eCommerce vs Marketplace: Which Model Is Right for Your Business?

The rise of online businesses has transformed the way we buy and sell products. For entrepreneurs looking to capitalize on this digital market, choosing the right business model is crucial.

Two of the most popular models are eCommerce platforms and marketplaces.

Each has its own set of benefits and challenges, so it is essential to understand their differences. In this article, we will explain the main differences between eCommerce and marketplaces to help you decide which model is right for your business, based on our experience with our clients from the Performance unit of Asylum AsylumX.

Understanding eCommerce

An eCommerce platform is an online space where businesses create their own virtual stores to sell products directly to customers. Platforms like Shopify, VTEX, Magento, WooCommerce, among others, provide the necessary tools to build and manage an online store.

Learn about our Performance unit at Asylum, specialized in performance and ecommerce AsylumX, where we will help you take your business to the next level by increasing your sales and online presence.

Advantages of eCommerce

  1. Total control over brand and customer experience: With an eCommerce site, you have complete control over your brand, website design, and user experience, ensuring consistency and a unique identity.
  2. Custom design and functionality: eCommerce platforms offer a wide range of customization options, allowing you to tailor your store to the specific needs of the business and customer preferences.
  3. Direct relationships with customers: By selling directly to customers, you can build stronger relationships, gather valuable customer data, and create personalized marketing strategies.

Disadvantages of eCommerce

  1. Higher initial and maintenance costs: Setting up an eCommerce site can be costly due to design, development, and hosting fees. Continuous maintenance and updates also require investment, depending on the decisions about eCommerce development, such as whether to invest in a specialized web developer from the start to handle the current code or a webmaster for theme management in eCommerce.
  2. Responsibility for marketing and traffic generation: Attracting traffic to your eCommerce site requires significant marketing efforts such as SEO, PPC campaigns, and social media engagement.

Understanding Marketplaces

A marketplace is an online platform where multiple sellers can list and sell their products to a shared customer base. The most popular in our region are Amazon and MercadoLibre, but there are giants like Aliexpress, Taobao, eBay, among many others.

Our partner Smartbeemo offers adaptable services for your marketplace and a subscription that allows you to discover winning products to sell online.

Advantages of Marketplaces

  1. Access to an existing customer base: Marketplaces have established audiences, providing sellers with instant access to potential customers without the need for extensive marketing.
  2. Lower initial costs: Joining a marketplace often involves lower initial costs compared to building an eCommerce site, making it more accessible for small businesses and startups.
  3. Shared marketing and traffic efforts: Marketplaces heavily invest in marketing and SEO, attracting traffic to the platform and increasing visibility for sellers. Learn how to boost your online presence with backlink strategies to increase your marketplace authority on the internet.

Disadvantages of Marketplaces

  1. Less control over brand and customer experience: Sellers must comply with the marketplace’s policies and design, limiting their ability to create a unique brand identity.
  2. Competition with other sellers: Marketplaces host numerous sellers, leading to direct competition and potential price wars.
  3. Commissions and other charges: Marketplaces charge fees for listing products and commissions on sales, which can affect profit margins.

Key differences between eCommerce and marketplaces

Aspect eCommerce Marketplace
Ownership and Control Full ownership and control over the website, brand, and customer interactions. Limited control as sellers must adhere to marketplace rules and design.
Cost and Revenue Models Higher initial and maintenance costs; revenues generated directly from sales. Lower initial costs but ongoing commissions; revenues shared with the marketplace.
Customer Relationships Direct relationships with customers, allowing personalized marketing and customer service. Indirect relationships as the marketplace often handles interactions and customer support.
Marketing and Traffic Responsibility for attracting traffic through SEO, PPC, and social media efforts. Shared traffic driven by the marketplace’s marketing and SEO investments.

Choosing the Right Model for Your Business

At AsylumX, we have supported more than 50 brands in their process of creating eCommerce sites or starting to sell on Marketplaces. Here are some points we consider when addressing this conversation:

  • Evaluate Your Business Needs

Consider your business goals, budget, and resources. An eCommerce platform might be better if you want total control over your brand and customer experience. A marketplace might be ideal if you prefer lower initial costs and access to an established customer base.

  • Scalability and Growth

Project the long-term scalability of each model. eCommerce sites can grow with your business, offering unlimited customization. Marketplaces provide a scalable option but may limit your brand’s distinctiveness.

When to Choose eCommerce

If you have a unique product, a strong brand, and the resources to invest in marketing and development, an eCommerce platform offers the most control and growth potential.

When to Choose a Marketplace

If you want to minimize initial costs, quickly access a large audience, and leverage shared marketing efforts, a marketplace could be the right choice.

Conclusions on How to Choose Between eCommerce and a Marketplace

Deciding between an eCommerce platform and a marketplace depends on your business’s specific needs and goals. By understanding the advantages and disadvantages of each model, you can make an informed decision that aligns with your vision.

Evaluate your resources, consider your long-term goals, and choose the model that best supports your business growth.

Alejandro Caicedo

Master's in Digital Transformation from ESDEN Business School and a Publicist from Universidad Autónoma de Occidente, with over 15 years of experience working in prominent media agencies (Wavemaker and Starcom) with regional brands such as Colgate Palmolive, Kellogg's, Samsung, Carrefour, Coca Cola, Colombina, among others.
He also played a role in the marketing teams of companies like Colombina S.A. as the Director of Digital Marketing, where he led the digital transformation of the company and its entry into eCommerce channels. He also had a stint at Fanalca S.A., where he was part of the advertising operation for the Honda brand in Colombia.
Currently, Alejandro leads the eCommerce and Media units at the regional agency Asylum Marketing, where he and his team help brands discover insights that spark great ideas, ensure these ideas reach millions of people, and assist businesses in uncovering the tremendous potential of online sales. Some of the brands they work with include Offcorss, Dior, Yupi, Rimax, Colombina, Visa, Absolut Vodka, among others.

Related Content