With the boom of ecommerce, every business is either planning to enter the online selling space or has already stepped in. But ecommerce is a rather bigger term that includes:
Both options come with their own set of pros and cons. Careful analysis and understanding of every aspect leads to an informed decision. Such a decision results in better outcomes in terms of sales and business growth. The next 7 minutes of reading will give you a clear understanding of what's best for your business, online store, or selling on e-commerce websites.
A complete understanding of the difference can help you know what works for you and what doesn't, depending on the current requirements of your business. Here's a clear distinction between online stores and marketplaces based on certain parameters:
As mentioned earlier, online marketplaces present the sellers with a pre-build audience of shoppers who trust the marketplace, hence easily convertible into customers. On the other hand, self-run online stores have to drive their traffic.
As physical infrastructure is required for selling offline, digital infrastructure like shipping, payment processing, and customer service are required to be sold online. Marketplaces like Amazon, Etsy, etc. have a built-in infrastructure for shipping, payments, and customer support, so sellers need to build any of that. Online stores, on the contrary, are not provided with any of these, so the sellers need to build them on their own.
Building a customer for a product is much easier than building a customer for a brand. With online marketplaces, sellers do not get much control over branding. However, they can market their goods with paid promotions, but there are very few chances of the customer actually remembering the brand. Conversely, online stores get complete control over their marketing and branding. Stores can be personalized and presented as per the brand and its consumers, making them more memorable.
The target audience and its tapping by the business define the success of a business. Listing on online marketplaces does not give much insight into the minds of customers or the target audience. Sellers might not even get the basic information regarding their buyers to connect with them later. Online stores have every detail of their customers, and they can connect with their consumers on any given day.
Competition must be taken seriously if you wish to stay in the market for longer. Online marketplaces put you in the middle of cut-throat competition where everyone else is selling similar products at a highly competitive price, making it difficult to build a loyal consumer base. However, once the buyer lands an online store, there is no competition in that particular space. Also, defining the USPs and building a consumer base becomes easy.
Investments are made into business to establish it and grow it further. Investments made in the case of online marketplaces are listings and a little entry-free (depending on the platform). Also, there can be a commission on each sale. In another case, with online stores, investment has to be made to develop websites, handle stocks, and deliver. However, the launch or addition of products does not add to any cost.
Cash flow is dependent on sales and the flow of money thereafter. E-commerce marketplaces help improve cash flow as no marketing and consumer attraction are required here. Ecommerce stores require time and effort to attract consumers and hence get cash flow. But the cash flow is rather consistent here as the product is liked by the consumers because they can become repeat customers.
After having a thorough understanding of differences, challenges need to be addressed so there is no fear of the unknown. Here are the challenges faced by sellers selling on the marketplace vs Online stores:
As a beginner, it is always advisable to start with an ecommerce marketplace, given the presence of a consumer base. It can be difficult to lure customers at the very beginning of the business. But if the idea is to build a brand and make a consumer base of your own, an online store is the right place to conquer. It will allow the establishment of a brand and its consumer base.
Pro tip: Sellers can get the best of both worlds with MapMyChannel. You can list your products on marketplaces like Amazon and Etsy, make your website, and take orders from that space. MapMyChannel will integrate these platforms to bring them all on a centralized dashboard. Now, it will automate the product listing, order fulfillment, delivery, etc., and you can focus on marketing and branding on your website.
