Online shop vs. marketplace: which is the best option?

Comércio Eletrónico

With the covid-19 pandemic, the growth of e-commerce has established itself as a trend, shops are looking to secure their space online and brands cannot remain indifferent. However, one of the questions when a brand is starting out in e-commerce is whether to invest in an online shop or operate via marketplace.

Choosing between an online shop or a marketplace is a strategic decision that should be made taking into account the profile of your business, the resources available and the growth targets set.

What is an online shop?

An online shop is a virtual space for buying and selling products of a particular brand. There are more and more cases of shops that only exist online, but most still have both physical and online shops.

In this case, the brand is responsible for shipping the orders and must ensure the guarantee of the products until the final consumer. Payment is made directly in the shop using selected virtual payment methods.

Advantages of having an online shop?

The fact that you can control the entire process is one of the biggest advantages of having your own online shop. It allows you to set prices and promotions and manage all the logistics. In practice: my shop, my rules. And this also applies to issues related to content, site design and brand promotion.

In addition to this, opting for an online shop also offers an omnichannel experience, i.e. integrating your online shop with the sales you make physically. This option allows you to have a greater scope and reach by extending your field of action internationally and a greater proximity with your target audience.

As you don’t have intermediaries or have to pay commissions, you can have a higher profit margin and fewer expenses, which can compensate for the initial investment.

The disadvantages?

E-commerce are created and managed by companies. This means, of course, investment and availability of resources. To have an online shop, the company must invest in the creation of the platform where it will expose itself and through which it will sell products or services.

Besides the creation of the site, an investment is necessary to generate traffic, i.e. to take people to that site. In other words, a digital marketing strategy must be created, not only to make this routing effective, but also to measure and analyse metrics.

What is a Marketplace?

A marketplace in turn refers to a space comparable to shopping centres, but online. Within the same platform you can access different brands that share their products, which allows you to offer your customers different options. In practice, the Marketplace is a business model in which the shopkeeper uses the space of another already consolidated brand, working as a showcase of its products.

Advantages of choosing a Marketplace?

When you join a marketplace, you already have most of the work done. The platform already exists, so you don’t have to think or invest in strategies to generate traffic, because this is, by nature, high. Your brand will also have more visibility in the search engines, which is very advantageous in terms of prestige and in increasing interest.

In this sense, you will have a cost-benefit, this means that even with the existence of fees and/or commissions on sales it is more likely that the amount paid to these platforms is lower than the cost of having your own website.

The disadvantages?

The fact that it is a large, global structure can be a disadvantage for your company as you have less control over how your products are presented. The dependence on the platform is higher and the autonomy to make decisions is therefore reduced.

Communication and close relationship with your customers may also be more difficult. As a consequence, the competition will be bigger and closer, which can make it more difficult to affirm your brand, as a marketplace sells several brands and products and it is likely that your competitors are also there.

By: Gonçalo Figueira, digital marketeer