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Ecommerce platforms vs. marketplaces - making the right pick for your business

When we talk about selling products online, it is usually through an ecommerce store that enables buying and selling through the internet. However, in recent years, digital marketplaces have risen in popularity, and many businesses have seen a sharp increase in their sales while trading in a marketplace. 

The big question that perplexes many business owners is - whether to chart their own territory by building an independent ecommerce store or selling on "one-size-fits-all" marketplaces. Each has its own pros and cons. If you are facing the same dilemma for your print on demand venture, then read on as we break down the basics, list the differences, and what factors to consider while making the big decision. 

The basics

What is an ecommerce platform?

An ecommerce platform is a website or app that allows you to create your own online store and sell products directly to customers. These platforms provide the tools and infrastructure to owners for managing their online store, processing orders, and handling customer inquiries. 

Ecommerce platforms are typically used by businesses that want full control over their online sales and customer experience.

Examples - Shopify, BigCommerce, Squarespace, WooCommerce (through WordPress).

Pros:

  • Brand control: The sky's the limit when it comes to personalizing your store. When you sell on an ecommerce platform, you have more control over the look and feel of your online store, which can help you establish and maintain your brand's identity.

  • Customization: Ecommerce platforms often offer more flexibility and customization options than marketplaces, allowing you to tailor the shopping experience to your specific needs and preferences.

  • Customer data: When you sell on an ecommerce platform, you have access to more detailed customer data, such as their purchase history and contact information, which can help you better understand your customers and make informed business decisions.

  • Marketing opportunities: Ecommerce platforms often offer a range of marketing tools and features that can help you promote your products and reach new customers.

  • Reduced fees: Many ecommerce platforms charge lower per-order fees than marketplaces, which can help you save money and increase your profitability.

Cons:

  • Upfront costs: Setting up an ecommerce platform can be more expensive than using a marketplace, as you may need to pay for things like hosting, payment processing, and design costs.

  • Limited traffic: When you sell on an ecommerce platform, you are responsible for driving traffic to your store and promoting your products. This can require time and money, especially if you are just starting out and don't yet have a large following or established customer base.

  • Technical skills: Setting up and managing an ecommerce platform can require a certain level of technical expertise, which may be a barrier for some sellers who don't have the necessary skills or resources.

What is an online marketplace?

The marketplace is an extension of ecommerce as it enables businesses to reach customers, but other sellers also exist on the same platform. It provides a central location for customers to shop and compare products from different sellers. 

These sites often have a large existing customer base, offer various products, and typically offer additional features such as reviews and ratings, as well as a built-in audience of potential buyers. 

Businesses that want to reach a wider audience and benefit from the platform's existing popularity and credibility go this route. 

Examples - Etsy, Amazon, eBay.

Pros:

  • Large customer base: Ecommerce marketplaces often have a large and diverse customer base, which can make it easier for your products to be discovered by potential customers - around the globe.

  • Traffic: Marketplaces often actively promote their site to generate their own traffic. Some may also offer marketing tools and features to help sellers promote their products, such as sponsored listings and targeted advertising, which can help drive traffic to your products.

  • Reduced upfront costs: Selling on a marketplace usually requires fewer upfront costs than setting up an ecommerce platform, as you don't need to worry about things like hosting, payment processing, and design costs.

  • Simplicity: Marketplaces are generally easier to use and require fewer technical skills to set up and manage, making them a good option for sellers who are just starting out and don't have a lot of experience with ecommerce.

  • Trust and credibility: Established marketplaces often have a level of trust and credibility with consumers, which can help build confidence in your brand and increase sales.

Cons:

  • Fees: Marketplaces often charge fees for listing products and/or for each sale, which can eat into your profits.

  • Limited customization: Marketplaces generally have more limited customization options compared to ecommerce platforms, which can make it difficult to create a unique and personalized shopping experience for your customers.

  • Brand control: When you sell on a marketplace, you may have less control over the look and feel of your store, and your products may be presented alongside those of other sellers. This can make it harder to establish and maintain a strong brand identity.

  • Competition: Marketplaces can be highly competitive, as many sellers are offering similar products to a large and diverse customer base. This can make it harder for your products to stand out and be noticed, which can impact your sales.

The differences

Ownership & control

The key difference between an ecommerce platform and marketplace is ownership and control.  With an e-commerce platform, you have complete control over your online store, including the design, branding, pricing, and product offerings. This allows you to create a unique and differentiated experience for your customers. On the other hand, ecommerce marketplaces are more standardized and offer less control. You must adhere to the marketplace's rules and policies and may have limited control over your branding. This can limit the flexibility and creativity of your business, but it also provides a level of consistency and trust for buyers. 

Here’s an overview of other differences:

Ecommerce platforms
Marketplaces
Traffic
Traffic
You are responsible for attracting customers and increasing the store’s traffic.
Marketplaces generate traffic due to the convenience of having many options available.
Marketing
Marketing
You are in charge of lead generation and advertising efforts.
Marketplaces nurture, attract, and engage leads on their own.
Competition
Competition
You are the only seller showcasing your products.
You compete with other sellers and their products.
Cost
Cost
You need to bear the costs of hosting and maintaining the website. Higher costs of setting up.
You need to pay a commission on every sale made. Lower costs of setting up.
Time
Time
Setting up a new shop and continuing maintenance can be time-consuming.
Quick to set up and minimal maintenance required.

Making the right choice for your business

Everything boils down to your specific goals and the needs of your business. There's no one-size-fits-all solution.  

If you want to establish a unique image that you want to be known for and you don't want to relinquish control, go the platform route. If you are not too fussed about your brand, for now, want something quick, and start selling quickly, pick a marketplace. 

If you want to reach a larger audience and take advantage of the traffic and visibility provided by a marketplace, an ecommerce marketplace may be a better fit. This is especially beneficial for small or new businesses that may not have a large customer base of their own. However, you will be in direct competition with other sellers on the same website. 

Another route is to take both paths - setting up your own shop with a platform such as Shopify, as well as listing your products on a marketplace, such as Etsy.

Ecommerce platforms and marketplaces are two different selling channels that each have their own benefits and drawbacks. Ultimately, what matters is that you do your research, carefully consider your options and choose the selling channel that best aligns with your aims.

Ready to get started with your ecommerce journey? Choose your platform or marketplace, then sign up to Gelato for free to start selling print on demand today.