A lot of our clients came to us with the same struggle. They have been selling their products through marketplaces directly. Yet, they had no way to get listed at the top of the search results and ended up having very few impression and sales conversion.
What is the difference between an online store and a Marketplace?
Selling your products online is a great opportunity to reach wider audiences and reduce your operational costs, however it can be confusing, since there are many options available and it can be difficult to decide which one fits you better.
For better identifying the characteristics of each platform, we must first know the difference between an online store and a Marketplace.
An online store is a website dedicated to ecommerce, set up and managed by a single seller, whereas a marketplace is a platform that gathers many types of vendors, it can be either independent sellers, local stores, small businesses or product owners.
Our clients asked, should I developed an online store instead? Let us begin with the answer to this question, what are the high- and low-lights of setting up your own online store or selling through e-commerce marketplaces?
Advantages of setting up an online store vs. a Marketplace
Starting an online business
With standardized grids and pre-populated fields, it is easy to manoeuvre and list your products on marketplaces. But if you are aiming for brand essence and customization, developing an online store would be what you are looking for.
A general expectation is that you would require more resources to set up an online store, but working with e-commerce applications like Shopify and Magento, you can easily build your site from scratch and manage your products through any filters and categories according to your needs.
Building your brand through marketing
To build your brand presence on marketplaces, marketing budget must be spent on premium listing and cross-promotion. This however just drives traffic to the marketplaces instead, which may even end up promoting other brands.
With your own online store, all your marketing budget is spent to build brand awareness and attract buyers to your own website via your choice of channels, ranging from Facebook, Instagram and Google Display Network.
Marketplaces always have a vast number of visitors, however brands gain very few impressions there, because the competition in product listings is very fierce. You would require a lot of resources to pump your product up the search results and attract any customers.
An online store on the other hand is likely to attract more target consumers directly with dedicated digital marketing tools as previously mentioned. This is what you use your marketing budget well and effectively.
Generating sales and revenue
You can always expect a lower profit margin on marketplaces, as the platforms always require you to pay additional charges e.g. sales commission, membership fees and lead fees, etc.
With your own online stores, all the revenue you earned from online sales go directly into profit. This in turn results in higher profit margin.
Why should you use your own online store rather than a Marketplace?
Going directly to a Marketplace may sound easier and cheaper, but if your intention is to personalize your store and invest on advertisement, being listed on a marketplace may result counterproductive. In the case of an online store, although it can be more challenging to set up initially- as it will be embedded to your own website- it will be always easier to manage and correctly promote the desired content.
So, here is our take on the differences between online stores and marketplaces. Would you like to know how we can tackle your problem on e-commerce set-up? Till next time, or simply get in touch with us today, and find out more!