Selling products online has become a major business avenue. But if you’re just getting started—or looking to expand—should you list your products on big e-commerce marketplaces like Amazon, Etsy, or Gumraod, or focus on building your own e-commerce website? Or should you do both?
The answer isn’t always straightforward. It depends on your resources, goals, and how you want to shape your brand identity.
Did you know that in 2023, about 1 out of every 5 things people bought worldwide was purchased online, and by 2027, it’s expected to be closer to 1 out of every 4 things? (source)
Online Store vs Marketplace: What’s The Difference?
Imagine you have a lemonade stand. If it’s your own stand on your own street corner, that’s like having an online store—just one business, one brand, one place to buy from.
But if you move your stand into a big fair where lots of other people are also selling different things, that’s like a marketplace—a bunch of different sellers all in one place, sharing the same crowd of potential buyers.
Your Own Online Store
An online store gives you the chance to create a shopping experience specifically for your brand. When you build your own online store, you have full control over how it looks, works, and how customers use it.
Your online store is usually set up on a platform like Woocomerce (WordPress) or Shopify.
What’s great about this approach is that everything is customizable. This includes how products are shown, how the shopping cart works, and how customer service is handled.
With your own online store, you focus on creating a brand that people love and trust in the long run.
The Marketplace Model
Marketplaces gather products or services from many different or similar sellers in one online space. What’s good about selling on these marketplaces is their already established customer base.
With many users looking for a variety of products, marketplaces help you quickly connect with buyers. You don’t have to spend time and money building your own audience. They make things simple by giving sellers tools for product listings, payment processing, and sometimes inventory management.
With e-commerce marketplaces, you focus on tapping into an already established source of buyer traffic. But you are competing with everyone else.
Advantages of Selling on Your Own Website
Selling on your own website has clear benefits related to control and brand ownership. Here are the two main advantages.
You Have Complete Control
Having your own e-commerce website gives you complete control over how it looks, the content you share, and how users navigate through it. This is important for brand awareness and helping people remember you.
Unlike the standardized designs found on marketplaces, your online store is a way to showcase your brand’s personality and create a real connection with your customers.
You can also customize the customer experience. You can personalize how you interact with customers, create loyalty programs, and provide a consistent experience across different platforms. This kind of personalization is often hard to achieve on a marketplace.
Having this level of control allows you to match your online store with your overall marketing strategies. You can try out different promotions, content marketing ideas, and customer service options specific to your target audience.
Direct Customer Relationships and Data Collection
Having your own online store makes it easy to build direct customer relationships. You can talk directly to your customers. This way, you can make interactions special, get useful feedback, and answer questions quickly. This personal contact helps you learn more about your customer base.
Another smart benefit of having a website is the chance to gather data collection. You can collect simple contact info, site habits, and shopping history. This gives you detailed information about how customers act.
This data is useful for improving marketing plans, adjusting products, and growing long-lasting brand loyalty.
When you use customer data wisely, you can give personal suggestions, create specific promotions, and build customer relationships better than if you were on a marketplace.
More Online Store Advantages
Better Margins
Without platform fees, you keep a larger portion of each sale. This can significantly improve your bottom line.
Flexibility
You decide how to price your items, run promotions, or bundle products. You can adjust quickly to market changes without waiting on platform approval.
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Disadvantages of Managing an Online Store
Having an online store is great. But it also comes with its downfalls.
Running an online store requires more costs and work than simply adding your products to a marketplace.
Higher Initial Setup and Maintenance Costs
Setting up your online store will cost more than joining marketplaces. You will have to pay for things like website design, domain registration, hosting, and, other platform fees.
You will also have ongoing maintenance costs. This includes updates for your website, security measures, and fees for any plugins or extensions you might need.
There might even be additional costs for specific services too, like professional product photography, copywriting, and search engine optimization (SEO) to help your store stand out.
So, it is important to consider both the start-up costs and ongoing expenses when checking if an online store is a good idea. Having a clear budget for development, marketing, and upkeep can help your store run smoother and increase your chances of success.
Need for Driving Traffic and Marketing Efforts
Unlike marketplaces, you need to find a way to attract visitors to your new online store. You will have to spend time and money on different online marketing strategies like paid ads, SEO, social media management, collaborations, etc.
Keeping a steady flow of traffic to your online store can be hard. You need a plan for creating content, applying SEO, and handling paid marketing. It is important to stay updated with new digital marketing trends and change your strategies to get the best visibility.
You could hire a digital marketing agency to do all of this for you ⇒
More Disadvantages of an Online Store
Logistics Management
You must either partner with courier services or manage shipping yourself. Handling returns and exchanges also falls on your shoulders.
Trust Building
Customers might hesitate to buy from a lesser-known site. You’ll need strong branding, customer reviews, and an excellent user experience to earn their trust.
Advantages of Utilizing a Marketplace
Managing an online store can be hard and time-consuming. This is why marketplaces are good alternatives – especially when just starting off.
Marketplaces are simple to set up and require minimal upfront costs. Gumroad is a good example of how easy and cheap it can be to start selling online on these marketplaces. Gumroad costs zero dollars to set up, they only take a fee out of every sale. You pay nothing if you sell nothing.
Also, marketplaces have a big, often global, customer base. This increases the visibility of your products. This option is especially good for businesses with limited resources.
Tap into a Large Customer Base
One of the biggest benefits of selling on marketplaces like Amazon, Etsy, or Gumroad is that you can reach a larger customer base, quickly.
Many businesses and individuals alike use these platforms regularly for shopping, so your brand has quick access to many of these potential buyers.
For example: In 2024, Gumroad has an average monthly traffic of over 400k visitors according to Ahrefs.
The large number of potential customers actively searching for different products similar to yours increases the chance that they will find yours.
This is especially good for new businesses looking to get visibility quickly.
Easy to Setup and Use
A big reason why e-commerce marketplaces are so popular is their ease of setup. Most platforms have simple systems that let you quickly create seller accounts and list products – even as an individual.
This easy process helps even those with little technical knowledge to set up an online store fast. Plus, these marketplaces often have 25/7 customer support ready to help you set everything up correctly.
Some may have built-in tools for product uploading, image optimization, inventory management, and shipping orders, which help you run your business more efficiently.
This way, you can focus on what’s important like developing products and connecting with customers, while the marketplace takes care of the techy stuff.
More Advantages of a Marketplace
Trust and Credibility
Marketplaces like Amazon and Etsy are household names. Customers generally trust these brands, which can boost your product’s credibility just by being listed there.
Logistics Support
From delivery to return policies, these platforms handle the nitty-gritty. That means less headache for you in managing shipping, tracking, and refunds.
Marketing Assistance
Most e-commerce sites offer promotion tools such as sponsored ads, lightning deals, and personalized recommendations. They help put your products in front of potential buyers.
Disadvantages of Selling on Marketplaces
Marketplaces are easy to use and have a large reach of potential buyers. But they also have downsides when it comes to branding, control, and competition.
Competition and Marketplace Fees
Competition is fierce for marketplaces. You share the platform with many other sellers, some of whom may sell the same products as you. This makes it hard to get noticed in the beginning.
Most marketplaces use a commission-based system. They charge sellers marketplace fees for each sale. These fees, along with extra costs like listing fees or premium placements, can hurt your profit margins.
To do well in a marketplace, you should use priced strategies that attract customers. It’s important to make your product listings clear and eye-catching. You can also look into various product categories to reduce direct competition.
More Disadvantages of Selling on Marketplaces
Dependency
Relying solely on an external platform ties your hands to their policies and algorithm changes. A single tweak can drastically affect your sales.
Hybrid Approach: The Best of Both Worlds
Most major brands or e-commerce companies will do both. They list their products on most (if not all) e-commerce platforms like Amazon and sell their products on their own branded e-commerce site.
This is the ideal approach. Listing your products on marketplaces allows you to take advantage of the massive buyer traffic these platforms already have, at the cost of losing some profit margins plus selling on your site in your own way, while keeping all the profit margins for yourself.
You can always find ways to direct the buyers coming from these marketplaces to your own website after they have made a purchase using some sort of email marketing.
Start on E-commerce Platforms
If you’re new to online selling, marketplaces can jumpstart your sales. They help you build a customer base and gain product reviews quickly.
Parallel Website Presence
Once you’ve established some brand recognition, introduce your own website. Nudge satisfied customers to buy directly from you for exclusive deals or loyalty perks.
Diversify Channels
Avoid putting all your eggs in one basket. When you sell on multiple channels, you reduce dependence on any single platform or algorithm.
Want an online store? Start with a free one here ⇒
Conclusion
In conclusion, whether you choose an online store or a marketplace, or both, it’s important to be aware of the good and bad. An online store gives you control over your brand and customer relationships. However, it can cost more to set up. On the other hand, marketplaces can help you reach a bigger customer base with less effort to get started. But they come with competition and fees.
Think about your business goals, your budget, and your marketing strategies to decide what works best for your products or services. If you need more help with setting up your online presence, contact our experts for support and advice.
Frequently Asked Questions
What is the difference between online store and online marketplace?
An online store is one seller offering products. An online marketplace is a platform where many sellers share their products. In online stores, there is only one seller. In marketplaces, there are many sellers. This gives shoppers many choices.
What is an online marketplace?
An online marketplace is a place where many business owners can sell a wide range of products. It connects them to a large customer base. These marketplaces usually charge commission fees on sales. They also benefit from economies of scale, which helps them grow and save money.
What is an Online Store?
An online store is an online business that sells its own products through its own website. This way, the business owner has total control over branding, pricing, and quality standards.
