What is the Difference Between Marketplace and eCommerce

The main difference between marketplace and eCommerce is that a marketplace is a website that sells products from multiple sellers while an eCommerce is a website that sells products of a single vendor to multiple customers.

Marketplace sites and eCommerce sites are two options you can choose from when you are selling your products online. You should have a good understand a good understanding of these to select the best approach for your business. Both have their pros and cons.

Key Areas Covered

1. What is a Marketplace 
  – Definition, How does it work, Features
2. What is an eCommerce
  – Definition, Features
3. What is the Difference Between Marketplace and eCommerce
 – Comparison of Key Differences

Key Terms

eCommerce, Marketplace

What is a Marketplace

A marketplace is a website that sells products from multiple sellers. It has an assortment of products, which attracts various types of customers. This functions just like a shopping mall. There are three parties in a marketplace: the marketplace administrator (the one who owns the website), the vendors and customers. Amazon, eBay, and Etsy are some popular marketplaces.

How does a Marketplace Work

Let’s look at how Amazon works. The website is maintained by the Amazon company. They invest time and money to attract protentional clients and offer a safe shopping experience. But once the customer finalizes the sale, the products are not shipped by the marketplace; they are store and shipped by the seller.

Marketplaces earn money by charging a commission from sellers and customers. Some marketplaces charge a flat membership fee or offer a combination of two. The commission can vary from marketplace to marketplace. In general, marketplaces like eBay, Amazon, and Etsy charges commissions between 5-15%.

The main benefit of selling on a marketplace is that the vendors don’t have to worry about website maintenance or website performance. Most marketplaces also offer free stores. Setting up a store or opening an account in most marketplaces is very simple and only involves few steps. You can sometimes even log in with your social media accounts.

What is an eCommerce

Ecommerce is a website that sells products of a single vendor to multiple customers. The website belongs to the vendor, so there are only two parties in the sale: the seller and the buyer. If your products are popular or if you have many sales, it’s always recommended to have an eCommerce site.

Since eCommerce sites belong to vendors, they have to be set up and maintained by the vendors. They also have to make sure that the sites are always secure and up and running. But setting up an eCommerce site is not very difficult these days, and there is no need to code it from scratch. There are e-commerce platforms like Magento, WooCommerce, and Shopify, which offer multiple predesigned features and templates to choose from.

Difference Between Marketplace and eCommerce

Definition

A marketplace is a website that sells products from multiple sellers, while an eCommerce is a website that sells products of a single vendor to multiple customers.

Parties

There are three parties in a marketplace: the marketplace administrator, the vendors, and customers, but there are only two parties in an eCommerce site: the seller and the buyer.

Inventory

Marketplace sites do not have inventory since they only create a space for sellers to connect with buyers, but eCommerce sites need to hold inventory in order to meet customer demand, unless they are using drop shipping.

Money and Cost

One of the main advantages of an online marketplace is that vendors can save time and money initially since they don’t have to set up or maintain the website. Setting up and maintaining an eCommerce site will cost time and money.

Marketing and Brand Recognition 

Marketplace sellers can use the consumer trust and recognition of the marketplace and access a large audience of potential buyers immediately, but when a seller builds an eCommerce site, he has to spend money and time to market the website, brand, and product.

Conclusion

The main difference between marketplace and eCommerce is that a marketplace is a website that sells products from multiple sellers while an eCommerce is a website that sells products of a single vendor to multiple customers. Both have their pros and cons.

Image Courtesy:

1. “2607114” (CC0) via Pixabay
2. “1606962” (CC0) via Pixabay