This document compares e-commerce stores and online marketplaces. It finds that while e-commerce stores allow more control over branding and the customer experience, they require higher investment and maintenance. Meanwhile, online marketplaces have lower costs but offer less customization. The best approach for most brands is to use both, with marketplaces for quick reach and e-commerce stores for relationship building. Integrating e-commerce and ERP systems can help businesses take advantage of the benefits of both.

2. Introduction
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• Investment of time and money time play a
crucial role in choosing options such as solely
adopting an e-commerce store, selling through
existing online portals (marketplaces), or both.
• In most cases what works for a brand is a
combination of both.
Did you know?
Consider this, by 2017 e-commerce sales
in US alone is expected to be around $434
billion.

3. What is a marketplace?
A marketplace is a multi-vendor online store that enables consumers to shop for a
variety of products and brands from multiple vendors across multiple locations.
Marketplaces make it convenient-
 For businesses to list and sell their products by taking care of all the operational
aspects (from providing a platform, integrating with payment providers,
streamlining order fulfillment, to managing customer service)
 To provide customers a plethora of options while ensuring quality.
 To build a community around the common needs of retailers and consumers. (
that’s the very purpose of a marketplace)
 Examples of popular marketplaces include Amazon, eBay, Alibaba and others.

4. E-commerce Stores vs. Online Market places
Category
E-commerce Stores Online Marketplaces
Investment (Development Time and
Costs)
Require more time and budget –
while businesses can leverage
platforms like Magento to shorten
the development cycle; efforts are
only required for customization
Require little upfront investment
and businesses can get started very
quickly – Register and sell
Functionality & Extensibility
Feature rich and can be further
extended to add more functionality.
Limited functionality available to
businesses – usually just provide
the basic functionality required by
businesses to sell effectively.
Maintenance Require more maintenance. very less maintenance.

5. E-commerce Stores vs. Online Marketplaces
Category
E-commerce Stores Online Marketplaces
Customization
Can be customized to incorporate any custom
requirements or workflows specific to your
organization.
No flexibility for customization. They
mandate the businesses the use the
platform as is.
Reach
Customer reach in e-commerce stores is
usually very limited compared to online
marketplaces.
Allow you to reach a much wider
audience across geographies.
Scalability
While e-commerce stores can be scaled to
meet the growing needs of businesses they
require additional investments (invest in an
enterprise edition, scale the server, etc.) .
Online marketplaces are designed for
scalability (as they have to cater to
multiple businesses and a relatively
larger customer base).

6. E-commerce Stores vs. Online Marketplaces
Category
E-commerce Stores Online Marketplaces
SEO
Store needs to be optimized for search
engines. SEO, for most businesses, is
often a tough nut to crack.
The popular online marketplaces are
already optimized for search engines.
Businesses can quickly take advantage
of their popularity with search engines
Customer Acquisition Cost
The customer acquisition cost is higher
for e-commerce stores as you have to
invest additional marketing dollars to
attract customers to your e-commerce
store.
The customer acquisition cost is usually
lower for online marketplaces ; it
allows you to leverage the existing
large customer base (the costs are
spread across multiple businesses).
Branding
flexibility to control all the aspects of
your brand – from your website
template, logo, call to action, to
customer communication.
Very limited brand visibility. Customers,
more often than not associate all their
positive (and negative) experiences
with the online marketplace and not
the brand.

7. E-commerce Stores vs. Online Marketplaces
Category
E-commerce Stores Online Marketplaces
Customer service
While businesses can better control the
customer experience in e-commerce stores,
customer service can be a daunting task for
businesses (both small and big) and require
significant investments.
Particular about customer experience
and have stringent rules in place
(mostly in favor of customers) to
control that experience.. Businesses
can easily offload customer service to
online marketplaces /leverage
infrastructure control customer
experiences.
Flexibility and control
Businesses have better control over what is
displayed about their brand. They can decide
if and how an information is conveyed.
Businesses often have very little say in
if and how a positive or negative
review about the brand or its product,
is displayed.
Competition
With e-commerce store you make customers
go the extra mile to compare your product
price with that of competition.
Listing alongside a number of other
businesses making it easy for
consumers to compare prices.
Margins
Businesses do not have to share any
commission.
Commissions charged on every sale
impacting merchant’s profit margin.

8. E-commerce Stores vs. Online Marketplaces
Category
E-commerce Stores Online Marketplaces
Data (Customer Insights)
businesses own the customer data
which can be collected to draw
meaningful insights and better target
the customers (promotions, offers,
emails, cross-sell, up-sell, etc.)
No access to customer information
with businesses that limits how they
reach out to the customers.
Personalization
The available data on hand and
advanced features of the e-commerce
store can be easily used to personalize
the product offering and customer
experience (custom pricing, etc.).
This is a level playing field for all
businesses. While the marketplace can
personalize the customer experience
the benefit is not passed on.
Customer Relationship
Management
With e-commerce stores businesses
are in complete of how they manage
and nurture the customer relationship.
E-commerce stores give them the
flexibility to target customers better
and increase the customer lifetime
value.
No concept of customer relationship
management. While online
marketplaces can help businesses
reach a wider audience the customer
lifetime value is limited because
businesses cannot retarget them for
lack of data

9. • Marketplaces can never replace the e-commerce stores , or vice-a-versa, but
certainly capable of complementing each other.
• Online marketplaces can help quickly reach a wider audience with a smaller
investment, e-commerce stores to help you build your brand, personalize your
offerings, and drive customer relationship and experience
• Market places help get brands ahead with visibility but e-commerce stores help
establish a long-term relationship with them.
• ERP ecommerce integration helps businesses take advantage of both e-commerce
store and online marketplaces by automating order fulfillment workflow and
reducing the operational overhead required to maintain these platforms.
Conclusion – choose the middle path

10. For more information
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