E-marketplace and e-shop: which should I choose?

The question of whether businesses should sell online is probably no longer an issue for businesses today. However, there are a number of options, and the most common choice is between an e-shop and an e-marketplace. Here is a brief overview of how they differ, the advantages and disadvantages of each, and the criteria for deciding which option is best for your business.

An e-shop is a space where you sell only your own goods, whereas an e-marketplace does not sell one’s own goods, but acts as a common platform for selling products from different brands. Various studies show that shoppers are more likely to choose e-marketplaces for a variety of reasons, with as many as 70% identifying e-marketplaces as the most convenient places to shop. Nevertheless, the vast majority of brands have their own online stores. So what are the pros and cons of each?

E-shop: independence and higher risks

The advantages of an e-shop are as follows:

• With your own e-shop, you have complete freedom and control over everything from store design to pricing. You can also make changes to it as you wish – colours, payment methods and other elements of your e-shop.
• You can collect your customers’ data. This is a huge plus point of an e-shop, as the customer information allows you to carry out effective marketing activities, such as displaying ads to relevant audiences, sending special offers, or reaching those who have added items to their shopping cart but not made a purchase, etc.
• There are no direct competitors nearby. Your e-shop contains only your products, unlike e-marketplaces where the same or similar products from other brands are easily found on the same platform and the consumer can easily compare their prices, composition and other features.
• You create a unique user experience that is associated with your brand. 

The disadvantages of an e-shop are as follows:

• Less visitor traffic. Especially at the beginning of the business, when the brand does not have a high profile, it takes effort to get customers to even find out about and visit the e-shop.
• Higher financial risk. Setting up and maintaining an e-shop often requires a higher financial investment than using an e-marketplace.
• More time and energy to set up and maintain the website. Along with great freedom comes great responsibility to choose from a wide range of options that will require more of your insight and knowledge in setting up an e-shop.

E-marketplace: less control and more traffic

The advantages of an e-marketplace are as follows:

• Easy to get started. E-marketplaces are usually designed to be as easy to use as possible, so you can get started as soon as you have uploaded your goods. You can also take advantage of the benefits on offer, such as advertising or shipping your products.
• Unlike an e-shop, you may not be familiar with the technical side of e-shops and you may not be able to deal with issues such as server rentals, website security, plugins, etc.
• Larger audience. An e-marketplace can offer a high volume of visitor traffic, potentially increasing the visibility of your products and therefore your sales.

The disadvantages of an e-marketplace are as follows:

• Competition with other brands, as many brands may offer the same or similar products on an e-marketplace.
• Much less freedom, as you are subject to the terms of the e-marketplace for discounts, sales and other aspects.
• You cannot collect any information about your customers because the e-marketplace does not share it.
• You do not build your brand awareness.

How to decide what to choose?

You should consider your financial resources and knowledge – if you have enough of both, it is definitely worth setting up your own e-shop, but if you have limited finances and do not know how to set one up, an e-marketplace might be a better solution.

Another important aspect is your brand awareness. If you are already an established business with your own audience, then of course an e-shop is a good and maybe even necessary solution. But if you are just starting out, when there is a lot of uncertainty and little experience, an e-marketplace can reduce the amount of hassle and allow you to focus on other areas of business development.

In fact, experts advise you to consider both options, as they bring different customer flows and different benefits. In this case, it is important to monitor sales over time, assess the sales generated by each channel and, on the basis of these statistics, decide whether it is worth selling in both places or just one.