Ecommerce platform and online store vs marketplace

There are lots of ways to sell products online. At one end of the spectrum are marketplaces, and at the other is a hugely complicated custom ecommerce website coded by web developers. Somewhere in between those two sits an ecommerce platform like SimpleShop. If you’d like a comparison between custom coded sites and an ecommerce website builder you can check out our Ecommerce website builder vs coding page.

Let’s get into comparing ecommerce platforms and marketplaces.

Selling via ecommerce platform and online store vs selling via marketplace: a comparison

Before we get into a direct comparison, let’s define what each thing is.

What is a marketplace

Simply put, a marketplace is a place where multiple sellers can list their products. Customers can browse, and search for products from these various sellers, and pay the marketplace for the products they buy. The marketplace then passes the money generated from the sale, minus a commission. Much like in a street market, multiple sellers may have similar or identical products for sale.

Marketplaces will often provide large volumes of traffic, who will browse and search the product listings. They will be generally looking for a particular product or type of product, rather than finding a brand or seller specifically.

They are generally easy to set up, and require minimal effort to run. They are usually free to use and list products, but take a commission on the sales generated. Because the focus is on product listings, it is harder to build a brand or reputation on marketplaces.

Examples of marketplaces include Ebay, Amazon and Etsy.

What is an ecommerce platform or ecommerce website builder

SimpleShop is an example of an ecommerce website builder or ecommerce platform. It allows users to set up their own custom shop, whilst taking the technical and operational difficulty out of how a shop should work. It handles all aspects of product listing, order management, shipping, taxes and payment, allowing the user to concentrate on building their brand and sales. The online shop created is similar to a brick and mortar store. It has its own shop window, address, and sells only its own product. It doesn’t have to give any money in commission, for sales it generates, but needs to bring in customers to look at and purchase products.

Ecommerce platform	Marketplace
You can build a brand, reputation, and own the infrastructure of your online business.	You are wholly dependent on how the marketplace works to list your products.
You keep all the money you earn from sales (some platforms charge commission but SimpleShop does not).	Marketplaces charge a sizeable commission on your sales, often 15-20%.
You are responsible for driving traffic and customers to your online store.	Marketplaces provide a large volume of traffic and potential customers.
You don’t compete with anyone else's products on the same site.	You compete heavily with other sellers on the same site, so product listings have to be optimised, and your pricing has to be competitive.
You own your customer data.	Your marketplace owns your customer data.
Platforms charge a small fee (SimpleShop charges $14).	Marketplaces are generally free, but charge commission on sales, and charge for listing promotion and advertising.

Ecommerce platform

Marketplace

You can build a brand, reputation, and own the infrastructure of your online business.

You are wholly dependent on how the marketplace works to list your products.

You keep all the money you earn from sales (some platforms charge commission but SimpleShop does not).

Marketplaces charge a sizeable commission on your sales, often 15-20%.

You are responsible for driving traffic and customers to your online store.

Marketplaces provide a large volume of traffic and potential customers.

You don’t compete with anyone else's products on the same site.

You compete heavily with other sellers on the same site, so product listings have to be optimised, and your pricing has to be competitive.

You own your customer data.

Your marketplace owns your customer data.

Platforms charge a small fee (SimpleShop charges $14).

Marketplaces are generally free, but charge commission on sales, and charge for listing promotion and advertising.

Long term vs short term

Though SimpleShop takes around 15 minutes to get set up and start selling online, it is also quick to do via marketplaces. Because there is less to customise and make your own, you can list a product even quicker in many cases.

In the short term, sellers often try out a marketplace, and then graduate to an ecommerce platform for the longer term. It’s common for sellers to use Etsy, and then move to SimpleShop, for example. This is because, long term, sellers want to be in control of their branding, their story, their reviews and customer data.

Marketplace commissions