Introduction

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• Investment of time and money time play a crucial role in choosing options such as solely adopting an e-commerce store, selling through existing online portals (marketplaces), or both.

• In most cases what works for a brand is a combination of both.

Did you know?

Consider this, by 2017 e-commerce sales in US alone is expected to be around $434 billion.

What is a marketplace?

A marketplace is a multi-vendor online store that enables consumers to shop for a variety of products and brands from multiple vendors across multiple locations.

Marketplaces make it convenient- For businesses to list and sell their products by taking care of all the operational

aspects (from providing a platform, integrating with payment providers, streamlining order fulfillment, to managing customer service)

To provide customers a plethora of options while ensuring quality. To build a community around the common needs of retailers and consumers.

( that’s the very purpose of a marketplace) Examples of popular marketplaces include Amazon, eBay, Alibaba and others.

E-commerce Stores vs. Online Market places

Category E-commerce Stores Online Marketplaces

Investment (Development Time and Costs)

Require more time and budget – while businesses can leverage platforms like Magento to shorten the development cycle; efforts are only required for customization

Require little upfront investment and businesses can get started very quickly – Register and sell

Functionality & Extensibility Feature rich and can be further extended to add more functionality.

Limited functionality available to businesses – usually just provide the basic functionality required by businesses to sell effectively.

Maintenance Require more maintenance. very less maintenance.

E-commerce Stores vs. Online Marketplaces

Category E-commerce Stores Online Marketplaces

CustomizationCan be customized to incorporate any custom requirements or workflows specific to your organization.

No flexibility for customization. They mandate the businesses the use the platform as is.

ReachCustomer reach in e-commerce stores is usually very limited compared to online marketplaces.

Allow you to reach a much wider audience across geographies.

ScalabilityWhile e-commerce stores can be scaled to meet the growing needs of businesses they require additional investments (invest in an enterprise edition, scale the server, etc.) .

Online marketplaces are designed for scalability (as they have to cater to multiple businesses and a relatively larger customer base).

E-commerce Stores vs. Online Marketplaces

Category E-commerce Stores Online Marketplaces

SEOStore needs to be optimized for search engines. SEO, for most businesses, is often a tough nut to crack.

The popular online marketplaces are already optimized for search engines. Businesses can quickly take advantage of their popularity with search engines

Customer Acquisition Cost

The customer acquisition cost is higher for e-commerce stores as you have to invest additional marketing dollars to attract customers to your e-commerce store.

The customer acquisition cost is usually lower for online marketplaces ; it allows you to leverage the existing large customer base (the costs are spread across multiple businesses).

Brandingflexibility to control all the aspects of your brand – from your website template, logo, call to action, to customer communication.

Very limited brand visibility. Customers, more often than not associate all their positive (and negative) experiences with the online marketplace and not the brand.

E-commerce Stores vs. Online Marketplaces

Category E-commerce Stores Online Marketplaces

Customer service

While businesses can better control the customer experience in e-commerce stores, customer service can be a daunting task for businesses (both small and big) and require significant investments.

Particular about customer experience and have stringent rules in place (mostly in favor of customers) to control that experience.. Businesses can easily offload customer service to online marketplaces /leverage infrastructure control customer experiences.

Flexibility and controlBusinesses have better control over what is displayed about their brand. They can decide if and how an information is conveyed.

Businesses often have very little say in if and how a positive or negative review about the brand or its product, is displayed.

CompetitionWith e-commerce store you make customers go the extra mile to compare your product price with that of competition.

Listing alongside a number of other businesses making it easy for consumers to compare prices.

Margins Businesses do not have to share any commission.

Commissions charged on every sale impacting merchant’s profit margin.

E-commerce Stores vs. Online Marketplaces

Category E-commerce Stores Online Marketplaces

Data (Customer Insights)

businesses own the customer data which can be collected to draw meaningful insights and better target the customers (promotions, offers, emails, cross-sell, up-sell, etc.)

No access to customer information with businesses that limits how they reach out to the customers.

Personalization

The available data on hand and advanced features of the e-commerce store can be easily used to personalize the product offering and customer experience (custom pricing, etc.).

This is a level playing field for all businesses. While the marketplace can personalize the customer experience the benefit is not passed on.

Customer Relationship Management

With e-commerce stores businesses are in complete of how they manage and nurture the customer relationship. E-commerce stores give them the flexibility to target customers better and increase the customer lifetime value.

No concept of customer relationship management. While online marketplaces can help businesses reach a wider audience the customer lifetime value is limited because businesses cannot retarget them for lack of data

• Marketplaces can never replace the e-commerce stores , or vice-a-versa, but certainly capable of complementing each other.

• Online marketplaces can help quickly reach a wider audience with a smaller investment, e-commerce stores to help you build your brand, personalize your offerings, and drive customer relationship and experience

• Market places help get brands ahead with visibility but e-commerce stores help establish a long-term relationship with them.

• ERP ecommerce integration helps businesses take advantage of both e-commerce store and online marketplaces by automating order fulfillment workflow and reducing the operational overhead required to maintain these platforms.

Conclusion – choose the middle path

For more information

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