E-Commerce vs Marketplace: Which is the Best Option?

If you are a company that wants to sell online directly to the consumer you have two great options: create your own E-commerce or use one of the existing Marketplaces, which in this article, we will use Amazon as an example.

Leading online sellers tend to use both options, with different strategies for each channel. For new sellers or those with little time in the market, the decision is not so easy, you have to think not only about the initial logistics and maintenance that either option entails, but also about the economic part involved. That is why we would like to highlight some of the advantages and disadvantages of selling in e-commerce or in a marketplace.

E-commerce vs Marketplace: Amazon

The option of creating your own online store has some advantages vs selling your products in a marketplace like Amazon, but it also has its disadvantages. Let's highlight some of them:

Advantages

1. Perhaps the main advantage is that the customer, once registered, is yours and you will be able to interact with him and impact him with new promotions, etc. On Amazon, the customer is yours.‍
2. You control the entire end-to-end process without intermediaries. User experience, product sheets, payment gateway, etc. On Amazon you have to comply with their rules from the moment you create a Seller account. 
3. The data you get from e-commerce allows you to have more relevant metrics, make much more accurate analysis at a strategic level and better connect with your customers.

Disadvantages

1. ‍Whenyou have an e-commerce you haveto do and control everything yourself and the number of variables to get a good customer experience is very high. You have to take into account that current projects tend to be multi-country, multi-language, multi-currency, operating with several offshore warehouses, etc.‍
2. E-commerce has a higher barrier to entry since you have to invest in technology even if you have the platforms SaaS platforms platforms as a much simpler and more affordable option.‍
3. Operation, support and maintenance costs are higher. ‍
4. Once you have created the e-commerce you have to take it to the users, so you have to invest in SEO, SEM, etc. to bring traffic to the web and position your products well. This is going to happen the same on Amazon but you already have a user base of 400M users who can find you in the Marketplace.

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Now let's look at the other part:

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‍Marketplace: Amazon vs E-commerce

If in addition to operating your own e-commerce you decide to place your products in a marketplace, we recommend you to do it in Amazon, which will also offer you some advantages and of course disadvantages:

Advantages

1. ‍Itallows youto be selling internationally with very low barriers to entry.‍
2. It is easy to operate and allows you to abstract from technology.‍
3. You have it all integrated: payment gateway, multi-country, multi-currency, logistic programs such as FBA, a large user base, marketing tools, advertising, etc.

Disadvantages

1. As mentioned above, the customer is not yours, but Amazon's customer.
2. Amazon is very exacting in its standards and you will have to fight with rejected product cards, documentation for everything, claims, etc.
3. You have to take into account Amazon's commission (8% - 15%) and logistics costs if you decide to use Amazon logistics.

As a conclusion, I would dare to say that for a company that wants to start doing live B2C the best option is to start in the marketplace which is much simpler. It is also viable for companies that already have their e-commerce very professionalized but want to expand sales in other markets. Nowadays the main retailers use a hybrid strategy and operate both channels. Amazon is one of the fastest growing.

On the other hand, if you already do Marketplace and do not operate your own e-commerce, maybe it is time to take the leap. The initial investment may be higher but you will have more freedom in the whole process. 

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