Marketplace - a better choice than an online store?

Allegro, Zalando, Empik, Morele.net, Amazon, eBay... Both locally (within one country) and globally available marketplaces could be mentioned endlessly. What is more, one could even say that sometimes we use a website without realizing that it has all the features ascribed to typical shopping platforms. Why is there a boom in this type of solutions, which are now called the leaders of the eCommerce market? Why are we so eager to buy via online trading platforms? And finally - is this solution, that owners of e-businesses should consider?

Marketplace statistics - for a good start

Where is the best place to start? Of course - with numbers! Recently prepared estimates indicate that trading platforms currently account for about 62% of the eCommerce market, and, according to the forecasts, this value will grow in the coming years to a level of up to 75%. Why such big numbers? Everything changed in 2020 with the beginning of the COVID-19 pandemic, when brands that had so far operated mainly in the offline channel, not going to fall out of the market for too long, carried out a digital transformation in a very short time. Some of them decided to set up their online store (either on an already owned or quickly acquired site), while another part decided to take advantage of the opportunities offered by local and global, specific, and industry-wide marketplaces. This approach translated into sales increases of up to 40%. This was aided by the positive user experience on online trading platforms.

Such a boom in marketplace shopping cannot be ignored! What's more, it's not just the existing data that supports this fact - although we write extensively about the data (including marketplaces) in our ebook,"How did the pandemic change markets".

A few words about user experience on trading platforms

You visit the website, enter the most relevant phrase in the search engine, use the matching filters and in just a few seconds you get a list of products most suited to your expectations. You read through the offers - features, prices, delivery and payment terms, delivery time - and then choose the one that's perfect for you. It saves time, it's easy to find the products you need, and it's comfortable to navigate the website while shopping because of the very friendly navigation - why not take advantage of it?

Customers confirm that the user experience when using online shopping platforms is at a very high level. Nowadays, consumers believe that shopping online should be as pleasant as shopping in a stationary outlet. If there are problems with the loading speed, navigation, or searching for the necessary product, they will give up. Well-known and well-liked marketplaces are not exposed to such problems (and when they appear, they solve them very quickly), which makes them significantly more attractive to consumers.

Why do consumers buy from marketplaces?

Consumers have fallen in love with shopping on Allegro, Amazon or Zalando because of benefits such as:

• possibility to choose necessary products from a very wide assortment (from the most basic to specialized),
• possibility of comprehensive comparison ( confidence in choosing the best product),
• the ability to buy a wide variety of products in one place - without having to visit several different stationary stores or visit several websites,
• a relatively high level of security when using the service (due to the steps taken in this regard by the platform provider),
• in some cases it is possible to order products of different brands in one shipment.

Of course, as with any other area, there are also disadvantages to buying from a marketplace - such as the lack of direct interaction with the seller or the lack of awareness of the brand from which you are buying the product. You may also have to bear shipping costs separately in case of an order consisting of products from several sellers. It has to be said, however, that the disadvantages mentioned above are disproportionate to the benefits for the consumer and make it necessary to consider whether marketplace platforms are a worthwhile business idea.

Marketplace - how it works

Do you remember from your childhood how you would come to the market in the morning, look at the vegetables from different traders and then choose the one that looked the best and had the best price for you? Marketplace works similarly - it is an online trading platform where diverse sellers, both individuals, and businesses, can advertise their offers. It provides consumers with access to a really wide range of products, depending on the segment and scale of the business. The user enters the desired product into the search engine and receives several offers tailored to the query. The user is then redirected to the seller's website and, based on the available information, decides whether to accept the offer or not. The purchasing process is very simple and intuitive, which significantly saves the time for the consumer.

The platform provider is responsible for the transaction between the seller and the buyer - the conclusion of the contract by placing and paying for the order takes place on the platform with the involvement of the operator. Then, depending on the individual marketplace policy, the platform can be responsible for logistics or pass on the delivery service to the seller. The seller makes use of the ready-made infrastructure and the group of customers who are registered in the marketplace, on a subscription or commission basis. The following figures prove that it is worthwhile:

From the principles of marketplace operation described above, there are the most important advantages and disadvantages of this solution, which we present in the table below:

Marketplace for retailers

Pros	Cons
prepared and tested engine	the need to pay a commission on each transaction
access to a wide audience	high competition at the same location
no need to search for customers and conduct marketing activities on your own	fewer opportunities to promote your own brand
easy and intuitive system	limited possibilities of competition, offer personalization (e.g. free adjustment of discount policy for loyal customers), building customer purchasing habits
no need to incur service development costs	no possibility to create a database of people who have visited the website

As you can see, every advantage of a marketplace stands in opposition to a significant disadvantage for a brand thinking about becoming a retailer. Particularly painful for an owner who identifies with their brand can be the lack of ability to personalize the user experience - in this regard, you can only use functionality provided by the owner of the trading platform.

Setting up an online store?

You already know the advantages and disadvantages of operating in a marketplace - you wonder what this aspect looks like in the case of online stores. Among the advantages of individual eCommerce, it is mandatory to mention full control over the business, which can be seen in such elements as:

• ability to customize every element of your website according to your expectations and user experience guidelines,
• creating a personal brand that will build its competitive advantages by the established mission, vision, and values that matter to the owner,
• undertake any marketing and advertising activities in your chosen offline and online channels,
• possibility of analysing the effects thanks to advanced analytical tools,
• ability to plan brand and product development within strategic objectives.

Of course, focusing on running your online store is by no means without its drawbacks. Starting from the cost of technology, the involvement of developers, time required to launch it and update, implementing changes, developing the site, and paying delivery and payment operators - you never stop working on your online store, it is the only way to keep your e-business running smoothly. This cannot be forgotten if you want to compete in a virtual world of very intensified competition.

Online store vs. marketplace

Marketplaces and online stores are competing to see who will get a bigger piece of the eCommerce pie - reach a larger customer base, build loyalty and make profits. There is nothing surprising because the answer to the question "which solution is better?" will be (classically in such situations) "it depends". It depends - and it depends on many factors:

• Your needs and capabilities (especially financial),
• the nature of the market in which you operate or plan to operate,
• the specific products or services available in your offer,
• the sales strategy you have adopted (do you emphasize eCommerce, or maybe you combine two channels),
• the stage your business is at,
• as well as other individual issues.

So it is necessary to make a decision that will be best for your business.

Synergy of all solutions

A large number of sellers decide to be present in two places - they have their online store, taking a creative approach to the process of building brand recognition, and at the same time, they place their offer on Allegro, taking advantage of the group of consumers available in both places. Online platforms are now characterized by extensive possibilities of integration with various external systems - marketplace, price comparison sites, and others. In this way, you can provide your customer with omnichannel sales, which will certainly be positively received.

And if you've been active on online shopping platforms for a long time, you know that your product sells very well, and what's more, you've built a dedicated audience, it might be a good time to consider setting up an online store to build your brand. More success in the world of eCommerce? Who wouldn't!

How about your own marketplace?

Znany Lekarz at Klinika.pl in the medical industry, Zalando, Vinted or Domodi in the clothing industry, Allegro and Amazon for broadly defined eCommerce with various product categories... It should be said that the marketplace concept works well in many areas of the market, winning the appreciation of online consumers. Maybe you see a need for this type of platform in another market area? No matter which solution is on your mind, contact us to carry out the project. Together we will build an online store on Magento, Shopware or marketplace, that will meet all your expectations.