Many people have a misconception that an e-commerce website and an online marketplace are the same. People feel so because any website where commercial transactions take place is an ecommerce site. That means a marketplace is also an ecommerce website. However, are all ecommerce sites marketplaces? Not necessarily. Now, how do these differ? Let us find out which are some of the key points of difference.
The Main Difference between Marketplace and Ecommerce Website
The company that operates a marketplace does not own the products featured in it. Instead, products of other retailers are put up for sale at a marketplace. Just like a traditional market, you can think of it as a place where commercial dealings are carried out.
Conversely, an ecommerce website can also be one where the company owns the site itself and sells its products and/or services on it. Here are some other differences between the two.
Marketing Strategy and Targeting
As an owner, you must have a clear idea about your marketing strategy and targeting in ecommerce business and online marketplace. In ecommerce, you should focus on targeting customers, but in a marketplace, you need to attract buyers and sellers.
In ecommerce business, the individual merchant needs to spend more resources to drive more traffic to their website. When a visitor finds their selection, the rest of the buying process is easier because they are picking from the offerings of one company. Conversely, a marketplace benefits from many different users operating on its website. It has several merchants, so they individually promote the existence of their marketplace, which eventually leads to an increase in awareness. Besides, the more the shoppers are satisfied with your marketplace and the more they transact on it, the more they will help make it popular.
A marketplace does not purchase or sell products, but it only gives a platform for trade to other retailers. So a marketplace takes a lot less financial risk compared to an ecommerce website. The latter site needs to keep investing in stock, which might just take time to fully sell or might just not sell. Marketplaces get economies of scale relatively easily, so they can expand quicker than ecommerce sites. When website traffic grows, looking for new vendors may be required to keep up with customer demand, but you will not have to bother about spending exorbitant funds on fresh stock or storing facilities.