We hear stories of our friends who created a successful online store during the pandemic and wanted to expand. Moving into an online marketplace seemed like an easy choice. It was cheap and easy to list their goods and the upfront investment was low by comparison to a store.
However, months in, they’re still experiencing problems.
There’s a lot that’s similar between selling in an online marketplace and a store, which is why the differences matter.
Welcome to the online seller’s conundrum: marketplace or store?
Here are some of the pros and cons of each.
The Pros and Cons of the Online Marketplace
Amazon, Etsy, eBay, Shopee, Lazada and others are all huge for a reason. They have a gigantic audience, allowing any seller to connect with millions of people. It’s easy to get started, the marketplace can handle the shipping, and there are tons of ways to pay.
They also offer robust marketing options.
Research shows that many customers browse marketplaces before making a decision. Get your brand or product in front of them and you skew the odds of a sale in your favor.
But marketplaces present challenges as well.
Your competitor will be right next to you on a marketplace, creating an immediate price competition that can lead to you selling your goods at a loss. This puts heavy pressure on the quality of your listing and can become very frustrating.
For that privilege, the marketplace will charge you a fee. This can be fixed or a percentage of revenue, but either way, it dents the bottom line.
Customers are also less likely to pick out your brand from the menagerie of competitors.
They remember the marketplace, not your store.
The Pros and Cons of the Online Store
Creating an online store gives you control of your brand.
Platforms like Shopify allow you to create the equivalent of a brick-and-mortar store online. You control the feel of your store, the items you present to customers, and all the details with payments and shipping.
Like a brick-and-mortar, getting eyeballs into your store is your responsibility, but the benefits are also yours to reap. With no fee, the only thing you have to pay is the upkeep of the store.
Your items are also available 24/7, which might not be true on a marketplace, and you can price them or discount them as you desire.
That said, there are cons to running a web store.
The first one is cost. While a marketplace costs little to nothing to join and charges sales fees, setting up a store costs money up front and regularly.
The second is that the other benefits of a marketplace, like managing inventory and shipping, are not an option. Product and order management can take up a lot of time, pulling you away from the last major hurdle, which is marketing.
While you reap the benefits of what you sell, getting customers into your store is also your responsibility and can be difficult for a new online store.
So Which Do You Choose?
The choice comes down to your long-term goals.
An online marketplace is great for someone new who’s looking to get their products out there and see what works. They’re also great for marketing purposes, even if they’re only serving as a loss leader.
An online store is a choice for someone with a long-term vision who wants to build a business that can last for years to come. It gives you more control over your revenue and your destiny. Even better, Shopify can now integrate your store with a marketplace, allowing you to gain the benefits of the marketing potential they provide without hitching your boat to theirs.