A
marketplace is an online platform where the website owner allows third-party vendors
to sell on the platform and invoice customers directly. Different sellers can advertise
their goods to customers via the marketplace. It’s like a farmer’s market with different
sellers and buyers, but all the transactions pass through the marketplace server and all
sellers and buyers have to respect the marketplace guidelines. In exchange for providing
clients and facilitating the sales, the marketplace takes a commission fee before paying
the buyer.
Through an eCommerce website, a single store owner sells products. The website owner
still bills the consumer and collects the GST. There is no choice to register as a seller.
Only the website owner can sell on this digital platform and is responsible for the quality
of the product and the shipping.
Different client base
While  in  the  eCommerce  website  business,  you  must  concentrate  on  attracting
customers, in a marketplace, you must attract not only buyers, but also sellers, who will
shape the platform’s core. Individual merchants must invest more to push traffic to their
websites  in  eCommerce.  Because  the  customer  is  limited  to  only  one  company’s
products, the selection process is simplified once he or she has made a decision.
Marketplaces, on the other hand, benefit from a diverse user base. Since there are so
many vendors, each one promotes the marketplace on their own, resulting in a viral
spread of information. The more satisfied customers are, the more likely they are to
transact on the platform.
Operational costs
If you choose to operate your own eCommerce website, you will need to buy stock, pay
for a warehouse, shipping fees, logistic fees and large marketing fees to compete with
bigger competitors, including marketplaces.
If  you choose to create a  marketplace,  most  of  your  costs  will  be  related to digital
channels: the development and maintenance fees for a marketplace will be much higher
as this type of platform requires a large amount of work. The marketing fees to bring in
clients and sellers will be higher as well, as it takes a substantial amount of traffic and
sales to be profitable. Managing a large number of sellers and the legal fees for such a
platform might be costly. However, your premises’ costs will be lower and you won’t
have to invest in stock and logistic fees to import or sell products.
Scalability
A marketplace doesn’t buy or sell goods. As a result, it poses far fewer financial risks
than eCommerce websites, which must continually invest in stock that can take a long
time to sell or never sell at all. As previously stated, marketplaces are more easily able
to achieve economies of scale, allowing them to grow more quickly than eCommerce
websites. When traffic spikes, you may need to find new vendors to keep up with the
demand,  but  you won’t  have to  invest  a  lot  of  money in  new inventory  or  storage
facilities.
An eCommerce website earns a high profit by selling products, whereas a marketplace
earns a percentage of sales, typically between 10% and 20%.
Pros and Cons of Each Platform:
eCommerce
An eCommerce website offers more control over all  operation that goes along each
purchase and will allow you to keep full profit. All of these benefits, however, come with
a lot more responsibility and assets. You must either handle all of these things yourself
or hire staff to do so on your behalf—and good support isn’t cheap.
Being  in  control  of  the  whole  process  also  means  being  responsible  for  all  costs.
Operational  costs such as facilities, logistic, stock and shipping can come at a higher
price, and can be time costly.
Managing  marketing  and  sales  take  a  lot  of  time,  you’re  in  charge  of  not  only
maintaining the site, but also driving traffic, which has become the greatest challenge
for aspiring retailers.  Building traffic is the most difficult  (and often most expensive)
aspect of any online company.
Want to check how eCommerce website looks. Have a look at one of our eCommerce
website at veeraa.com.au.
Marketplace
Managing a marketplace involves less operational costs and requires large marketing
efforts and skills.  The advantage of it  is  that the lack of need for logistics offers the
opportunity to grow much faster. To be profitable, a marketplace needs a large number
of  sellers  and  much higher  amount  of  traffic,  on  the  top of  a  high  maintenance  &
complicated platform.
The advantage of a marketplace is that the fact that they have no logistics and inventory
to manage and give them a lot more flexibility and ability to grow than an eCommerce
website.
Have a look at one our our marketplace project at veganskin.com.au.
Still  unsure of which option is best for you? Contact our team of web development
experts! Explore more about our digital services.
Content Source
https://sydneydigitalagency.com.au/the-difference-between-marketplace-and-e-
commerce-website/