Ecommerce Websites & Marketplaces Differences


People often presume an ecommerce store and an online marketplace as the same thing. Though, there are some underlying contrasts between them. Today, ecommerce is no longer a new concept in the market and it has turned into more of a requirement. The area of ecommerce has grown immensely since the time it was developed. However, today, the concept of the marketplace is flourishing in the market, too. The marketplace is an online platform where various sellers can market their products to the customers. Here are some of the most significant differences between an ecommerce website and a marketplace.

Lighter Initial Investment

In the context of an ecommerce website, a great sum of money is required for investment at the initial stage because you will need to get sufficient inventory for customers in order to create a large offering for the clients to explore. Whereas on the other hand, sellers get relieved of that initial investment as marketplace permits them to maintain their respective inventory. Furthermore, due to the presence of multiple vendors, the marketplace is able to index more products.

A Much Larger Inventory

The chances of a buyer coming across and finding their searches increase a lot when the size of your inventory is large. But at the same time, if the size of the catalog is big, then it means that more work will be involved in merchandising because even if the customers are interested in the website, eventually their concentration-time will decrease. When compared to ecommerce, the marketplace will have more merchants, thus it is apparent that it will have more products

A Scalable Model

Unlike ecommerce websites where you will need to continually spend in stock, products are not purchased by the marketplace, thus it has quite less financial risks than ecommerce. Through in this method, an economy of scale is obtained more swiftly by Marketplaces. This also enables them to grow actively compared to ecommerce websites.

A 2-Ways Customer Relationship

If you own an ecommerce website then along with various other works, you will have to focus equally on providing the top notch customer service and in the case of any questions, ensure that the buyers are able to contact you. This task is not an easy one and demands immense commitment from an ecommerce website. But on the other hand, if you own a marketplace, then between buyers and sellers you play more of a mediator role that monitors their transactions. You only need to step in when something is not right between the buyer and the seller.

Example of an Ecommerce Marketplace


Long Tail Marketing

The huge number of products that are recorded by marketplace provides it with the opportunity to concentrate heavily on search engine optimization (SEO) and social media marketing (SMM), especially by using Google Adwords to increase its rankings in search engines. Thus, it enables the company to market particular commodities more instead of general categories where there is an intense competition. On contrary to ecommerce websites, the marketplace cannot brand the products as it doesn’t directly deliver them to the customers.

Positive Cash Flow

Generally, an ecommerce website needs a big investment for setup, thus despite a considerable cash flow, the break-even time may be quite longer. But in the context of a marketplace, as their revenue is primarily percentage of the transactions, the profit margins are higher and to expand the business and achieve growth, the cash collected can be funded again.

A More Complex Navigation

In a marketplace, the products are organized in one well-maintained catalog because it primarily has various sellers who have their respective list of products. The arrangement of the products is based on categories in an ecommerce website. Thus, in terms of the navigation process and patterns, there is a huge difference. Also, in both these context, various distinct parameters are used to create the search.

Example of An Ecommerce Website


Sales Volume

In order to receive the same profit margins that an ecommerce site gets, a marketplace requires selling a larger volume of products. Thus, a marketplace has to manage an increasing number of transactions and it requires focusing more on the automation.

Technological Difference

Due to technological advancements, in today’s time, a huge number of platforms are available on the market that can be used to create an ecommerce website. Some of the major platforms include Magento, WordPress (WooCommerce), Zen Cart, OpenCart, osCommerce, Prestashop, Shopify etc. However, the technology that is required to develop a Marketplace is different. Building a marketplace usually needs more extensive efforts and on the market, there are very few solutions accessible. Though there are several plugins/extensions accessible in the market for Magento, Shopify and others which can be integrated to make an ecommerce store to the marketplace. You would need specialists who can assist you in online marketplace development and assist you in the integration of extensions too.

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