Ecommerce Platform vs Marketplace: What’s Best for Your Online Store?
Congrats! You’ve finally decided to take the plunge and start selling online.
It doesn’t matter if you’re a first-time retailer or have extensive brick-and-mortar experience, you’ll run into the same multi-faceted question: Where should you launch your business—via an ecommerce platform or an online marketplace?
The key difference is this: Ecommerce platforms give you control over branding and customer experience, whereas marketplaces offer built-in traffic for a price.
Need expert help selecting the right tool?
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But that’s just the tip of the comparison iceberg. In this guide, we'll explore both options in detail and provide a head-to-head ecommerce platform vs. marketplace analysis.
Each option has its perks and shortcomings, and your choice will largely depend on your business needs and resources.
By the end, you’ll be able to figure out which solution best suits your goals, so you can stay motivated throughout your new venture.
What is an Ecommerce Platform?
An ecommerce platform is a software solution that lets you build and run your online store with ease.
It often comes with proprietary tools or integrations to help you customize web pages, add product listings, process payments, and fulfill orders.
Many companies rely on these solutions, including industry legends like Kraft Heinz, a prominent Shopify user, and Coca-Cola and Krispy Kreme, which settled on Adobe Commerce (formerly Magento).
It’s fitting that these major brands went for the two ecommerce platforms with significant market shares.
But depending on your business needs, they may not be the right for you.Our roundup takes a look at the best ecommerce platforms out there to help you find your best match.
How ecommerce platforms work
Ecommerce platforms have useful features such as intuitive templates and plugins that facilitate website branding, marketing, and management without needing extensive technical skills.
These functionalities grant you complete control over design customization, payment processing, search engine optimization (SEO), and social media integration.
Let’s look at how some platforms can do that:
- Shopify and Wix Ecommerce offer an intuitive drag-and-drop builder to simplify website creation from the ground up while helping you achieve your dream online storefront.
- ShopWired and Shift4Shop have flexible built-in solutions for end-to-end payments, perfect for B2B and B2C businesses.
- WooCommerce’s robust WordPress integration can help with content management system (CMS) needs—suitable for those who run a content-rich ecommerce site.
- Subbly specializes in subscription ecommerce businesses, so they have unique features like subscription-first inventory tracking and dynamic shopping.
These distinct features can help you weigh your options in the ecommerce platforms vs marketplaces cross-comparison.
You know your business needs better than anyone. Match those needs with what each platform brings to the table to maximize your investment.
Shopify’s got the name recognition, but these Shopify alternatives prove that sometimes, the underdogs have the best tricks.
Pros and cons of ecommerce platforms
Over 70% of the 9.8 million online retailers worldwide operate their ecommerce stores because professionally designed online stores make it easier to build authority and convert your target audience.
The downside, though: website ownership is a tough job for many. 81% of marketing teams seem to agree.
Running a site requires time commitment and upfront investment.
All responsibilities rest on your shoulders as well: marketing strategies, inventory management, and logistics.
Here’s a pros and cons summary of running your own ecommerce website:
| Pros | Cons |
|---|---|
| - Full control over branding - Customizable user experience - Higher profit margins - Scalable infrastructure | - Higher upfront investment - Visibility relies on ongoing marketing efforts - Inventory management and fulfillment responsibilities |
Ecommerce sites are a good investment for businesses eyeing growth.
However, startups and small businesses should be mindful that running an online store requires planning and investment.
What is an Online Marketplace?
An online marketplace is a shared platform where multiple vendors can list and sell their products or services.
Built-in audiences shop around as sellers vie for visibility in search results.
Amazon ranks as the most popular digital marketplace as of today. Brands like Yarniss, an arts and crafts store, can thrive online without having its own online storefront.
Yarniss sells mainly on Amazon and Walmart:
For established brands, you can create a curated, brand-specific marketplace where you can invite other vendors to list their products on these ecommerce marketplaces:
How digital marketplaces work
Marketplaces require you to create a seller account and verify your identity before posting product listings.
Once the store is live, you’ll get real-time notifications for new orders to prepare shipment.
The marketplace processes payments for delivered items and deducts commission fees before remitting funds to your account.
You should comply with the platform’s terms and conditions throughout this process to maintain your store.
Pros and cons of marketplaces
The biggest perk: You can ride a marketplace’s coattails for credibility and sales velocity.
49% of shoppers use a marketplace website or mobile app to start and complete their purchases, so you get instant access to a large customer base with a strong buying intent.
The storefront is easy to set up and launch. However, customization is limited only to product listings, SEO-rich descriptions, and high-quality product images.
You won’t have to pay anything upfront, but there are ongoing fees that can eat into your profits. You also can’t collect customer data for targeted marketing.
In a nutshell, the ecommerce marketplace’s benefits and drawbacks are as follows:
| Pros | Cons |
|---|---|
| - Access to a large audience - Easy and quick storefront setup - Low initial investment - Simplified logistics and order fulfillment | - Limited branding customization - Dependence on platform rules - High competition with sellers in your niche - Fees eat into profits - No customer data access |
Now, let’s take a closer look at how building an ecommerce site stacks up against selling on marketplaces.
The Showdown: Ecommerce Platform vs Marketplace—8 Key Differences
Every business operates with distinct goals.
This side-by-side ecommerce platform vs marketplace comparison will help clarify your options.
1. Ownership & control
Having full control over your online presence defines how customers experience your brand.
And by “experience,” that means every touchpoint—from initial homepage interaction to the checkout process and post-purchase support.
The ownership and control you have over your store can help build this consistent brand identity.
Ecommerce platform
Ecommerce websites offer full ownership and control. You can customize everything, including web design, product presentation, page navigation, and checkout processes.
Comfort food brand Keep Life Tasty entered the ecommerce market using Shift4Shop. Owners Llance and Lori Kezner needed a platform that could support the wholesale and direct-to-consumer parts of their business.
Shift4Shop was a perfect fit because of its Customer Groups feature, which shows customers different prices based on their segmentation.
Like Shift4Shop, ecommerce platforms tend to have features or integrations that allow brands to design their website how they see fit.
Additionally, they grant you any website-related data and full website ownership.
Marketplace
On a marketplace, you’re bound by pre-defined templates and navigation formats.
There’s little customization in terms of navigation and design. You only have to enter or upload your branding information as the platform allows.
For instance: ecomm marketplace Nautical Commerce will base your store menus on the following designated fields:
The only upside is that the process is simple. Marketplaces remove the nuts and bolts of securing and designing a website.
Winner: Hands down, ecommerce platforms. If you place a high value on ease of use, you can shop around for beginner-friendly options like Wix Commerce.
With our ecommerce platform Shopify, we have full ownership and control over our site—everything from branding to customer data is ours.
Marketplaces, on the other hand, offer less control, especially when it comes to customer interactions and how our brand is presented
2. Traffic & SEO
Traffic and SEO go hand in hand to reach a larger audience and connect with the right customers.
Getting people to see your products is important, but you need to also think about the quality and sustainability of the traffic you acquire.
Ecommerce platform
When you build your own ecommerce store, your target audience won’t be aware that it exists unless you make it visible.
You’ll have to roll up your sleeves and work on various SEO, email campaigns, and content marketing strategies to make that happen.
These initiatives work together to boost brand awareness and attract potential customers, and ecommerce platforms support them with built-in or integrated tools.
However, you need to be prepared for the grunt work.
The good news: Once you’ve hooked the right people in with superior product quality and customer experience, they’ll always know where to find you.
Marketplace
Marketplaces, on the other hand, are like bazaars full of competing stalls with eye-catching deals and displays to lure in passersby.
You’ll have to make yours stand out or use ads to get ahead.
But since it comes with existing traffic, it’s a decent place to build a reputation for your online business without spending a fortune.
The process remains the same, however.
In a marketplace environment, staying top of mind isn't usually the game. You have to keep outdoing your rivals with clever ads and product descriptions to land sales, instead of winning your target audience’s hearts.
One caveat: When you’re building a marketplace from scratch, things are twice as hard. You’ll have to implement seller outreach and other initiatives to expand your customer base.
Winner: Marketplaces cos you don’t have to scramble for visibility. The traffic is already there, so your time is better spent selling rather than searching for customers.
Marketplaces create a bit of a double-edged sword because you have more audience potential and a high level of competition from established brands.
You decide what happens with an ecommerce platform like Shopify.
You can optimize every page, tweak meta tags, build SEO-friendly site structures, establish backlinks, and build everything from the ground up with few limitations.
You’ll have to work to drive organic traffic through SEO and paid ads, but you also own 100% of that traffic and can build deeper, more personal relationships than simply standing out on a marketplace as the best choice of the many options.
3. Marketing & brand recognition
The internet is a competitive market.
Fostering strong emotional connections with customers through targeted, intentional marketing is your differentiator.
Ecommerce platform
Ecommerce platforms let you build your brand identity as you wish.
You can position product categories, promotional banners, testimonials, and click-to-action (CTA) buttons to guide your customer’s shopping journey.
Take a look at the persuasive branding on this Volusion-built website by Antonelli’s Cheese. The bold brand colors and hero image help boost brand recognition.
Marketplace
On a marketplace, your brand can slip through the cracks since there are many options to choose from.
Plus, you have little control over your visibility because the platforms’ algorithms determine which products go in search results or related product recommendations.
You’ll have to run sponsored product ads or pay-per-click (PPC) marketing campaigns to gain more exposure.
At the end of the day, shoppers are most likely to remember the marketplace, not your brand.
Winner: Ecommerce platforms are an integral component of building an impactful brand. They offer the creative freedom to craft your brand’s identity exactly how you want it.
From where I stand, platforms give you the freedom to create a distinct brand identity.
I’ve seen clients on Shopify develop cult followings through creative marketing.
On marketplaces, while you might reach more eyes, your brand can get lost in the sea of products.
4. Customer data & engagement
What else could possibly help you connect with your audience on a personal level if not their data?
These nuggets of information are like cheat codes for understanding and addressing their pain points and how they perceive your products.
Ecommerce platform
Your ecommerce platform can collect all customer data, which you can analyze to build lasting relationships through direct follow-ups, personalized offers, and remarketing.
Ecommerce platforms, such as Adobe Commerce, offer advanced analytics tools (Adobe Analytics) and APIs (with tools like Hubspot, Klaviyo, and Google Analytics) to track customer behavior in one place.
This is especially handy when you’re marketing or selling across multiple channels.
Having comprehensive insights helps you reward repeat customers and encourage positive word-of-mouth to convert passersby and first-time buyers into long-term advocates.
Marketplace
Marketplace merchants have limited access to customer data in general. The platform manages buyers’ contact and shopping information, restricting engagement post-sale.
Etsy has Etsy Stats, for instance, where you can only see details like how shoppers located your shop, and listing views, favorites, and revenue.
For B2B sellers, you can find solutions that support more data tracking and monitoring.
Since B2B business models are more relationship-focused than transactional, B2B marketplace options like BigCommerce offer access to customer insights to foster loyalty and repeat business.
Here's what a BigCommerce marketing report looks like for a marketplace administrator:
Meanwhile, vendors selling on a BigCommerce marketplace can opt to purchase product, customer, and marketing insights as an add-on to their tiered subscriptions.
The insights you and your partner vendors can tap into are pretty much tied to the marketplace’s infrastructure.
Winner: Ecommerce platforms win this round. It gives more contextual information for growing your business and getting to know your customers better.
Customer data and engagement are more limited on marketplaces like Etsy. When you don’t own the customer data completely, it affects how you build repeat business.
5. Initial setup cost
Knowing the setup costs upfront helps set realistic expectations and budget constraints. Avoid unforeseen costs that could delay your store's launch.
Ecommerce platform
Initial setup costs for building your ecommerce website include but aren’t limited to website builder subscription, domain name, payment gateway, and third-party integrations.
You may also need to hire web development experts if you or your team lack the technical skills.
This can put a big dent in your startup funds. Working with Shopify website developers, alone, can cost you up to $15 to $95 per hour.
The wait is also another factor. The timeframe from planning to launch and testing for a standard ecommerce store is 3 to 6 months.
Even with cheap ecommerce platforms, you still will be looking at a higher investment to get started.
Marketplace
When opting for a marketplace, you can lean on its out-of-the-box infrastructure to expedite the process.
For smaller brands, you can quickly become an Amazon seller in as short as 48 hours (including approval time).
But even big enterprises like METRO AG used Spryker to create a standardized back-end that accommodates diverse retailer needs across regions.
The platform’s API-first architecture facilitates rapid marketplace deployment without extensive integration costs.
Plus, depending on the platform, you only pay when you make a sale, which can be enticing for startups looking to test the waters without committing substantial resources.
Winner: Marketplace is a low-stakes way to launch your business fast. You can start selling almost immediately with minimal upfront investment.
Marketplaces can be faster and cheaper to set up since they handle a lot of the backend logistics, but they come with high ongoing costs.
Owned ecommerce websites require a greater initial investment in development and design, but they pay off over time because you avoid hefty marketplace fees.
Dispensaries on marketplaces often give up 10-20% in fees for each transaction, cutting into profits.
6. Inventory management and fulfillment
An efficient inventory system allows you to track what’s selling, what isn’t, and when it’s time to reorder.
The selling environment you choose determines your control over these variables.
Ecommerce platform
Managing inventory levels and fulfillment processes with an ecommerce site falls entirely on your shoulders.
Some platforms like Shopify have built-in inventory management to automate these tasks.
Wix has Wix Store Reports, which deep dives into product performance. This tool even goes so far as to handle product variants, helping you sharpen SKU management to reduce chances of out-of-stock events.
And if you want to improve your inventory management and forecasting prowess, third-party inventory software solutions like Sage and Cin7 can lend a helping hand.
Check out our top recommendations for inventory management software:
Marketplace
With some marketplaces, you can lean back and relax. They can take certain tasks off your plate, such as storage and fulfillment.
Amazon’s Fulfillment by Amazon (FBA) and dropshipping solution Mirakl are perfect examples of this.
Some require additional fees, but it could be a huge advantage if you sell a diverse range of products your warehouse can’t hold.
Winner: It’s a tie!
Marketplaces handle all the heavy lifting for startup merchants. You won’t need to stress over logistics at first.
But ecommerce platform integrations provide more comprehensive support, which you’ll want to have for something as critical as inventory management and fulfillment.
On an ecommerce platform, you can implement automated systems (APIs) to manage inventory and scale your operations efficiently.
For example, if you partner with suppliers, they can automatically refill your stock when inventory runs low.
With marketplaces, you may have to manually update your inventory, and scaling can be more challenging due to marketplace limitations.
However, services like Amazon FBA can help with fulfillment but at a higher cost.
7. Profit margin
Your profit margins are a key performance indicator (KPI) of your success.
The higher the margin, the healthier your bottom line and the more you can fund growth initiatives.
Ecommerce platform
No one can take a cut off your profits (except perhaps payment processors and payment gateways) when you run an ecommerce site.
You’re also safe from sudden policy changes that could affect your fees.
Above all, you can list as many products as you want and set your product prices without marketplace-imposed constraints.
Marketplace
Marketplaces won’t break the bank upfront, but monthly charges can add up.
Target Plus (Target’s marketplace) doesn’t impose a fixed fee every month. But for every sale you make, you’re expected to fork over a category-based commission, typically between 5% and 15%.
Meanwhile, Pepperi charges $500 per month for basic B2B marketplace, field sales, and merchandising tools. If your sales fail to keep up with these costs, profit margins can suffer.
Winner: Ecommerce platforms come out on top. No hidden fees and commissions will nibble at your earnings, so you get to keep more of what you make.
Owned ecommerce sites provide better profit margins since you’re not giving a percentage of each sale to a marketplace.
Over time, this can make a significant difference, especially for high-volume dispensaries.
Clients I’ve worked with have seen up to 15% improvement in profit margins by switching from a marketplace to an owned platform due to eliminating fees.
8. Scalability
At some point, you’ll launch new products and expand your reach.
If that’s your goal, a scalable model ensures you’re not stuck with rigid structures that can hinder your growth.
Ecommerce platform
You can grow your ecommerce site on your term. However, scaling also means more bottlenecks in operations.
But don’t worry, the right platform can ease these burdens and even prepare you for growth.
Case in point: Sana Commerce Cloud helped B2B and B2C garden furniture brand Sunsit to tap into new markets and grow its business by simplifying channel and product complexities that could otherwise hinder its growth.
Because of this, Sunsit enjoyed higher conversion rates, with 62% more unique shoppers and 15% higher turnover.
Marketplace
Marketplaces grant instant access to millions of potential new customers.
That itself proves it’s an inherently scalable option, provided you know how to pierce through the clutter of countless competitors.
On Amazon alone, brand owners reported increased sales by over 22% year-over-year.
However, you’ll be stuck in the endless loophole of promoting your brand without the benefits of a recognizable brand.
Winner: Ecommerce platforms win in scalability. Outside the marketplace box, your growth isn’t constrained by any pre-set framework.
Marketplaces have built-in scalability, but you’re also limited to the solutions your platform offers.
We wanted something that maintained and grew profits as we scaled, so we kept to our own platform.
It requires a bit more effort and expertise, but the reward is more money in your pocket and flexibility to build your business.
At some point, many brands will outgrow the marketplace in which they establish themselves, and we wanted to plan for that growth from day one.
Side-by-side comparison: Ecommerce platforms vs online marketplaces
Here’s a visual breakdown of the ecommerce platform vs. marketplace comparison.
Keep these main differences as you evaluate the pros and cons of your preferred solution.
| Ecommerce platform | Marketplace | Winner | |
|---|---|---|---|
| Ownership & control | Full control and customization over the entire website | Limited design control with pre-configured templates | ✅ Ecommerce platforms |
| Traffic & SEO | Requires active SEO and marketing to generate traffic | Built-in traffic with high buyer intent | ✅ Marketplace |
| Brand recognition | Build a unique, strong brand presence | Marketplace branding dominates, less visibility for you | ✅ Ecommerce platforms |
| Customer data & engagement | Full access to customer data for targeted marketing | Limited access to customer data (exceptions for B2B) | ✅ Ecommerce platforms |
| Setup cost | Higher upfront costs, including website development | Low initial investment, pay-per-sale fees | ✅ Marketplace |
| Inventory management | Full responsibility for managing inventory, but with more control | Fulfillment services handle logistics, less control | ➡️ Tie |
| Profit margins | No marketplace fees, keeping higher margins | Ongoing fees reduce profit | ✅ Ecommerce platforms |
| Scalability | Flexible scaling but requires more resources | Immediate scalability but comes with high competition | ✅ Ecommerce platforms |
Overall winner: Ecommerce platform
Comparing ecommerce platforms vs marketplace solutions, the former is the clear winner.
Marketplaces offer free traffic, but they lack control, profitability, and marketing flexibility. If the platform fails, your business goes down with it.
Ecommerce site’s long-term benefits of brand ownership, adaptability, and deeper customer connections make it worth the hefty investment.
Before concluding your decision, visualize the impact you want your brand to leave on the market. Go for the platform that can back that vision.
Marketplace vs Ecommerce Platform: Choosing the Right Model for Your Business
While we do have a clear showdown winner, your needs take precedence. Every business has its own goals, resources, and growth plans.
Below, I’ll walk you through when a marketplace might be your best bet and when investing in an ecommerce platform is the right one for you.
When a marketplace is the best option
The marketplace is best for you if you:
Have a limited budget: Marketplaces are an easy, low-cost way to enter the ecommerce market.
Need an immediate customer base: Marketplaces have an existing, often wide, customer base that you can tap into immediately.
Are after a low-risk commitment: Marketplaces offer a lofty playground for experimenting with ecommerce. It’s also great for brands looking to test their expanding product lines.
When an ecommerce platform is the best option
Ecommerce platforms suit your business best if you are:
Looking to establish your brand: Ecommerce platforms are brimming with tools to help you create the online store of your dreams—one that best reflects your brand identity.
Gaining full control: Ecommerce platforms give you control over the design, product offerings, and customer data of your site.
In it for the long haul: Ecommerce platforms have higher upfront costs, but if you’re thinking long-term for your business, it’s a better investment.
Platforms enable you to avoid ongoing marketplace fees and build more direct relationships with customers, which can boost your profitability over time.
Let’s make things easier with a decision tree:
- Are you working with a low budget?
- Yes → Consider a Marketplace (proceed to sell on existing platforms like Amazon or Etsy).
- No → Proceed to the next question.
- Do you need immediate access to customers?
- Yes → Marketplace is likely a better fit (large audience and quick sales).
- No → Proceed to the next question.
- Is brand identity and customization integral to your business?
- Yes → Consider an Ecommerce Platform (allows you to control the brand and the customer experience).
- No → Proceed to the next question.
- Are you looking for long-term growth and higher profit margins?
- Yes → An Ecommerce Platform is the best option.
- No → Proceed to the next question.
- Do you want the flexibility of using both channels?
- Yes → Consider a Hybrid Model (use a marketplace for immediate sales and an ecommerce platform for long-term growth).
- No → Marketplace might still be your best choice for testing the waters.
The Hybrid Model: Best of Both Worlds?
If you still feel torn between the two, I have awesome news: Hybrid models exist—if you can afford them.
You can count on marketplaces for immediate and steady sales, and ecommerce platforms for long-term growth.
According to Greg Zakowics, senior ecommerce expert at Omnisend, a marketing automation platform, going hybrid strikes a balance by maximizing the pros and minimizing the cons of both solutions.
The hybrid approach helps brands diversify their revenue streams by not relying on a single channel for sales, allowing them to shift the risk.
It can expand customer reach by generating traffic from multiple sources and identifying how shopping trends on one channel may impact another.
One brand that does this well: Jettproof.
Founder Michelle Ebin describes how the hybrid approach help them better engage Jettproof’s audience: “We drive new customers to our Shopify store with targeted Amazon ads, then nurture them with personalized content and offerings.”
On the downside, juggling two distinct platforms can be a source of headaches for newbie ecommerce sellers.
Gavin Yi, founder of Yijin Hardware shares that one of the most conspicuous mistakes in the hybrid setup is the inconsistent pricing, deals, and inventory.
He explains:
Since you are using two different systems, doing things manually can cause differences in inventory and pricing.
Consumers might get confused about why it’s sold out on the marketplace while it still has remaining stocks on your platform.
When an order pushes through, delays might happen due to insufficient inventory.
The solution is using software tools that can bridge the information gap between the two platforms.
Enter: multichannel software, an extra automated brain for your ecommerce store.
Multichannel software helps you create unified customer experiences and fix process inefficiencies that can hurt your business in the long run.
It can streamline both sales channels, along with your inventory management, order processing, and customer service platforms.
We’ve reviewed the top multichannel software solutions here, so you don’t have to worry about finding the right one for your business:
Final Thoughts
Ecommerce platforms and online marketplaces both have distinct advantages for brands looking to launch their brands.
If you have enough resources, you can tap into these benefits with a multichannel solution.
If not, you already possess enough information to make the best decision for your business.
Should you decide to go for ecommerce platforms, here are few more resources you’ll certainly learn a lot from:
- How to Choose an Ecommerce Platform
- Best Multi-Store Ecommerce Platforms to Expand Your Brand
- Best Ecommerce Platforms For Small Businesses
- Best Free Ecommerce Platforms for SMBs
- Best Ecommerce Platforms For Startups
- Best SaaS Ecommerce Platforms
- Best Ecommerce Website Builders
- Best Omnichannel Commerce Platforms
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