Marketplace Vs Online Store – What Is Best For You?

Posted By: editor
Posted On: 06 May, 2021

The onset of Covid-19 has led to a surge in e-commerce and sped up digital transformation, creating a significant change in consumer behavior towards shopping online for both essential and non-essential categories. This altering landscape made it imperative for businesses across industries to reimagine, adapt, and deliver a seamless customer experience through digital selling.

Though most of the retailers have captured this opportunity and launched their online business, some of them were unsuccessful in kick-starting digital selling.

However, with the next wave of Covid gripping the world, there are high chances that last year’s scenarios would repeat regarding customer buying behavior. This situation provides a great opportunity for those retailers who missed out on the previous chance.

As retailers bring their products online, they must decide where they are going to sell their goods. The options are – listing in an online marketplace, building their online store, or both.

In this article, we will explore the advantages and challenges of both the marketplaces and online store. We will also give pointers to help retailers choose the right platform for their business.

Marketplace Advantages:

Customer Acquisition:

One of the biggest advantages of using online marketplaces is that they can make it easier for retailers to acquire new customers. Marketplaces help businesses reach a wider variety of customers who may not have heard of their product otherwise.

Trust and Credibility:

Some marketplaces like Amazon, eBay have been around for years and have developed a powerful brand and credibility. These are crucial factors to build trust among potential buyers who prefer to buy from a known brand than from an unknown independent seller.


The other advantage of selling products in a marketplace is that its marketing efforts drive a lot of sales. Marketplaces spend thousands of dollars on SEO optimization and paid ads every month.

Customer Experience:

Marketplaces undertake tasks that are of importance to customer experience. The seller must handle the production/supply of the goods, and marketplaces handle the rest.

For instance, Amazon handles the storage, packaging, shipping, and after-sales support for the products sold on its site, at a high standard. The ‘Fulfilment by Amazon (FBA)’ provides excellent 24×7 customer service, which benefits the sellers and the shoppers.

Marketplace Challenges

Selling Fee:

Most marketplaces charge for product listing, so one needs to pay some fees even before making a single sale. Also, there is a commission for every transaction.

Intense Competition:

Another drawback for retailers is that they cannot stand out from the crowd while establishing their brand. Online marketplaces have no or minimal space for seller profile’s personalization. So, while selling the same products, retailers compete for shoppers’ attention.

No Branding:

The concern with the marketplaces is that shoppers focus their attention on products, not on the sellers. For that, it is impossible to develop a unique brand and build a loyal customer base.

No Customer Communication:

Online marketplaces do not let retailers communicate with shoppers. Because of this restriction, it is impossible to conduct marketing campaigns, inform customers about special offers or new stock arrivals. That way, one must only rely on new sales without taking advantage of past purchases.

Online Store Advantages

Customized Website:

One of the biggest advantages of online stores is that retailers will have the freedom to personalize their store look and stand out from the crowd. It also gives the flexibility to create content that contains emotional appeal and instructional guidance.

Personalized Shopping Experience:

Retailers can use specific keyword-based landing pages while targeting customers and show them relevant content.

Control on Customer Data:

Retailers have full control of customer data (purchase history, contact information) while selling on their online stores. They can use this information to generate up-selling and cross-selling opportunities.

Alongside, retailers can do analysis (cohort analysis, segmentation) on customer data that enables a deeper understanding of customer behavior.

Flexibility on Offers and Discounts:

Retailers can introduce offers and discounts on their products at any time of the day. They get freed from having to wait for marketplace sale days. Retailers can also customize targeting/ marketing efforts as per audience preferences.

Online Store Challenges

Time-Consuming Setup:

Setting up an online store involves many steps, including choosing a domain name and hosting service, setting up a shopping cart and credit card processing software, and creating content for the store.

Getting Shoppers to Online Store Needs Work & Time:

Launching the web store does not end retailer’s work. Retailers need to take up relevant marketing efforts to generate traffic.

Once visits on the site stabilize, they must work to convert them into customers. To achieve this, retailers should experiment and optimize the user experience.

From the above pointers, one can say that there is no right or wrong way to sell products online. One must do what suits their business and target audience.

How To Choose The Right Platform For The Business?

Here are a few aspects retailers should consider while deciding whether to sell on their online store, an e-commerce marketplace, or both.

  • Target Audience: Who the target audience is and how they buy is one of the biggest factors that retailers should consider when choosing a place to sell their products online.
  • Brand Reach: Selling on the web-store makes an excellent choice for an established brand. But brands that are new can choose an e-commerce marketplace for its customer base.
  • Budget: Retailers should keep the budget in their minds while choosing the best platform, as both the platforms attract some or other costs.
  • Product Type: Selling on a web store is more profitable if the product is unique and distinctive. A marketplace would be a preferable option if the product is generic.
  • Goals: Retailers should keep the goals in mind while going digital. For instance, if their goal is to expand beyond the local market and start selling across borders, the online marketplace is a perfect choice.

Going Forward

While marketplaces are easy to list and handle the logistics, they are unlikely to yield the desired results for retailers with a vision in the long run. An online store is a brilliant choice to operate independently, but generating leads and converting them into sales can be a difficult thing, at least in the beginning.

The best solution is to use the best of both worlds and adopt a hybrid approach. Retailers can make use of the traffic provided by the large online marketplaces and simultaneously build on the loyal customer base through their web store.

One should remember that it is never a question between a marketplace or an online store. It is always about managing both in order to increase top-line and profits in the long run.

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