Marketplace vs e-commerce: All you need to know

Marketplace vs e-commerce: All You Need to Know

Online merchants or young entrepreneurs who are new to selling often use the terms marketplace and e-commerce interchangeably. But since the ratio of online buyers has increased to 2.14 billion as of 2021, it is high time to know the difference. Mobile application experts know what it takes to develop each platform, and in this blog, we will help you get the same knowledge.

The Basic Difference: Marketplace Vs. e-commerce

Despite both the platforms connecting the sellers with the buyers, 70 percent of customers prefer the marketplace to shop. It is merely due to convenience. 

A marketplace is an online place where the website owner allows multiple sellers/third-party vendors to market and sell their products on the same platform. The owner does not own the products/inventory. In contrast, a single person owns an e-commerce site and is liable for inventory management, customers’ invoices, and tax.

Since marketplaces charge a certain amount of commission, the sellers don’t get maximum potential profit. But at the same time, the exposure to a much bigger target audience ultimately increases the conversion ratio. 

However, the use of each online place varies with the type of business you run. 

The Major Differences: Marketplace Vs. e-commerce

1. Traffic & Engagement

Marketplaces have multiple vendors, and it is much easier for new brands to get through the engagement. Here the goal has always been related to transactions that allow a large chunk of the target audience to visit your products and make a purchase. 

In contrast, e-commerce stores need a lot of effort to build a relationship with the right target audience and convince them to engage. The traffic is slow and takes a big marketing budget to flourish.

2. Brand Recognition

Businesses aim for a reputable name in the market, especially if the brand is new. An e-commerce website, for instance, a services site like Infinisys, will have access to customer analytics. 

Based on the results, the brand can implement promotional campaigns, work on Search Engine Optimization (SEO) and spend the budget on paid ads to attract loyal followers. You can inform, engage, and retarget as per the specific funnels to create brand recognition.
Whereas, the marketplace has several other brands that directly compete with your products where the attention of a potential customer can deviate. Also, people tend to recognize the marketplace, for instance, Amazon or eBay, rather than your brand name. 

3. Inventory Management

Inventory management is a hectic task and might cause you monetary loss if people don’t buy those products. Narrowing our focus to an e-commerce store, the brands have to maintain an inventory with warehouse spaces to cater to the website visitors’ needs. And in case a product is not your best seller, you will end up giving massive discounts to get rid of the stock.

Marketplace, in contrast, is more sort of an e-space market where you can activate or deactivate any product if it’s not selling without worrying about reducing the prices. Here you don’t have to hold inventory.

4. Profit Margins

The end goal of every business is to generate higher profits. Since marketplaces have certain commission fees, it impacts the sales profit. To have a reputable margin, vendors need to sell a higher volume of products. 

On the other hand, e-commerce websites return a profit to the sellers directly with each sale. And you can independently modify the model. For instance, you hire some mobile application experts to take your e-commerce website to another level. It will cost you a lot of investment, but the volume will expectedly hit 620.97 billion USD by 2024. 

Read more about the M-commerce trends and stats in today’s growing era.

5. Customer Access

To sell a product, one must be well-familiar with the mindset, likes, and dislikes of the customers. The marketplace is a channel that connects the buyers and sellers only. You cannot retarget, communicate, or directly engage with the existing or potential customers, and neither do you have the access to customers’ analytics. It becomes a barrier to your brand awareness and customer loyalty and is not much effective for long-term aimed businesses. 

Whereas e-commerce sites are solely your property where you can send new product notifications, ask for feedback, talk to customers, use analytics, and build a brand relationship. 

Website and Mobile Application Experts or a Marketplace?

The right online business platforms depend on the kind of business you have. Many brands optimize their independent e-commerce site and then list the same products on trustworthy marketplaces such as Amazon, Etsy, Upwork, Alibaba, and many other names. 

However, if you want to cut the cost and start as a newbie, the marketplace is the best option with less to no risks. An E-commerce website can be your next step. To have a team of mobile application experts and a competitive edge, you can contact Infinisys and see a vital boost. Contact them at +19292842003 and fluent in digital reality. 

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