MARKETPLACE VS. DIRECT ECOMMERCE: WHICH IS BEST FOR YOU?
Tuesday, July 28, 2015Global Administrator
The Difference Between a Marketplace and 3rd Party Hosted eCommerce Solution
If you haven’t been living under a rock, you probably know how eCommerce is dominating the shopping realm these days! Having said that, anyone with the entrepreneurial mindset has probably considered incorporating eCommerce into their business model.
With that decision comes many more. One of these decisions is where to sell, with the most popular options being a marketplace like Amazon or eBay or your own eCommerce store built on a third party platform such as Magento, Shopify, or Bigcommerce.
Here’s a low level comparison to help with the decision.
Visibility
eCommerce Store
With your own store, potential buyers only see your brand. Chances are they didn’t wind up there by accident either. They have interest in your brand at that moment and don’t see anything else unless purposely placed there by you.
Marketplace
Contrary to popular belief, this option will probably gain you less visibility amongst the competition. You’ll find that well-known, established brands gain more visibility.
Scalability
eCommerce Store
Depending on your size, this could be a challenge. For larger, more established companies with the means to drive sales and a sophisticated fulfillment method, an eCommerce store can effectively handle higher volumes.Having said that, a smaller operation may have trouble fulfilling orders and creating a quality user experience without the proper resources (when that happens #GiveUsACall J)
Marketplace
Smaller brands may find it helpful to make use of the high volume sales methods used by these marketplaces. This option is appealing because the scalability is built in with the solution.
Customer Relationship Management
eCommerce Store
With your own store you have more opportunity to market to customers and potential buyers. There is more opportunity to nurture the relationship and create an experience. With the ability to market to them through related content (i.e. blogs and email) and provide detailed product descriptions and photos – this option is clearly the winner from a customer relationship perspective.
Marketplace
With a marketplace, there is always competition a click away. Customers here are more likely to be “shopping around” and your relationship with them is more transactional. This is not to say that you can’t nurture the relationship. It just takes a bit more work.
Branding
eCommerce Store
When using a third party platform to develop your own eCommerce store, you have immense amounts of control over your branding. You have the ability to brand everything from your logo to your calls-to-action to the site template you use! Everything is your brand.If you are a smaller company, and just coming to market, having your own store is a good way to develop your brand as well. You are able to track your customer activity, market to them and get to understand how they think and feel about you.
Marketplace
Again, with being a more transactional relationship with your customers. There isn’t much interest in your brand, so there isn’t much control over your on this platform. Your template and user experience is determined and created by the marketplace you choose.
Ownership and User Experience
eCommerce Store
There is complete and total ownership here. You create the experience and maintain it. This is great form a branding perspective, however can be fairly time consuming in the upkeep. Although in many cases you’re relying on a third party for hosting your site, you are 100% responsible for yourcustomer’s experience so any issues or delays fall completely on you.
Marketplace
As mentioned before, this is an experience that is determined for you already. There is no ownership here. Depending on what you’re looking for, this may be a better option for you, it’s much faster and very little maintenance. When new trends in user experience emerge, you don’t have to make costly and time consuming changes; the marketplace takes care of it for you!
Pricing and Competition
eCommerce Store
With your own store, prices are not directly compared or listed against a competitor. With this, your brand maintains center stage. Having said this, your competition is able to click over to another site so it’s up to you to keep them engaged.Although price is always a factor when comparing two brands, your store allows your marketing to do a lot of the talking here so a high price isn’t as deterring.
Marketplace
Price plays a much bigger role here against the competition since it can be directly compared. You are easily able to win out by lowering your price in most cases, and this can be an easy fix.Before doing this, however, one must consider total cost to use the marketplace, profit margins, and how the cheaper price will reflect on your brand.
In the end, there are a lot of pieces to the puzzle and one must consider everything before making any concrete decisions of where to sell. You may choose one of the other or both; just make sure you consider everything!