As you may know, eCommerce refers to “electronic commerce”, which is the online selling of products or services via digital channels. Nowadays, many popular brands sell their products not only in stationery stores but also on their websites or other places on the internet, taking for example, Nike or Adidas. Apart from usual websites where only one brand or merchant is selling, there are also places like Amazon or eBay that enable to sell products from many brands and companies. These websites are called multi-vendor marketplaces (MVMs). When deciding about selling online, it is crucial to know the difference between an eCommerce platform and a Multi-vendor marketplace, as this will determine your business strategy and growth.
Due to that, the aim of this article is to highlight the main differences between these two approaches to shed light on possibilities that the best eCommerce platforms can offer.
As usual, let’s begin with some basic information to know where we stand.
What is an eCommerce platform?
eCommerce platform is a software solution that offers all the tools necessary to run a store. Thanks to them, businesses can create a virtual storefront that allows them to display products, process and accept payments online, manage inventory, etc. In other words, everything is necessary to run an eCommerce website. What’s more, many eCommerce platforms offer more advanced functionalities and extensions to create a store that meets a company’s specific needs.
An eCommerce platform enables businesses to connect with customers globally and expand their reach beyond physical store locations. It also provides data about customer behavior, sales performance, and other statistics that allow businesses to optimize their operations and improve customers’ online shopping experience. However, visitors only see a ready product which is an eCommerce website, without information about the platform used to create it.
There is a wide range of products and services that can be sold through eCommerce stores, including physical goods such as clothing, electronics, and groceries, as well as digital products such as software, e-books, and music. Additionally, services such as consulting, coaching, and online courses can also be sold through eCommerce platforms. In other words, you can sell anything if the law allows you to sell it.
It’s important to know that eCommerce platforms differ in many ways, including price, scalability, purpose, and more. To understand it better, the next paragraph describes the most popular types of eCommerce platforms.
Types of eCommerce platforms
Here are four popular types of eCommerce platforms that can be distinguished when choosing the right one for online store owners. Each of these solutions has unique features, and it’s up to the company strategy and budget which one will be the best eCommerce platform for their business and goals.
Open-source eCommerce platforms
Open-source eCommerce platforms are a popular choice among web developers and technical teams due to their flexibility and the fact that the source code is publicly accessible without any fees. Users can freely modify the store’s design and introduce new functions with full access to the code. Moreover, open-source eCommerce solutions are regularly updated and developed by the community. However, it should be noted that the development of an open-source eCommerce platform or web hosting may still incur costs, despite the absence of licensing fees. Open-source platforms offer a wide range of functionalities and integrations on the global market; nonetheless, not all extensions are free. What’s more, you will need to hire a freelancer or a development agency if you lack programming skills to establish the website and secure it from potential threads.
SaaS stands for Software as a Service, and it is a cloud-based eCommerce platform. SaaS platforms allow users to create online stores using ready-made templates, making it a relatively cheap solution that provides a fast implementation. They are often called cloud/hosted eCommerce platforms due to the fact that they are hosted in the cloud of the company that developed them. This solution is very convenient and does not require much work as the platform provider is responsible for managing the infrastructure, security, and regular updates.
Access to the eCommerce software works on a subscription model basis. Although this solution is great and for small and medium businesses, this solution is rather insufficient to cover the advanced needs of enterprises due to the limited flexibility and customization.
In this case, the platform is created from scratch to meet the individual needs of an eCommerce store. This approach allows for almost unlimited customization and personalized functionalities, and the customer can have multiple channels to get the exact eCommerce store they want. Nonetheless, remember that this solution requires a big budget and patience as the implementation is time-consuming. Moreover, the cooperation between the customer and the programmer/development agency is crucial to create a desired online store.
What is a headless solution?
Worth mentioning here is a headless solution for eCommerce websites. But what exactly does “headless” mean? Simply speaking, headless eCommerce means separating front-end (part of the website that the user interacts with) and back-end (part of the website responsible for data processing and generating responses) from each other. This relatively new technology is growing in popularity each year for a reason. It allows to create several independent applications, each one assigned to a particular task, and work together as part of one integrated architecture based on API communication. This leads to greater flexibility and customization in the way the website is presented to the user, as developers can modify content on front-end, while still leveraging the existing back-end functionalities and not disrupting its processes (inventory management, transaction and payment processing, shipping, etc.).
Examples of eCommerce platforms
In order to have a better understanding of eCommerce platforms, here are examples of them. These platforms offer various features and tools to facilitate online transactions and streamline the buyer and seller’s process. Therefore, the choice of an eCommerce platform depends on the individual goals and business strategy of a company.
Sylius is an open-source headless eCommerce platform that provides businesses with a powerful and flexible solution to create and manage their online stores. Thanks to the Symfony framework, Sylius is highly customizable and adaptable to meet the specific needs of any online business. Whether you’re a small company just starting out or a large enterprise looking to expand your online presence, Sylius provides a robust eCommerce solution that can help you create an online store personalized just for your needs with a seamless shopping experience for the customers. Nonetheless, it works best for mid-market B2C projects and enterprises with advanced needs.
- Sylius (open-source)
- Sylius Plus
Shopware is another headless eCommerce platform based on the Symfony framework. In comparison to Sylius, it is a more standard solution with many out-of-the-box functionalities. Shopware is an intuitive, user-friendly platform that is best for B2B and B2C projects that require many functionalities that are easy to use, even for a non-technical person. Additionally, it is optimized in a mobile-friendly way (Shopware PWA), with built-in CMS and website builder to provide the best user experience. Also, it is great for marketing purposes thanks to built-in marketing tools and search engine optimization features. There are also many plugins available from the Shopware Store; however, most of them are paid.
- Open-source (free),
- Rise (600 USD/month)
- Evolve (custom pricing)
- Beyond (custom pricing)
Shopify is a SaaS cloud-hosted eCommerce platform that is a very popular headless solution for eCommerce sites focused on providing the best buying experience. It encompasses all functionalities necessary to build an online store and manage it. Shopify is easy-to-use with many free templates and plugins, which makes it perfect for small businesses that are new in eCommerce. Unfortunately, customization and content management are limited, and there are fees for each transaction.
- Basic (32 USD/month)
- Shopify (92 USD/month)
- Advanced (399 USD/month)
- Free trial available
PrestaShop is one of the most popular eCommerce platforms worldwide. It is an open-source eCommerce solution written in PHP language and based on the Smarty template engine. PrestaShop owes its popularity to being a free eCommerce platform, with a very intuitive administrator panel and miscellaneous free themes and modules that can be customized to create a professional-looking online store without the need for extensive technical skills. Another advantage is the very big community around it. Nevertheless, there is some legacy code in PrestaShop that may affect scaling. It is rather recommended for B2C companies with standard requirements and people who are just starting their journey in eCommerce and want to create a basic online store.
What is a Multi-Vendor Marketplace?
Multi-vendor marketplace is an eCommerce website that enables to sell products or services by third-party vendors. Unlike traditional eCommerce platforms, where a single business sells its own products or services, a multi-vendor marketplace brings together multiple sellers, creating a diverse range of offerings for customers to choose from. Multi-vendor marketplaces divide into many categories, for instance, fashion marketplaces, cosmetics marketplaces, etc.
Solutions for Multi-Vendor Marketplaces
There are various solutions when it comes to setting up an eCommerce marketplace. If you are considering creating one, take a look at these examples and see what solution suits you best.
Spryker Commerce OS
Spryker is an effective solution for B2B, B2C, and marketplace. It works as a modern eCommerce operating system using a headless solution. Due to its microservice architecture, it offers maximum efficiency and scalability. What’s more, it is flexible in terms of making changes in response to the rapidly changing business environment. Whether you’re looking to launch a new online store or transform your existing eCommerce operations, Spryker is the platform of choice for businesses that demand flexibility, scalability, and innovation.
VTEX is a powerful and versatile platform designed to help businesses of all sizes to succeed in the highly competitive world of e-commerce. With a range of advanced features and capabilities, VTEX provides a comprehensive platform with many out-of-the-box functionalities that enables companies to easily create, manage, and optimize their online stores. It’s a robust and multi-functional solution best for enterprises that can utilize its potential. To give an example, Coca-Cola and Walmart built their websites on top of it. VTEX pricing is based on the number of sales, so it can vary between a few hundred to even a few thousand USD.
It is an online subscription commerce platform focused on creating B2B marketplaces. AppDirect sells a cloud marketplace platform that companies use as a foundation for their own marketplaces. This solution enables to quickly launch a marketplace and start getting revenue. The platform is focused on selling/reselling in-demand software-as-a-service (SaaS) products based on a subscription model. Thus, companies can sell/resell Google Workspace apps, Microsoft products, etc.
Available versions: AppDirect Starter (799 USD/month), AppDirect Professional (1,499 USD/month), AppDirect Enterprise (custom pricing).
Mirakl is another SaaS solution designed to manage online marketplaces. Mirakl offers an intuitive, secure, and flexible solution that powers digital growth in various aspects of eCommerce, from the platform model to personalization and payments. For instance, Miracle Payout simplifies the onboarding process for top sellers and ensures efficient and secure payments, and Mirakl Target2Sell provides personalized intelligent recommendations on product pages using data and AI. Furthermore, the platform facilitates the digital connection between businesses, sellers, technology systems, partners, data, and consumers. Mirakl’s products are designed to simplify these complex connections, making them scalable to drive a profitable and sustainable eCommerce business. The price of the Mirakl platform depends on your business, and it’s set individually after contacting the vendor.
OpenMarketplace by Bitbag
OpenMarketplace is a robust, scalable, and fully customizable solution for online marketplaces. By leveraging our years-long experience in eCommerce and the development of various MVM projects tailored to customers’ needs, we decided to create a MIT license-based multi-vendor eCommerce platform that will meet the needs of even the most advanced businesses. Taking this into consideration, OpenMarketplace covers a substantial amount of features to utilize the potential of online marketplaces and is able to create one that exactly suits your needs. Keeping in mind the importance of seamless user experience, our solution is very intuitive and easy to use, even for non-technical people.
Differences between running an eCommerce store and an eCommerce marketplace
Running an eCommerce store and an eCommerce marketplace are two different approaches to selling online, with their own advantages and challenges.
The first major difference is the responsibility for various processes on the website. When running an eCommerce store, you are responsible for everything that happens on the website, starting from product descriptions and ending with the customer support service. On the contrary, the eCommerce marketplace owner doesn’t have to manage inventories, logistics, or product pricing, as these things are the responsibility of particular vendors that sell them.
The next difference is the way of getting revenue on the website. An eCommerce store generates revenue by selling its products or services directly to customers. eCommerce marketplace, in turn, earns revenue by charging a commission or a fee for each transaction made on the platform, advertisements of particular vendors, listing fees, etc.
Another difference is the scalability of the website. Since the marketplace owner does not have to sell or buy items, there is less financial risks involved. On the other hand, an eCommerce store has to constantly monitor the number of products and face the risk of not selling them at all. Due to that, MVMs can scale a lot faster. The last difference mentioned here is the marketing approach. The owner of the eCommerce store has to put a lot of effort into attracting customers and driving traffic, for instance, by running a marketing campaign on social media platforms. eCommerce marketplace benefits here from “the network effect”. To put it simply, as more customers join a platform, its value increases and more sellers want to sell online on that marketplace. A larger number of sellers also increases the range of products available and drives competition, which in turn attracts potential clients. With more clients using the platform, there is a higher volume of traffic, which attracts even more sellers. And the process repeats itself.
Another advantage of the marketplace is when a seller registers on a platform. The clients join him to buy his products. Thus, everyone contributes to developing a massive network of sellers and buyers in one place.
But what if you want to sell on someone’s marketplace instead of creating one?
To make your decision easier, the next paragraph describes the differences in selling products on these two platforms from the vendor’s side.
Should you sell on an eCommerce platform or Multi-Vendor Marketplace?
Taking into consideration the popularity of eCommerce marketplaces, it is crucial to know what is the difference between selling on your own online store and a multi-vendor marketplace. Due to that, here are the most important differences between these two approaches.
First of all, time to launch from the vendor’s perspective is very different in the case of the marketplace and eCommerce store. Registering on a marketplace is usually a matter of hours. However, setting up your own eCommerce website can take weeks or even months, depending on a chosen solution and eCommerce business vision. Additionally, signing up on a marketplace and beginning to sell is very cost-effective. Due to that, the marketplace option is especially good for smaller vendors that don’t have the budget to set up their own websites. Second of all, the marketplace platform provides a great environment for transactions, as they generate high traffic where there are a lot of global customers that are looking for a product on a single website. Moreover, high traffic provides increased visibility for vendors. This allows vendors to reach a wider audience and tap into a larger customer base. This task would be a lot harder on an eCommerce site when a brand/company is not well-known or doesn’t invest much money in marketing.
Nevertheless, selling on a marketplace also has its downsides. As previously mentioned, vendors are obliged to pay a commission or a fee for transactions on marketplaces, and the platform also can charge them for product listings or a registration of a vendor’s account. Additionally, in multi-vendor marketplaces, you don’t have full control of the website. It’s up to the marketplace owner what design and functionalities the marketplace consists of.
Last but not least, being a vendor on a marketplace gives only limited access to data, while running an eCommerce platform you are capable of gathering first-party data that is owned by your business and using it for marketing purposes or the improvement of the shopping experience.
As can be seen above, eCommerce platforms and eCommerce multi-vendor marketplaces are two different approaches with their own benefits and challenges. Take your time and think about what option would suit you best for your business. Whether you are new to eCommerce or you already spend some years in this industry, consider testing new solutions to expand your business and increase your customer base. Naturally, it is also possible to apply a two-pronged approach here by selling both on the own eCommerce platform and multi-vendor marketplace, as many companies do.
If you have any questions regarding setting up your eCommerce website or a marketplace in eCommerce, feel free to contact us!