If you’re planning on selling online, what channels are best to use: A marketplace, an ecommerce?
This is probably one of the first questions you will ask yourself if you’re thinking of taking the plunge into the online sales.
The answer: it depends. It depends on your business and sales goals, on your financial and human resources, on your technical and marketing skills, on your customers and potential customers, on the nature of your product or service…
So, before you dive into the pool, ask yourself some questions first: What do you intend to achieve? Logistically, what are the benefits or drawbacks of your product? Who is your buyer persona and what are their buying habits? Or maybe you are looking to expand to new markets? What differentiates you from your competitors? How much money can you invest for the launch of this project? And on a monthly basis? Do you have the staff or financial resources to hire a marketing team?
It goes without saying that we cannot answer these questions for you, but we’re hoping to help you find some answers through this article. So, let’s go for it!
Is a marketplace the same as an ecommerce?
Actually, no! There are many differences between one and another. As an end user you might not stand still by this question. You are just looking to shop online, receive your order in time and proper condition and make a secure payment. But if you’re running a business the decision to sell on a marketplace or ecommerce or both even, is very important.
So, let’s see what the main differences are:
An ecommerce (electronic commerce, online commerce, virtual shop or online shop) is simply a website where you can send products or services in order for people to buy them.
An online shop has it’s own hosting and domain. A hosting is the virtual storage of your website information, this allows users to visit your site. A domain on the other hand, would be i.e.: www.thisismywebsite.co.uk. This is how your clients will find you.
The main advantage of setting up your own online shop is that you can put in all your ideas and creativity and design your shop according to your own liking. You decide the style, functionalities, communication strategy and more importantly: the sales terms and conditions.
Another important benefit of owning an ecommerce is that the profit you make from your sales belong to you and you only. Meaning, you pay no commissions and have full control of your profit margin, income and expenses.
But every coin has two sides. There are a couple of disatvantages to the ecommerce industry. Firstly, the start-up cost. If you are being told that an online shop is easy and inexpensive to set up you should know that’s untrue. If you’re aiming for a professional and functional shop that offers a quality service and user experience, you have to be willing to invest.
Secondly, you should be aware that an ecommerce will cost you time, effort, money and skills to optimize your site along your competitors. In the beginning, your clients will have some trouble finding you within the ocean of offers that Google lays out for them. And when they do, you’ll have to gain their trust first, because, let’s face it: They “know Amazon” but they don’t know you! To achieve this, you’ll have to invest time, offer a great service, differenciate your business from your competitors and have your clients write you some reviews (no cheating allowed here!)
A marketplace is comparable to the traditional flea market that we all know. Local business share an open space to sell their items whilst agreeing to pay a price and accept the pre-established rules. An online marketplace works the same really.
Unlike the ecommerce, a marketplace has a general hosting and domain, i.e.: www.ebay.co.uk.
The first advantage of the use of marketplaces is that the initial investment is a lot lower than an ecommerce project. A second advantage is that your target is more likely to find your products. A marketplace is easy to find in all search engines and your customers already know the platform and will therefore hesitate less when it comes to purchasing your goods.
So, the downside is that since your operating on a shared platform you’ll probably loose some brand recognition. But if your goals are financial, this shouldn’t be a breaking point.
As to the disadvantages: On one hand, you will be competing with other suppliers within the same platform, therefore your target has more options to choose from, some cheaper, some more expensive, some better, some worse. But still a wider choice.
Nontheless, the most important disadvantage is surely that you have no control over your sales terms and you’ll pay the platform some generous commissions also. Basically, this enthails that you will cede control over your sales management to a third party.
You should put order in your thoughts, define your company’s strategy and crunch some numbers to figure out how you are going to make your business grow.
Maybe you ought to star selling on a marketplace and analyze how your products sell online before investing in an ecommerce. If your sales do well you can always ad this later on.
Althouh if your aiming for brand recognition and you’re looking for more than just profits, then you might want to go for the ecommerce in stead of a marketplace.
All in all, these are important decisions and every piece of information, such as this humble article, will get you closer to the right direction.
Do you have any questions or comments? We look forward to reading them 🙂
Image from: Freepik.