Selling on Ecommerce vs Marketplace and How to Choose

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Published on: August 8, 2023

Ecommerce and marketplace are two types of online shopping platform. An ecommerce website offers products from a single seller (the store owner), and a marketplace offers products from multiple sellers through a single platform (the marketplace website). 

For example, a brand called Sally’s Singing Candles might sell their products on (their ecommerce website), as well as on Amazon or Etsy (online marketplaces).

Ecommerce refers to buying and selling goods or services online. All online marketplaces are ecommerce websites, but not all ecommerce websites are marketplaces.

Selling on an Ecommerce platform

To avoid confusion, let’s define some key terms:

Ecommerce store vs. ecommerce platform

An ecommerce store is simply an online store: a place to buy and sell goods or services digitally via the internet.

An ecommerce platform is the software that powers an ecommerce store, providing the necessary tools for merchants and customers to participate in ecommerce.

So, you can build an ecommerce store (website) from scratch—or use a platform such as Shopify, WooCommerce, Magento, etc. that already has certain features built in.

Ecommerce platform vs. ecommerce marketplace

“If a marketplace is when multiple sellers use the same platform, how is that different from an ecommerce platform?”

One key difference is the location of your storefront (the entryway and presentation of your online store). A platform like Shopify is not a shopping destination. Shopify users aren’t selling products on—they’re selling products on individual websites powered by Shopify. But if you’re an Amazon Marketplace seller, you’re selling products on—your storefront is located on Amazon, not a separate website.

To learn more about ecommerce platforms vs. marketplaces, read on.

When you’re selling on an ecommerce platform, you (the business owner) are responsible for the entire operation: stock levels, inventory storage and management, order fulfillment, logistics, customer service, payment processing, accounting, and so on. Whatever third parties you work with—such as 3PL (third-party logistics) providers—you are responsible for sourcing and managing those relationships.

That’s a lot of work—but it also means you remain in control of your own brand. You control pricing, imagery and messaging, marketing, website design, customer service and relationship management, data collection and analytics, and so on.

Ecommerce platform pros and cons

Business owner has total control over brand (pricing, packaging and boxing, messaging, marketing, site design, etc.)

Business owner is responsible for handling or sourcing everything (inventory, order fulfillment, logistics, customer service, etc.)

Less immediate competition—your products aren’t listed right next to other sellers with similar offerings

Harder to get your product in front of potential customers—you’re operating an independent website, so it takes an extra step to get people to land on it

Selling on Online Marketplaces

An online marketplace is essentially a digital shopping mall, with many different stores operating under the same roof. The “roof” is not owned by the sellers, but by the marketplace website owner or administrator—i.e., Amazon, Etsy, Alibaba, and so on. 

The administrator does not own the sellers’ inventory. They’re just providing a common space for sellers to showcase their products, with the administrator enabling customer transactions, payment processing, and various other digital tools and services on the back end.

Retail vendor vs. third-party seller

Many retailers, such as Target and Walmart, have two different kinds of vendor/supplier relationships: first-party and third-party.

In a first-party vendor relationship, the retailer purchases the vendor’s inventory and resells it to customers. The retailer is responsible for order fulfillment, distribution, parcel shipping and delivery, customer service, etc.

In a third-party seller relationship, the retailer provides a platform for sellers to showcase their products—i.e., an online marketplace. Sellers maintain ownership of their inventory, which they sell directly to consumers. Sellers are responsible for order fulfillment, drop shipping, etc.

Some marketplaces provide opt-in warehousing, logistics, and ecommerce fulfillment services for third-party sellers, though sellers can also choose to source their own ecommerce logistics and fulfillment depending on their business needs. 

In general, operating a marketplace is a way for ecommerce retailers to increase their product offerings without having to significantly invest in storage, management, and logistics for lots of new vendors. All they have to do is run the marketplace platform—the third-party sellers are responsible for the rest.

Ecommerce marketplace pros and cons

Immediate access to marketplace resources, tools, and bandwidth, allowing for easy storefront setup and management

Tons of competition—the bigger the marketplace, the higher the chances that other sellers are offering similar products, potentially at lower price points

Easier to get eyes on your product—the “digital shopping mall” has a built-in customer audience

Less control over your brand—your storefront is marketplace-branded, and your pricing may be subject to sales, discounts, etc. beyond your control

Ecommerce vs Marketplace

Let’s dive into the differences between ecommerce websites and marketplaces.

Flexibility and Scalability

Business flexibility: the ability to adapt to market changes and other shifts in circumstance.

Business scalability: the ability to handle and adapt to increases in demand.

Ecommerce Marketplace

An ecommerce platform gives you full control over your online store, and full visibility into your distribution network. You don’t have to follow any marketplace restrictions or regulations, allowing for greater choice and flexibility in terms of your product assortment, fulfillment and distribution channels, and overall operations.

You’re the one sourcing and managing business partnerships with 3PLs, parcel carriers, and other links in the supply and distribution chain. If there’s a disruption, you’re able to deal with it directly instead of having to navigate unfamiliar marketplace infrastructure.

An ecommerce platform is potentially less scalable—you don’t have access to the resources, digital bandwidth, workforce, and operational network of an established retailer marketplace.

An online marketplace gives you less control over your storefront and brand. There might be product restrictions (type, materials, dimensions, weight) and fewer options available for logistics and fulfillment providers, parcel carriers, etc. Supply chain disruptions might be more complicated to navigate.

That said, it might be easier to capitalize on consumer trends. For example, if a certain product goes viral and you have the ability to quickly add it to your store, the marketplace has a built-in audience of people likely to search for that product and find your offerings.

An online marketplace is an established shopping destination designed to accommodate millions of visitors, with a safety net of money and resources. Overall, a marketplace offers greater scalability.

Branding and Audience Engagement

Ecommerce Marketplace

One of the biggest advantages of an ecommerce website is unique, memorable, consistent branding. You have full control over the design, layout, navigation, etc. of your website and marketing materials. The only branding on your website is your own.

It’s also easier to collect data such as customer emails in order to build marketing lists and maintain communication with previous customers, keeping them updated on new releases, sales, and other promotions.

When a customer visits your online store, it’s like walking into a brick-and-mortar boutique—the experience is simple and straightforward, without any distractions, on-site competition, or clashes in messaging. They’re more likely to remember your brand name—and seek it out again in the future.

This is one area where online marketplaces fall short—at least for businesses interested in brand recognition and awareness. In general, marketplaces provide limited access to customer information. All digital touchpoints, interactions, and transactions are managed by the marketplace platform.

Sellers might have access to some data (page hits, conversion rates, etc.) but not the full picture. There’s no opportunity for email capture or similar customer retention tactics. (For example, Amazon does not share customer emails with sellers.)

You can customize your storefront, but everything else is marketplace-branded. Your products stand out less in a sea of competition. If someone asks one of your customers, “Wow, where did you get that?” It’s likely they’ll say, “I got it on Amazon” rather than, “I got it from Brand Name.”

This all sounds pretty negative—but there are plenty of ways to make up for a lack of branding. For example, packaging inserts that offer an incentive for customers to visit your website, encouraging audience engagement through other channels.

Technology Capabilities

Ecommerce Marketplace

With ecommerce, your capabilities depend on your digital infrastructure. If you build a website from scratch, it’s up to you (and/or your web developer) to decide which tools and technologies to utilize, how much traffic to accommodate, and so on.

If you use an ecommerce platform, the essential web design and ecommerce tools are included in the service—i.e., the house is built, you just have to furnish it.

In terms of your broader operations, your capabilities depend on your storage and fulfillment network. If your 3PL provider uses outdated technology or legacy infrastructure, that limits your business. It’s important to choose partners with an eye on the future, not a foot stuck in the past.

When evaluating potential 3PL partners, feel free to ask about their current and future plans to incorporate new technologies into their workflow.

With a marketplace, your capabilities depend on the marketplace platform. One major advantage of selling on a marketplace is that you’re not responsible for tech support—if there’s an issue, it’s up to the marketplace administrator to resolve it. You also don’t have to worry about “traffic jams” or other issues that can affect independent domains.

In terms of your broader operations, it depends on whether you’re using in-house storage and fulfillment services or outsourcing to a 3PL. There are pros and cons to both—whether you go for one or the other, or a combination, depends on your business needs.

Marketplace infrastructure makes for a highly convenient customer experience, especially at checkout—most customers will already have an account with their payment and delivery information set up, allowing for quick and easy purchases. For ecommerce websites, it takes extra work to get customers past the checkout hurdle.

Time and Money

Ecommerce Marketplace

Ecommerce websites—built from scratch or with the help of an ecommerce platform—requires a bigger initial investment. It’s hard to bring in organic traffic, meaning you have to spend time and money on cross-channel marketing campaigns.

You have to make sure your website is as easy, convenient, and enjoyable to navigate as possible. Even when you’re using a platform with built-in tools, making a purchase requires the customer to navigate an unfamiliar website—as opposed to a marketplace where they’re familiar with the layout and they already have an account.

All of this marketing, website maintenance, customer relationship management, etc. means ecommerce is more costly up front. However, the only platform fee is the price of service—you don’t have to worry about additional charges stacking up.

Selling on a marketplace is definitely more cost-efficient up front. You don’t have to build or design a new website. Of course marketing is still important, but you don’t have to worry about driving traffic to the marketplace. The customer base is already there—your goal is to stand out from the competition and convert leads.

Your primary expense is whatever it costs to set up and maintain your online storefront. However, many marketplaces charge additional fees for services such as high or low order volume, higher product rankings, referrals, payment processing, sales commissions, and value-adds like custom packaging or shipping labels. Small fees can add up quickly to decrease your profit margins.

Customer Analytics

Ecommerce Marketplace

An ecommerce platform gives you full access to customer data, plus the ability to collect opt-in data such as emails. Direct access to customer data—site activity, ad clicks, touchpoint interactions, etc.—not only informs data analytics for marketing campaigns and other decision-making, but it allows you to communicate with customers, provide personalized customer service, and direct your marketing budget toward targeted ads to improve conversion rates.

As mentioned above, online marketplaces allow only limited access to customer data. There’s no way to directly communicate with customers unless they go to your website later, and you won’t gain any insights as to why a customer chose your product over a similar one or vice versa. You have far less insight into the customer journey.

Choosing between ecommerce platforms, marketplace, or both for your online business

Online store vs. marketplace: key differences
Online store/ecommerce website Marketplace

Two parties involved (merchant, customer)

Three parties involved (merchant, customer, administrator)

Online store offering products from a single seller

Online shopping mall offering products from multiple sellers

Website owner = store owner

Website owner = marketplace administrator

Total control over brand and branding, pricing, packaging and boxing, logistics and fulfillment, customer service, etc.

Less control over brand and branding, pricing, packaging and boxing, logistics and fulfillment, customer service, etc.

No built-in customer base—harder to get eyes on product

Built-in customer base—easier to get eyes on product

No immediate competition—customers are only seeing your products on your website

Immediate competition—your products are listed right next to similar offerings

Store owner is responsible for handling entire operation

Marketplace administrator handles certain aspects of operation

Simply put, there’s no “one-size-fits-all” answer. Both methods have pros and cons. It really just depends on what works best for you and your business. 

Many brands utilize both methods: accepting customer orders via their website and via mini storefronts on various online marketplaces. Multichannel and omnichannel operations are increasingly necessary in the fast-paced world of digital retail, as businesses want to expand their reach and add as many new sales and distribution channels as possible. 

The downside of selling products in multiple sales channels? It makes your operations more complex—especially in a multichannel setup, where your sales channels are not integrated and you have to maintain separate inventories and digital ecosystems for each channel. 
In an omnichannel setup, your sales channels are connected through a data integration tool. This allows for greater visibility, data collecting, and data sharing throughout your supply and distribution network—though it can be difficult to implement without the help of an experienced omnichannel fulfillment provider.


In this guide, we covered:

  • The definition of ecommerce platform vs. ecommerce marketplace 
  • Key differences between ecommerce platforms and marketplaces 
  • Pros and cons of selling on an ecommerce platform vs. marketplace

We hope you found this guide helpful and informative! 

Still have questions about ecommerce? Connect with us—we’re here to help. 

Looking for an ecommerce fulfillment solution? You’ve come to the right place. 

We’re EcomHalo: your full-service ecommerce fulfillment provider. 

Our cloud-based digital dashboard integrates seamlessly with top ecommerce platforms, marketplaces, and shopping carts—providing real-time visibility of all orders across all your sales channels. Your business, at a glance.  
Request your FREE 15-minute consultation call to receive:

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Julie Massey
Julie Massey

Julie Massey is a dynamic business development leader with a decade of experience and a consistent record of achievement in SaaS, logistics, medical device and pharmaceuticals. Julie spent eight years in healthcare sales gaining broad experience across capital equipment, medical devices, and pharmaceuticals with companies ranging from start-up to Fortune 10. She has worked with such companies as WalkMed Infusion, AmerisourceBergen and Johnson & Johnson.

Julie is a graduate of the University of Alabama, a travel and fitness enthusiast, and currently resides in Fort Lauderdale with her fiancé Ryan and their dog Moose.