Many people don’t know the differences between the marketplace and eCommerce. Both are used for online business purposes, but there are fundamental differences between the two.
But first, in 2022, we know how important online sales channels are for business. With the rise of online shopping, it is only natural that the number of worldwide shoppers will rise along with it. In 2021, Statesman stated that digital buyers reached 2.14 billion. Almost 27% of the world's 7 billion people are digital buyers. It means that more than one in four people you see are online shoppers. It's not surprising because the internet has penetrated the world. Now online shopping is more convenient.
The pandemic has changed people's behaviour, including shopping online. Now we can shop online through social media, especially through LIVE commerce. In China, live-streaming shopping has played a big role. In 2021, McKinsey reported that 45% of online shoppers in China did shopping via live stream.
Big events like Black Friday, Amazon Prime Day, or Christmas increase the growth of digital buyers. This trend will continue and grow.
But for people new to digital commerce, it will be challenging to determine a good market for their business. Common questions like which is better than eCommerce and marketplace? Well, let's discuss the differences below!
The definition of marketplace and eCommerce
Simply put, eCommerce is buying and selling goods or services via the internet. The payment process is through a payment gateway, and one vendor manages all transactions. If you have many products and sales variants, then eCommerce is better. E-commerce describes a single transaction and only involves two parties; sellers and customers.
A marketplace is where sellers sell their products and has three entities: sellers, customers, vendors, or third parties. All transactions are under third parties. The marketplace is the right place when you don't have solid fans for your product.
These two platforms share the same core function, which is online shopping. But the process of manufacture and use is different. Let's dive deep into eight differences between the marketplace and eCommerce!
8 differences between Marketplace and eCommerce
The differences are based on the user's point of view and technical aspects. So, let's get on the list!
1. Consumer Approach and Target Market
Before deciding on e-commerce or marketplace, it is essential to research consumers and target markets. Make a clear concept of consumer approach and targeting. E-commerce requires attracting buyers, while your marketplace must focus on buyers and sellers.
After the buyer selects the product, the transaction process in e-commerce is simple. There are no other competitors because there is only one shop in e-commerce. On the other hand, a marketplace will be more attractive if it has many sellers and buyers. Sellers will build their respective branding through the marketplace.
2. Time and money
The process of building an e-commerce site can be simple or complex. Many things need to be installed in it—much activity and time to set up an eCommerce. But in the marketplace, you have to register, click, upload, and you're done. You don't need extra time.
E-commerce also requires investment funds at the start of building a site. Of course, it will take a long time to get the appropriate ROI. On the other hand, marketplaces offer better benefits based on the number of transactions.
3. Inventory
A large inventory means that it is more likely that consumers will find the items they are looking for. But a large inventory means extra effort to market it. Sometimes, you have to set aside extra space to store a large inventory. In e-commerce, you must remove or throw away products that don't sell well or lower their prices. In the marketplace, you only need to press one button to deactivate the product.
4. Margin
100% of the profits from e-commerce are for yourself. E-commerce has a greater margin value than the marketplace. The profit comes from the transaction size without any admin and commission deductions. While the marketplace requires more volume and transactions to cover admin costs.
5. Competition
The marketplace will be more profitable for consumers who haven't made a product choice yet. The marketplace has millions of product variations that can satisfy consumers. But this is not an advantage for the seller because the more catalogues, the more competition. Whereas in e-commerce, consumers can browse directly on their site without interruptions from other stores.
6. Engaged audience
The audience is an entity that needs to be considered in selecting e-commerce and marketplaces. Engaging audiences in e-commerce takes time and money. You must introduce your market on social media, create advertisements and build awareness to get leads.
Meanwhile, the marketplace is transaction oriented. Its primary mission is to match buyers and sellers through products. Marketplaces always encourage consumers to buy and sellers to list more products.
7. Trust
An article on Medium says that 67% trust purchases in familiar marketplaces. This means that building trust in the marketplace is essential for survival. Likewise, in e-commerce, the owner must be able to build trust on the site so that consumers are comfortable shopping.
8. Navigation
Generally, in the marketplace, the arrangement of products into organised sets. Sellers can arrange their products according to the location of their arrangement. Whereas in e-commerce, products are organised by category. E-commerce sites are more detailed and accurate, so the search process is more specific.
Examples of marketplace and eCommerce
To give you a broader picture, here are examples from eCommerce: Shopify, WooCommerce, Wix, BigCommerce, and Magento. Examples of marketplaces are Amazon, eBay, Etsy, Walmart, and Google Shopping. The marketplace is also adopted in the buying and selling process of real estate.
Conclusion
The main difference between marketplace and e-commerce is the number of sellers. E-commerce has only one seller selling different types of products. In contrast, the marketplace has many sellers and many product variations. The system used by both is almost the same. Both offer convenience in the buying process. When buyers are interested in a product, they only need to click and make the transfer process.
E-commerce does not provide land for other stores to sell. There is no bargaining process in e-commerce. Prices listed are fixed prices unless they are on a discount. So, which one should you choose? There is no right or wrong answer when choosing between the two. All things must be considered, including the eight categories above. The world of e-commerce and marketplaces will continue to expand.
