eCommerce Platform vs. Online Marketplace

eCommerce Platform vs. Online Marketplace: Which One is Right for Your Business?

If recent history has proven anything for business owners, it is that having a meaningful online presence can be the ultimate tool to survive in the modern market. For instance, Canadian eCommerce sales have amounted to nearly $30 Billion USD this year and are projected to grow to $40.3 Billion USD by 2025![1]

The fact of the matter is that bringing your business online has never been easier! eCommerce platforms have streamlined the process of building an eCommerce website, and online marketplaces have become a platform for entrepreneurs to jump into the online market with minimal hassle.

The question is: which of these two options is better for your business? Let’s compare and see if there is a clear winner.

There are Pros and Cons for both Platforms and Marketplaces

 

Sizing Up the Options

First, let’s start by defining what each of these options are.

An eCommerce Website is exactly what the name suggests: a website designed to act as an online storefront for your business. These days many businesses utilize platforms such as Shopify, Magento, and WooCommerce to build these sites with the necessary eCommerce tools already integrated.

On the other hand, Online Marketplaces such as Etsy, Wal-Mart Marketplace, and Amazon Marketplace are preexisting sites that host multiple sellers. This can be likened more to a chain big-box store carrying your products rather than your own brick-and-mortar retail location.

Research similar products when looking into a marketplace

 

eCommerce Websites Put You in Control

The key takeaway, both good and bad, when it comes to choosing an eCommerce website over an online marketplace is that, to a certain extent, everything is in your hands.

To start, you will have higher upfront costs that typically encompass secure hosting, design and development, and payment processing, and are priced out based on the size of your business (how many products and services you are selling), as well as how much business you are doing.

Ensure the eCommerce platform you choose uses content blocks in its CMS

What this means, however, is that you have the freedom to build the site that you want for your business, putting you in control of the entire customer experience.

When done right, your website becomes the marketing tool to make sure your brand stands out to your customers. In fact, studies have shown that “73% of people prefer to do business with brands that personalize the shopping experience[2].

Speaking of marketing, it is worth mentioning that, if your business doesn’t already have a preexisting customer base, a custom eCommerce site, no matter how well built, will not generate leads by itself. You must be prepared to do the legwork of bringing traffic to your site and building your customer base.

A well-designed shipping strategy can be a valuable marketing and retention tool.

 

Online Marketplaces Give You Reach

As mentioned earlier, listing your business’ goods on an online marketplace is like getting physical shelf space in a big-box store. One of the biggest advantages of listing on an online marketplace is that your business will have access to that marketplace’s built-in customer base.

Take Amazon, for example. A study from Inviqa showed that 59% of consumers between the ages of 22 and 40 will visit Amazon before any other website[3]. That is a lot of potential eyes on your business.

The trade-off here, of course, is that yours is one of thousands of businesses on any given marketplace. Lack of branding control means a customer may not associate your brand with your product and may end up purchasing through a different vendor on the same marketplace down the road! Brand awareness and recognition may ultimately come down to simply paying for ad space to boost your brand’s visibility.

Custom branding is a great way to set your business apart

 

Staying Within the Margins

At the end of the day, the biggest deciding factor in this debate is the ROI for your business. We have already touched on the upfront cost of launching an eCommerce website. By comparison, most online marketplaces typically have little to no startup costs.

How do these marketplaces turn a profit of their own? Simply put, from their vendors. Online marketplaces typically have fees associated with storage and shipping, and charge an average of an 11% commission on all vendor transactions[4]

Many eCommerce owners start with one channel and expand

By comparison, on an eCommerce platform your business facilitates its own revenue stream, which means a larger portion of that revenue goes back to your company. This proportion of revenue, however, will be reduced when you factor in the cost of customer acquisition through marketing initiatives.

 

Which Solution is Your Solution?

All things equal, there are pros and cons to both eCommerce websites and online marketplaces. An online marketplace can provide your business fast, low-cost entry into the online market, with immediate access to a preexisting customer base, and minimal maintenance. However, you will have to face competition with other vendors, limited ability to generate leads, and commission fees that cut into your profit margin.

If you decide on an eCommerce website, you have end-to-end control over the customer experience that you offer, although your site will lack the initial visibility to quickly grow. Be prepared to invest upfront for hosting, design, marketing and payment processing fees, but with no commission fees, you can expect higher profit margins, meaning it is possible to quickly see ROI on your upfront expenses.

The good news is that whichever of these options is the better choice for your business, Freightcom has shipping solutions for both! Our platform not only partners with the leading online marketplaces, but it also integrates seamlessly into eCommerce websites via major eCommerce platforms. In addition, if you are not using an eCommerce platform or Marketplace, and have a custom eCommere website, Freightcom also offers a shipping API. So before you choose how to bring your business online, contact one of our shipping experts today at 1-877-335-8740 or at sales@freightcom.com and make sure that shipping is one less decision you have to make.


[1] https://www.statista.com/statistics/289741/canada-retail-e-commerce-sales/

[2] https://wpforms.com/the-ultimate-list-of-online-business-statistics/

[3] https://inviqa.com/blog/millennial-retail-trends-online-retail-amazon-era

[4] https://www.digitalcommerce360.com/article/infographic-top-online-marketplaces/

Brandon Draga

Written by Brandon Draga

Brandon Draga is a full-time content writer at Freightcom, the leading shipping solution for businesses in Canada. When Brandon is not writing content to help businesses with their shipping needs, he can be found at local skate parks or writing fantasy novels.