What is the different between online store and marketplace?
An online e-commerce store is suited to company who want to sell their own inventory of products exclusively to their target audience. You are in charge of sourcing or manufacturing, storing and distributing your products and receive the entirety of the purchase price. An example of this is treehouse-hk.com, which sells stone/ bracelet under its own brand.
An online marketplace, on the other hand, focuses on matching multiple buyers and sellers of goods and services. For example, Etsy.com successfully provides space for individual crafters to reach customers who are looking for unique, hand-made, and small scale products. company became part of the eco-system and pay a commission or fixed fee to marketplace owner.
If you are a new brand without adequate brand awareness, to open an online e-commerce store need extra effort on marketing effort to bring awareness. Further, you might need to take responsibility for your site’s inventory procurement, storage and shipping. It also requires a significant investment early on, at a time when you may not have built the customer base to support your product. However, if you have a compelling product, a niche market and would like hands-on control of your site’s growth, the single-vendor e-commerce model could work for you.
We had interview and discuss with some entrepreneur whom has strong market connection on specific seller market with these seller does not have the economy of scale to build their own brand. We recommend them to create a marketplace platform to facilitate those seller. The marketing cost, platform cost, and the operating cost could be significant lower per small merchant.