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January 25, 2023

Scaling Your Business 4 min read

Marketplace vs Ecommerce Site: Pros and Cons to Consider

If you're selling your products on a marketplace but want to upgrade your selling strategy, it might be time to get your own ecommerce website set up. But a move that drastic is neither easy on the mind nor the pocket. 

In this article, we dive deep to understand the pros and cons of selling on a marketplace vs platform. 

But First, What is Marketplace in Ecommerce?

A marketplace is an online shopping platform where multiple vendors can list and sell their products. There are three parties involved in a marketplace: the administrator (the owner of the website), vendors, and customers. Some popular marketplaces are Amazon, eBay, and Etsy.   

Ecommerce Website 

An ecommerce website is a platform where a sole business owner takes care of the entire selling process, from managing the inventory to handling logistics and shipment. You can think of an ecommerce platform as a stand-alone shop.

Selling on Marketplaces vs Your Own Ecommerce Website: Pros and Cons

Pros

Selling on a Marketplace Selling on an Ecommerce Site
Customer base: Selling on an established marketplace allows you to advertise your products to a larger volume of potential customers without spending on marketing.  Greater control: You get complete control over the site’s design, features, functionality, and navigation. 
Cost: For a small fee, marketplaces will handle the platform, technical maintenance, SEO, and even marketing strategies.  Customer data insight: You can gather first-hand data by tracking how your customers engage with your online shop. The data gives you insights on enhancing user experience and boosting sales for your e-commerce business. 
Inventory: You don’t need to worry about your product inventory. Some marketplace handles your product inventory at their own warehouse. Brand messaging: An ecommerce website is a great way to build your reputation and tell your brand’s story. 
Set up: Marketplaces have all things set up in one place so it’s easier and more convenient for you to get started.  Less competition: You don't have any on-site competition since your website sells only your products. 

READ MORE: Go Green: 7 Ways to Set Up a Sustainable Ecommerce Brand

Cons

Selling on a Marketplace Selling on an Ecommerce Site 
Competition: There are tons of sellers that offer similar products to yours on the same marketplace.   Footfall: Bringing in traffic and driving customer engagement is challenging. 
Brand messaging: There may be marketplace limitations as to how your business can brand its online presence.  Cost: Setting up, maintaining, and marketing your own ecommerce website can involve fronting up with some cash. 
Customer list: People who purchase from your store may forget your business brand/name. It’s hard to build a customer list and sell to them again in the future.  Costs: Scaling your ecommerce website may involve financial risks. 

Now that you have a good understanding of the pros and cons of both options, let's understand the key differences between the two.

Marketplace vs Ecommerce Site: Key Differences

Marketplace Ecommerce Site
Footfall + Audience Engagement  Higher audience base as the options for the products and categories offered are diverse and larger in number, leading to higher engagement from the buyers.  Lower audience involvement and greater effort as well as costs are needed to get more people to the website. 
Marketing + Brand Awareness  Lack of direct access to rich customer information and analytics, which makes driving loyalty difficult. Driving sales promotions and creating personalised marketing campaigns and buzz for newer products is easier since you have instant and direct access to customer data and analytics.
Financial Risk + Scalability  There are fewer financial risks since you don't need to spend on storage facilities or managing new inventory.  Scaling operations can take time, more effort, and greater monetary investment. 
Inventory Management  Marketplaces don't need inventories, so there are no additional costs.  Large inventory will allow your buyers to find what they need but it must have room for stocking extra products. 
Profit margin  The profit margin for marketplaces is lower than of an ecommerce website due to listing fees and commission fees.  Ecommerce websites provide the advantage of higher profit margins with every sale. 
Control  Lack of personalisation for your profile, which makes establishing brand awareness challenging. You get complete control over your profile. You can also choose the right keywords for SEO.

If your brand has gained a loyal base of ardent customers and you don’t wish to share your profits with another marketplace, consider getting your own ecommerce website. 

On the other hand, if you’re just kickstarting your business and want a ready-made stream of customers along with reduced costs for operation and maintenance, an online marketplace option is better suited for you. 

Remember that marketplaces such as Amazon also provide the added benefit of a full-fledged logistics mechanism in place.

READ MORE: How to Get ROI Out of Your Ecommerce Website and IT Monitoring Service

Get Greater Control and Security Over Your Website 

While selling on marketplaces is less of a headache, having your own website empowers you to exercise great control and security over your website. 

In fact, creating your own website is more like building a brand for your products—one that people respect and become habituated to with time. You can also focus on providing an exceptional user experience. 

If youre unsure about how to build an ecommerce website from scratch, you need to first sort your hosting needs from a reliable hosting provider.

Here at Vodien, we provide two options. If you have fewer products, Business Web Hosting is a great choice. However, if your business is continuously growing and has thousands of products, you can go for a Virtual Private ServerThis is a high-power, flexible, customisable, and affordable hosting plan that can boost your ecommerce selling through the roof.

Get in touch with one of our specialists to know more.

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