Thanks to the internet, the retail world is no longer dominated by brick-and-mortar stores with limited shopping hours. People can shop online 24/7. Likewise, anyone with the drive and resources can set up an ecommerce operation. An entrepreneur can create their own online operation from scratch, use an ecommerce platform, or sell through a marketplace.
Working from scratch is self-explanatory. But what about ecommerce platforms and marketplaces? What are they and how do they differ? If you want to know, keep reading. This post will break down both options in easy-to-understand terms.
- The Ecommerce Platform
An ecommerce platform is a cloud-based platform on which entrepreneurs can build their own ecommerce sites. For all intense and purposes, an ecommerce platform is essentially software-as-a-service combined with web hosting services, storage space, and the necessary tools for doing business – like shopping carts and payment processing.
When an entrepreneur chooses an ecommerce platform, they remain in complete control of the business. To make getting started easier, most platforms offer templates from which online stores can be built. Shopify is one such platform. Their templates are functionally similar to those found on well-known content management systems like WordPress and Drupal.
Shopify also gives ecommerce operators a full suite of tools for managing and tracking inventory, managing shipping, processing payments, and even handling returns. It is an all-in-one package that gets an ecommerce operator up and running with very little hassle.
- The Ecommerce Marketplace
An ecommerce marketplace is an online property through which an unlimited number of sellers can ply their wares. The most recognizable example is Amazon. Although Amazon does have its own retail operations, it allows other ecommerce sellers to list their products on their site.
eBay is another example of an ecommerce marketplace. As you may know, eBay started out as an online auction site. The traditional eBay auction is still available, but the marketplace behaves more like Amazon these days. In both cases, ecommerce operators sign up for accounts and then begin listing their products.
With a marketplace, sellers are locked into how that website is set up. They do not get to design their own site that aligns with their branding. They are also locked into whatever the marketplace decides for payments, shipping, etc. Sellers generally have some options, but these may be limited.
- Order Fulfillment Differences
In terms of how orders are fulfilled, both models offer the same options. Ecommerce operators can fulfill orders themselves or outsource the task to a third party. Shopify users hoping to outsource might contact a company like Preferred Shipping (visit their website here), a company that can handle both fulfillment and international shipping.
Entrepreneurs who choose the marketplace model have the same two options. But in the case of Amazon, there is a third option available to some operators: having Amazon fulfill the orders. Sellers ship their products to an Amazon warehouse; orders that come into Amazon are fulfilled by Amazon.
- A Matter of Control
Deciding how to set up an ecommerce operation is really a matter of control. Does the business owner want to control everything from the ground up? If so, building from scratch is the right way go. If they do not mind surrendering a little control and getting a lot of help in the process, an ecommerce platform makes sense.
Going with an ecommerce marketplace means surrendering a lot of control to that marketplace. It works for some ecommerce operators. For others, not so much. The marketplace is the most restrictive because you are selling your goods in someone else’s store.
What are your thoughts? Which model do you prefer?