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Marketplace and Ecommerce, which one is better?

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Our world is on the trend of shopping online, every time, everywhere and Exommerce is no longer the new and strange concept in the market. It is considered as the essential part in our life. Although it has appeared and developed just several years but the development pace is actually impressing. Besides, one concept that is mushrooming in the market and a lot of eCommerce merchants tend to incline toward it.

One question: What is marketplace? In short description, it is a kind of ecommerce website, place where can display and sell their products to customers. Nevertheless, vice versa is not true, not all ecommerce websites are marketplace. So, what makes the difference between both of them? Why marketplace is better than usual ecommerce? This article will give you several main points directing you towards the roadmap of Magento Marketplace. Here we go:

  1. Minimizing initial investment:

With ecommerce, when you plan to start an online store, the initial capital requirement will be quite high, even too high because it will require you to provide enough amount of inventory for customers to explore. On the contrary, marketplace will allow sellers to manage their inventory, it will free you from the huge initial investment. More than that, users can index  more products and multi vendors can take part in as well.

  1. Larger inventory:

As we mentioned above, marketplace is the place for multi vendors and allows they manage their own inventory, so it is obvious that the total amount of products available on marketplace will be far more than in ecommerce. Keep in mind that more product will equal more chance of sale.

  1. No financial risk, highly scalable:

In contrast to direct ecommerce website, with marketplace, no investment for buying product, no investment for enriching inventory. Not buying means no risk of products not being sold. Therefore, you can eliminate the financial risks and that you can expand more quickly is also normal.

  1. Customer relationship:

If you own a direct online store, along with so many tasks, you have to focus equally on customer service and make sure customers are able to contact you anytime they need. And if you own a marketplace, you are a mediator between transactions of buyers and sellers; you have to jump in between, only if something goes wrong between them.

  1. Long tail marketing:

When marketplace reaches large enough number of products, you need to have specific plan to manage. We suggest that you should take advantages of huge amount of product to do the best SEO and SMO targeting specific keywords, improve your Google ranking. Besides, the online store with limitation of products will work on general keywords, we are sure that the competition is fierce. Nevertheless, marketplace does not ship products to customers directly, thus the vendors have to bear marketing expense.

  1. More profit margin:

Low initial investment and no marketing expense, these two factors are enough to prove that marketplace don’t have to incur a lot of cost. Due to allowing other vendors on marketplace, you can get commission for every product sold. Low cost and higher profit will increase your profit margin better than ecommerce store.

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