It’s easy to get lost in the global terrain of e-commerce. The numerous opportunities for expansion and branding advancement make it an attractive arena for growth but the inherent complexities and risks can make those first steps feel daunting for all but the most fearless entrepreneur.
While many think of e-commerce as the simple act of ‘digital selling or buying’, there are distinct differences between the various types of arenas for e-commerce, the marketplaces and webstores, and the strategies you can utilise to your brands’ advantage.
Just to make sure we are on the same page: what are marketplaces
In general, an online marketplace is an e-commerce site where products and service information are provided by multiple third parties and where transactions are processed by the marketplace operator. For merchants, marketplaces eradicate the burden of time and customisation. The technical aspects of the website store management are transferred to the marketplace. This ultimately makes it easier for the merchant to focus on product development, manufacturing and distribution. While stock information and descriptions are provided by the merchant but maintained by the marketplace and adapted/designed for the mobile apps. There is regular site traffic, which can also drive people to your webstore and brick-and-mortar store. Marketplaces are especially attractive to small businesses as they have low to no start-up costs, with lower promotion expenses.
The marketplace usually charges a fixed fee or percentage per transaction, and there is typically active competition between the vendors on the marketplace. The multi-vendor competition drives prices lower, often making it harder for smaller companies to compete, but it is also the primary reason that consumers are drawn to market-places. Simply put, they often have the lowest prices and the largest selection of products from the widest range of brands. In fact, 31% of first-time shoppers prefer online market-places to webstores because of the lower prices and brand-diversity.
Why the USA and why marketplaces in the USA