ecommerce-vs-multivendor-marketplace-payment

eCommerce Vs Online Marketplace Websites

Online shopping has never been more in demand. 

The eCommerce market was responsible for $2.3 trillion in sales in 2017. A figure expected to rise to $4.5 trillion in 20211. That estimate was before lockdown too, so the actual value of online sales could be much higher.

The UK has the world’s third-largest retail eCommerce market2 and by 2040, it’s believed that 95% of purchases will be made online.3 Oh, and did you know that 43% of online shoppers make purchases while in bed?4 We’re proud to be part of that 43%!  

So, if you’re considering entering the lucrative online shopping universe, a) we don’t blame you and b) we’re here to help you decide the best option for you: eCommerce or online multivendor marketplace.

Contents

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What is an eCommerce website?

An eCommerce website allows a sole vendor (e.g. Next) to sell their wares. It’s the online shop for that particular brand, built on a platform such as WooCommerce or Magento. (Talking of which, here is our guide to which eCommerce platform is best for your business.) As a result, the responsibility for sourcing, promoting, storing, and distributing the products belongs to the owner of the eCommerce site.

What is an online multi-vendor marketplace?

A multi-vendor marketplace allows numerous vendors to sell their wares alongside each other. The owner of the site usually connects the vendors with sellers, and it’s down to each seller to handle their inventory. The most famous example, of course, is Amazon but you may have also used the likes of Gumtree, eBay, and NotOnTheHighStreet.  

What are the differences between a single vendor eCommerce website and a multivendor marketplace?

Although both options share a common theme of allowing products and services to be sold online, there are a number of key differences between the two. Let’s take a look.

Inventory

The products listed on an eCommerce site are the responsibility of the site’s owner. This means the amount of products listed is limited by that business’s storage capacity and cash flow. For example, it may be that stock needs to be sold (potentially by reducing prices) before it can be replenished.

A multivendor marketplace doesn’t have such limitations. Having more vendors not only means a bigger inventory but the storage and distribution are usually handled by the vendors, so if something isn’t selling, the owner of the marketplace won’t be out of pocket or need to reduce prices. They can simply replace those items with better-selling options from another vendor.     

Costs

ecommerce-vs-online markeplace websites

If you’ve got one main product (or product line) that you expect to be your best seller (known as a hero product), then an eCommerce site is the best option. Platforms such as WooCommerce and Magento are cost-effective solutions to designing, developing, and launching this hands-on option that, depending on your requirements, can be as simple or complicated as you need.

If your long-term business plan is to scale your selling potential in a more hands-off fashion, a marketplace strategy is the best fit. There may be a bigger initial cost to get it designed and developed, but once the structure is in place you have the foundations to grow and potentially re-coup your investment by having the capacity to sell more products. 

One thing to consider early on with a multivendor marketplace is to test there is a demand for what you’re offering using what is known as a minimum viable product (MVP). You can discover the benefits of building an MVP here

Scaleability

Both options have the capacity to grow as and when you need. If business is booming on your eCommerce site, it can easily scale as your business grows. The only potential limitation is the financial cost to you of replenishing and distributing stock to meet demand.

Scaling a marketplace by adding new vendors is also very easy to achieve, plus there is the added benefit that you don’t have to factor in the costs of replenishing and distributing stock as that responsibility belongs to your vendors.

Payment systems

Whether you’re considering an eCommerce site or multivendor marketplace, making it easy for your customers is key. Particularly as 8% of shoppers abandon their baskets if their preferred payment option isn’t available.5

Payments systems on an eCommerce site are slightly easier to set up as the transaction is between you and the buyer. Most eCommerce platforms allow this through a simple plug-in. Things get a little trickier with a multivendor site as you need to factor in commissions earned from each sale. This will depend on the revenue structure you agree with your vendors. As a result, the payment system may need customising to meet your needs. 

For further tips on ensuring your customers complete their purchases online, here’s our guide on how to avoid the most common reasons for shopping cart abandonment

Revenue streams

With eCommerce sites there is no middleman (or woman) involved. The revenue earned from a sale is yours. In other words, you’ll get a bigger piece of the pie than from a sale on a multivendor marketplace where only a portion of each sale makes it into your coffers.

Although the profit per sale is less on a marketplace as it’s commission-based, they have the potential to sell greater volumes of products from multiple vendors and can also earn extra revenue from services such as listing fees and premium listings.

Site navigation and user interface

Quite simply, offering shoppers an enjoyable experience can be the difference between losing and gaining a sale. That’s why both eCommerce and multivendor sites should focus on the user experience (UX) and provide an interface that is intuitively easy-to-navigate.

By their nature, eCommerce sites have simpler navigation as the visitor is there to browse one seller’s product or products. A marketplace, however, must consider two user journeys: that of their buyers and sellers. 

The visitor dashboard should allow buyers to navigate through products from numerous vendors with extra navigational tools such as custom searches, which allow them to quickly and easily find what they are looking for. The vendor dashboard should make it easy for them to manage their inventory. 

Want to know more ways of keeping your customers happy online? Here are our 11 best practices for eCommerce UX.

Technology

The good news is whether you want an eCommerce or multivendor marketplace, the technology exists to get your business off the ground. 

eCommerce sites are relatively easier to get from concept to launch thanks to plug-and-play solutions such as WooCommerce and Magento, which can be used ‘out of the box’ or customised with some knowledge of coding. For a deeper dive into the best eCommerce platform for your business, check out our guide to WooCommerce Vs Magento.

The technology behind a marketplace is more complicated. They should be coded to order based on your unique requirements, use cloud-based software and include APIs (application program interface), and work across multiple platforms (particularly as 54% of online purchases are made on a mobile device.)6  

We put together a more in-depth guide to some of the most popular multi-vendor marketplace platforms around at the moment.

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Time to launch

Whatever your needs, there’s an option. If your business goal is to sell your own products, an eCommerce site is the quickest and most suitable choice, as you’ll benefit from out-of-the-box software that can fast track your route to market.

As touched upon, multivendor marketplaces are more complex and therefore take longer to launch. There is also the added time factor of finding vendors to use your site to sell their products.

Marketing

To get your digital business off the ground, both eCommerce sites and multivendor marketplaces need marketing so people know your brand exists, where to find you, and what you offer.

For an eCommerce site, the focus is purely on the buyers and driving traffic to your site with marketing that positions your brand as the solution to their problem.

A marketplace has a slightly more complex marketing goal, as the target audience is both buyers and sellers. One positive from this wider audience is that you could also benefit from the additional marketing efforts of your individual sellers, and from a potentially larger group of buyers who may leave reviews that help spread the word about your marketplace.

Either way, SEO (search engine optimisation) will help drive visitors to your site and help get your brand name out there.

multi-vendor marketplace marketing

For more information on how to market and grow your multi-vendor marketplace check out our guide.

We’re your eCommerce and Online Marketplace solution

As award-winning specialists in both eCommerce website design and marketplace website development, we’d love to help take your online business from concept to launch. Get in touch to find out more.

References

  1.  https://www.shopify.com/enterprise/global-ecommerce-statistics 
  2.  https://www.emarketer.com/content/global-ecommerce-2019  
  3.  https://www.nasdaq.com/articles/uk-online-shopping-and-e-commerce-statistics-2017-2017-03-14
  4. https://kinsta.com/blog/ecommerce-statistics/ 
  5. https://www.baymard.com 
  6. https://www.criteo.com/wp-content/uploads/2018/01/Browsing-Buying-Behaviour-2016-UK.pdf 

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