8 Differences of E-Commerce and Marketplace for Businesses

E-commerce and marketplace are two marketing terms that are important in modern online business strategies.

But do you know the difference between e-commerce and marketplaces?

They generally allow businesses to reach a wider market and reduce operational and marketing costs.

Even so, there are still many people who do not understand how eCommerce and marketplaces differ from each other.

Here is a complete explanation of the differences between e-commerce and the marketplace.

What Is E-Commerce?

E-commerce, or electronic commerce, refers to the activity of buying and selling goods or services over the Internet.

It includes online transactions as well as direct business-to-consumer sales through a company's website or application.

In e-commerce, the products offered are usually from the same brand or company, without mixing with products from other brands.

E-commerce encompasses a variety of online business models, including direct sales from brands to consumers, as well as transactions involving marketplace platforms.

What Is Marketplace?

A marketplace is an online platform that allows sellers to offer their products or services to potential buyers.

A marketplace is a virtual shopping mall where consumers can browse different brands and buy the products they want.

It is a convenient and efficient alternative to online shopping because consumers can find a wide variety of products from different sellers in one place.

8 Differences between E-Commerce and Marketplace

After understanding the meaning of both, you must have understood that e-commerce or marketplace is a platform for buying and selling online businesses.

So what's the difference between e-commerce and marketplaces? Here's an explanation and examples between them.

1. How It Works

The first difference between e-commerce and marketplaces is the way they operate and the business model they use.

E-commerce is an independent online store where the seller takes care of all aspects such as inventory, shipping, and payment. Buyers can visit an e-commerce site or app to purchase from the online store.

Whereas a marketplace allows sellers to open a store on an existing platform with the responsibility of managing inventory and shipping, while buyers can choose products from different stores on the platform.

2. Business Model

The next difference between e-commerce and marketplaces is the business model. E-commerce is a business model that focuses on selling products or services from a single company or brand, with facilities and teams dedicated to handling all aspects of the transaction.

In contrast, a marketplace is a platform that connects buyers with multiple sellers and charges sellers a commission for transactions that occur on the platform.

3. Transaction Handling

In addition to the business model, you can also see the difference regarding transaction processing. In e-commerce, all processes such as order payment, and product delivery are handled by the company itself.

In a marketplace, each seller is responsible for his or meanwhile, each seller is responsible for their aspects of the transaction. Order handling, payment, and product delivery depend on the policies and procedures each seller implements on the platform.

4. Commission and pricing

Another difference is related to the commission and pricing. In a marketplace, sellers usually pay a commission to the platform for each transaction that occurs, for using the services provided by the platform.

On the other hand, in e-commerce, there are no commission payments because only the company's products or services are sold and no third parties are involved in the transaction process.

In terms of pricing, e-commerce generally has product or service prices set by the company itself.

Meanwhile, a marketplace is a platform where prices are set by each participating seller, so there are price variations for the same product or service.

5. Variety of Products and Services

The next is related to the products and services. The products and services offered by e-commerce tend to be limited to certain types, thus focusing more on product uniformity and consistent brand experience.

On the other hand, marketplaces have a much wider variety of products and services because they involve many sellers offering their products.

6. Customer Experience

Customer experience is another difference between both platforms. In marketplaces, customer experience can vary widely depending on individual sellers.

While marketplaces are platforms, the consistency of the customer experience is not always a guarantee. This is due to the way sellers offer products and services and how they serve customers.

E-commerce, on the other hand, is an option that offers more control over customer interactions, from how the site looks to how the overall customer experience is delivered.

E-commerce makes it easier for businesses to focus on aspects that can increase customer satisfaction and build stronger relationships with them.

7. Branding and Marketing Strategy

Marketplaces are an opportunity for visibility for sellers' brands or products, but they can also limit their marketing strategies.

In a highly competitive environment, sellers must compete for consumer attention, often relying on ratings or reviews on these marketplace platforms.

E-commerce, on the other hand, is a business model with more flexibility to design and execute marketing strategies.

This means that businesses can organize promotional campaigns that match their brand values and target market, without the limitations that can be faced in the marketplace.

8. Platform data and analytics

The last difference between e-commerce and marketplaces is the data and analytics platform.

In marketplaces, sales and customer behavior data is shared between platforms and sellers. In e-commerce, businesses have full access to their data, enabling deeper analysis for better decision-making.

Once you understand the difference between e-commerce and marketplaces, you can make the best choice between the two based on your business needs.

Marketplaces offer high visibility without the need for large investments, while e-commerce offers total control and a more personalized customer experience.

After choosing the right platform for your business, the next important step is the ability to market your products digitally and organically.

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