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Should I Start Selling Online in A Marketplace or E-Commerce?

Reviewed By Jason Guerrettaz

Written By Zach McGillis

Published April 24, 2019

Updated March 10, 2025

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Are you thinking about launching an online business, but are curious about the various factors to consider? There are numerous benefits to selling products online. First of all, you will be able to reach many more customers than a traditional brick and mortar retail store and you don’t have to put together a physical storefront. Furthermore, selling online enables you to sell at all times of the day to people all over the world. But the concept of selling online is a very general one.

There are numerous different eCommerce options available to you and new sites are popping up every day. This means that while it’s easier than ever to launch a business like this, you’ll also need to consider how to remain competitive. There are two primary ways that you can begin selling products in the eCommerce base. The first is using a marketplace, such as Amazon FBA.

A marketplace is a third-party site that includes product listings from numerous sellers across various product categories. Outside of Amazon FBA, other examples of marketplace selling include Walmart, eBay, and Etsy. The second option available to you when launching an online business is through your own website. This is an independent eCommerce site that you run as the sellers. Buyers then purchase goods directly from the site belonging to the business. You can use eCommerce platforms like Magento, Shopify, Big Commerce, and Woo Commerce to accomplish this goal.

Is There Really A Difference Between eCommerce Sites and Marketplaces?

The primary difference between eCommerce sites and marketplaces will depend on what you are selling and who you are. Marketplaces can make millions of visitors available to you instantly. However, you’ll also have to be competitive because you’ll be fighting with thousands of other sellers who have gone the same route to launch their own business. Putting together your own eCommerce website is one way to differentiate yourself, but you’ll have to have a method to drive sales and pour traffic into your website.

Benefits of Selling on A Marketplace

There are numerous different advantages to selling on a marketplace, which is why so many people turn to the concept of selling on Amazon FBA when first getting started. It eliminates many of the common challenges in building your own website and driving traffic to it.

First of all, it is convenient to get started and to maintain an online marketplace. This can simplify your eCommerce needs especially if you are a new seller. Since the infrastructure is already established, you eliminate all of the hassle and time linked to building your website from scratch.

Since no individual seller owns online marketplaces, the payment and transactions are handled by the marketplace itself, which means that your experience as the seller only involves a few different steps to add and modify your product listings. Another factor to consider when using an eCommerce site is that there are many visitors who are already making purchases there and they have already developed a trusting relationship with the owners of the site. Marketplaces are highly trusted and well established because people already make purchases on them and are more comfortable going there to spend their money than to look elsewhere to find new products.

There are millions of shoppers who could potentially be searching for products much like yours, which means that using an eCommerce site means that there is not a lot of work to get your products immediately in front of prospective customers. There are some disadvantages to using a third-party site. One of the leading reasons why people are turning to these options today is because they can benefit from directly tapping into an established marketplace. The process that you select will have implications for how to choose to sell your company in the future.

Marketplace vs eCommerce: A Quick Overview

Even retailers with brick-and-mortar stores recognize the benefit of having an online marketplace. The convenience of buying products from the comfort of your home, through just a few simple clicks on your laptop or smartphone, has become invaluable to a lot of consumers who no longer have the time to jump in their cars and drive to the nearest shopping plaza.

Customers also love the wide selections available online, often far more extensive than at their local stores, which is why so much of the retail world is shifting online.  An eCommerce site is now a must-have for most retailers.

Ever since the pandemic lockdowns began altering the public’s buying habits and shifting them online, online marketplaces have grown rapidly. This trend is expected to continue in the fast-paced and evolving digital world. But if you’re not certain which approach to take, here are some of the basics about eCommerce vs marketplace.

It’s important to realize whether you use an established marketplace or your own website, you’re operating an online store either way. The key difference is that your Shopify website, for example, supports your business alone. If you open shops on Amazon or Etsy, you’re operating alongside multiple sellers to offer products through the same storefront.

There’s no significant difference for your customers. The shopping process is the same either way. One advantage to using an Amazon or Etsy platform is the well-established reputation both sites have and their internal marketing devices to help put your store in front of your target customers.

But while this difference may be irrelevant to the final consumer shopping experience, the option you select can have a major impact on your company’s long-term profitability.

If you operate your own eCommerce website, you’re in charge of your inventory and manage every aspect of the business operation. Once the purchase has been made, you’re responsible for:

Fulfillment

Storage of SKUs

Processing payments

– Logistics

You as the owner must ensure you have a smooth operation and the customer gets the products delivered on time. As the site owner, you’re the only seller.

That’s not the case with a marketplace operation.

Sites such as Amazon and Walmart allow third parties to sell through their platform, For plenty of retailers, the value of selling on Amazon is the host site has its own internal marketing and enables third-party sellers to take advantage of Fulfillment By Amazon, which handles the storage of their SKUs, order processing, shipping, and customer service. With millions of people using Amazon, this has become a much faster way for retailers to introduce their products to new customers, as opposed to launching a brand-new site that most shoppers have never heard of.

An Amazon marketplace can be used not just for DTC sales but also as a B2B model. With far more options available to you, a lot of entrepreneurs have found that selling on a marketplace is a win-win situation. That’s why a lot of retailers with their own websites like to expand their sales channels to include sites such as Amazon, Walmart, and Etsy. Having multiple sales channels is a smart way to drive revenue.

What are the Advantages of Marketplaces

A marketplace operation is a smart way to expand your business to new and different markets to attract customers from the marketplace’s established demographics. The fact that sites such as Amazon are trustworthy, well-known websites gives them a head start in reaching prospective customers they might not have found on their own.

This is another way of saying you don’t need to choose between eCommerce and the marketplace. Plenty of merchants have started off operating their own eCommerce website and then questioned whether to turn it into a marketplace.

Let’s look at that persona. There are numerous pros to consider about either starting as a marketplace or expanding onto one.

The benefits include:

Wider Product Assortment, which enables you to expand inventory and manage more SKUs, as well as new partnerships with trusted suppliers.

Complete control. Since merchants think if they operate on Amazon, their operations will be controlled by the parent company. But the truth is you still have control over most aspects of your shop.

Consumer insights. Platforms such as Amazon can readily provide consumer data that becomes invaluable for your shop moving forward. You’ll quickly understand your customers and what they’re looking for.

Brand loyalty. Once customers have found your shop and discovered you have what they’re looking for and you’re easy to order from, they’re likely to demonstrate increased loyalty to your platform. Why go looking anywhere else when you’re providing them with the products they want? Now you’ve become the go-to place for their shopping needs.

What Are the Disadvantages Of Marketplaces

Selling through online marketplaces offers flexible business opportunities with low start-up costs. That’s why thousands of merchants flock to eBay and Amazon every year, despite the competition from thousands of other sellers.

That stiff competition is one challenge facing new merchants on these platforms. They need to find a way to make their store stand out and attract customers away from their direct competitors. But there are other disadvantages of online marketplaces for your business.

Potential drawbacks that need to be considered when selling on marketplaces can include:

Commissions and fees, which can get costly. Marketplaces usually charge commissions on every sale, and most have a fee structure as well.

Restrictive terms and conditions. Every marketplace has rules that merchants must follow, or their site will be shut down.

Limits on communications with customers can be a part of those restrictive terms and conditions.

Branding limitations that can prevent your shop from employing certain branding tools that may conflict with the parent site.

A lot of merchants sign up to sell on Amazon, but not all of them succeed. That doesn’t mean your business is going to fail, but it is important to understand the challenges that all sellers face when they first start on a platform such as Amazon or eBay, where the customers don’t know your shop and may be comfortable buying from other shops on the platform.

Factors To Consider When Choosing A Platform

How successfully you sell your SKUs is going to be significantly impacted by the choice between an eCommerce platform and a marketplace. Each option has different features, benefits, and challenges. You need to factor in which ones align with your business goals.

Advantages Of eCommerce Platforms

There are some advantages to creating your own eCommerce site. Doing so gives you full control over how you present your brand. That includes the website design and how customer service is handled.

You have full access to your customer data, and the ability to creatively customize every aspect of your store so it fits your business needs. More importantly, you won’t have direct competitors operating on the same platform.

Disadvantages Of eCommerce Platforms

There are challenges to consider as well, such as the initial setup. It can be time-consuming to set up an eCommerce platform, and to do it right requires a lot of technical expertise that the entrepreneur may not have. However, many sellers bypass this challenge entirely by using an established site such as Shopify, which does a lot of the work for them.

Shopify has its own internal marketing devices, which can make it easier for a seller to figure out ways to drive traffic to your site through marketing efforts which can be costly and time-intensive. With your own newly designed website, you’re fully responsible for ongoing maintenance to ensure it runs smoothly and stays secure, while sites such as Shopify and WooCommerce handle that.

Online Store Vs Marketplace

Whether you start with an eCommerce store or on a marketplace, there are differences and similarities to consider. Each option can potentially enhance — or limit — your sales and your company’s potential.

With so many global sales taking place on marketplace platforms, a marketplace can become that one seamless platform where buyers can search for everything they want. Becoming a marketplace enables you to reach broader audiences, increase the number of products you can sell, and allow the platform to handle warehousing and shipping.

Not every seller chooses this path, though, and some prefer the uniqueness of having their own branded website. If they’re good at digital marketing, they can find their audience and enjoy high sales and profits. The bottom line is that both have become major trends in recent years.

It’s important to take into account what your goals are, and what you hope to accomplish in the long term.

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