When starting an online business, one of the first and most critical decisions you’ll face is whether to create an e-commerce website or build a marketplace. Both platforms allow the selling of products and services over the internet, but they serve different purposes and accommodate different business models.
Seek the answer to “which is which” before hiring a web developer or investing in eCommerce design. In this blog post, we’ll try to address this question by dividing the definition into two parts: an e-commerce website and the marketplace.
Definition and Core Structure
E-Commerce Websites
An e-commerce website is a type of online store that is operated by a single brand or company that sells its products or services directly to consumers. You are the only seller, and the entire website is focused solely on your offerings.
For example: Nike.com, Apple.com, or any local boutique store with an online presence
Key features of an e-commerce website:
- Single Seller
- Centralized Inventory and Fulfillment
- Unified Branding and Pricing Control
Marketplace
Another marketplace is a software application where multiple third-party sellers can sell their products. The owner of the marketplace enables the transactions and earns a commission fee from the sellers.
For instance, Amazon, eBay, Etsy, or Alibaba.
Key features of a marketplace:
- Multi-vendor setup
- Sellers fulfill their own inventory and logistics systems.
- The platform makes money from commissions, subscriptions, or listing fees.
Control and Ownership
E-Commerce Website
As the sole owner of an e-commerce web design, you fully control the branding and online presence of your store, including product listings, user experience, and pricing. This affords more control in the way your website functions and appears.
With a skilled e-commerce developer, you can design and build a fully catered online shopping website that suits your audience.
Marketplace
Marketplaces require complex marketplace development because the platform owner is responsible for numerous sellers, user roles, and intricate features like vendor onboarding, product moderation, and order routing.
You can exercise less control over individual listings because all third-party sellers list their unique products with provided descriptions and pricing. However, you retain control over platform policies, commissions, and set the general look and feel of the marketplace.
Managing Inventory
E-Commerce Website
In a typical online store development model, you are in charge of product procurement, stocking, and inventory management. This allows you to control product quality and availability, but adds expenses relative to warehousing and logistics.
Marketplace
Marketplace operators do not take care of the inventory. Vendors replenish their own stock autonomously, which alleviates operations for the platform. Building an inventory management system also requires seamless buyer flows in updating and syncing inventory within the backend.
Revenue Models
E-Commerce Website
Income is generated from online sales of goods or services offered. Earnings are proportional to units sold. There are other means like upward selling, cross-selling, and subscription selling.
Marketplace
It’s possible to earn from different avenues:
- Sales commission
- Subscriptions or membership fees for sellers
- Cost of premium listings
- Advertisement for buyer-branded placements
With a solid foundation of sellers, income streams become valuable even if initially slow scaling.
Website Development Complexity
E-Commerce Website
Compared to developing a marketplace, creating an e-commerce website is simpler. With a good web developer, you can set up, customize, and start your online store using WooCommerce, Shopify, or Magento.
An e-commerce web design typically covers:
Product Catalog Page
- Shopping Cart
- Payment Confirmation Page
- Shipping and Tracking Dashboard
- Customer Review Dashboard
- Marketplace Module
The marketplace module is the most intricate and painstaking of all features. Each marketplace user (admin, vendor, customer) requires their own unique dashboard using a different UX. You also need to build your own moderation system for products, manage disputes, handle commissions, and possibly integrate external API services.
Such tasks require the skills of a professional web developer or an agency that specializes in marketplace development.
Customer Experience
E-Commerce Website
You are able to create a customized and streamlined purchasing experience. Since you are selling your own products, it is simpler for you to optimize the website, CTA buttons, product pages, and checkout process for maximum conversions.
Great e-commerce web design plays a vital role in maintaining sales and trust through branding and design consistency.
Marketplace
Marketplaces have a wide range of options, which is one of the key selling points for buyers. The shopping experience, however, can be fragmented with varying product descriptions, seller polices, and shipping methods.
These challenges can be addressed through a well-designed marketplace development strategy that enforces listing and seller behavior standards.
Marketing And SEO
E-Commerce Website
You are completely responsible for driving traffic to your site through social media, email marketing, SEO, and even paid ads. Your e-commerce developer is more than capable of helping with search engine optimization on the website, ranging from metadata to mobile usability.
Marketplace
Marketplaces tend to have an advantage from user-generated content and larger catalogs, which aids SEO, but consistent investment in digital marketing campaigns to attract sellers and buyers to the marketplace is a must.
The problem is twofold:
- The focus is on acquiring qualified sellers for the platform.
- The attention is towards the buyers of the products.
Scalability
E-Commerce Website
The scaling improvement of an e-commerce website stems from adding new products, expanding marketing efforts, logistics, and improving the information systems. Accomplishing this is easier when a team and systems are already in place.
Marketplace
Marketplaces have greater potential for scalability. With more vendors signing up to sell their goods, the platform can grow rapidly without having to proportionately spend on stocking products or warehousing them.
Nonetheless, to sustain this growth, your online store development must have scope for expansion and robust backend infrastructure relating to performance, data security, uptime, and overall availability.
Conclusion: Which One Is Right for You?
The decision to go for an e-commerce website or a marketplace solely depends on the business model one is operating, the available budget, and planned goals.
- If an individual wants to maintain control while selling available products, an e-commerce website would be best suited for them.
- However, if one is looking to build a platform where people sell and intend to pay through commissions or subscriptions, a marketplace would serve best.
From a basic online retail store to a complex multi-vendor system, hiring a professional web developer is essential. Make sure you hire experts in e-commerce web design, marketplace, and online store development so that your project is handled properly.
Still need help getting started? Contact a professional e-commerce developer today to help you realize your business idea.