If you plan to sell products online, there are two options available: Marketplace vs Online Store. Then, which one is better? Which platform is right for you to sell online?
In this article, we will help you make the best decision for your digital business development. Of course, the final decision is still yours. We try to present various facts about both. Curious?
Marketplace Advantages and Disadvantages
Marketplace is a platform, either in the form of a website or application, which is managed by a company (third party) to facilitate sellers and buyers meeting online.
You can think of a marketplace like a department store. Many sellers with various types of merchandise in the same location.
What are the Advantages of Selling on the Marketplace?
The following are some of the advantages of selling your product through the marketplace:
1. Easier to Get Started
Marketplace allows you to start an online business at any time. You just need to decide which marketplace you want to use, and start signing up.
For example, if you want to build the business through Tokopedia, you can use your Facebook, Google account, email or mobile number.
After the registration stage is complete, you can start filling in your identity and your business. Next, immediately install your various products on the storefront in the marketplace.
Each marketplace may have a different way. However, in general, it’s enough to register an account, then display the products.
2. Only Requires Minimum Capital
Apart from being easy, registering on the marketplace is free of charge. In fact, if it is limited to regular sellers, no service fees are charged.
Depending on the marketplace you use, you may only share 1% profit per product if you upgrade. The purpose of upgrading membership status is to get various promotional benefits and the level of buyer trust.
However, being a regular seller is not an obstacle to earning income from selling your products.
3. System Available
You don’t have to bother designing a system for your online business. Marketplace has prepared your means of selling well. Starting from the website and its platform, attractive design, flow of product purchases and more.
One thing you need to do is just upload the best photo of your product. Don’t forget to also provide a description that reflects the advantages of your product. In this way, your product will be able to compete with other competitors.
4. The Market Has Been Formed
As the name implies, marketplace is an online marketplace. That is, buyers will immediately come to the market if they need a product.
Using the Etsy example. If someone wants to buy a handicraft product, he doesn’t need to be confused about who the seller is who owns the item. It is enough to come to the online market and buy products easily.
The good name of a marketplace determines the success of the business you run. Both from the ease of access, to the level of security of the transactions it manages.
In short, if someone buys from Lazada, it’s the name of the marketplace that’s in their mind, not your store. For new businessmen, this is certainly quite helpful.
5. No need for a Marketing Strategy
Have you ever heard of free shipping? Free domain hosting promo or 10.10 discount promo?
Yes, there are many ways to offer products to attract customers. Marketplace has a myriad of marketing strategies. That means you don’t have to do it yourself.
You only need to focus on the quality and availability of your product when selling on the marketplace.
In fact, the marketplace will also think about how to attract more and more people to come to their platform.
This requires SEO (Search Engine Optimization) techniques and a good marketing strategy. Again, you don’t have to do these steps yourself.
What are the Disadvantages of Selling on the Marketplace?
Quite a lot of advantages offered by a marketplace, huh? However, of course doing business using the marketplace is not without its drawbacks. Anything?
1. Sharp Competition with Competitors
As in traditional markets, you will find many businesses selling the same products as you. So, the competition that occurs with competitors in a marketplace is very high.
For example, when a buyer searches for “wireless mouse” on Lazada, the results that come up come from various stores across Indonesia. The buyer will not know the store that sells it, except when clicking to go to the full description.
With this condition, the possibility of your product being sold is as big as your competitors.
2. Limited Profit Margins
The impact of an intense competition of course: price war.
The way out that is often taken by business people is to provide a cheap price tag for the products being sold. Consequently, the profit margin that can be generated is very small.
To increase sales, you can just advertise on your marketplace. However, of course there will be additional costs and reduce your overall profit. After all, your competitors might also do the same strategy, right?
In other words, your potential profit per product when selling on the marketplace is very limited, aka tight.
3. Unable to Retarget
The system built by the marketplace aims to facilitate transactions. Starting from price information, product descriptions, procedures for shipping goods, and more. However, all transaction data absolutely belongs to the marketplace.
Under these conditions, as a seller, you will lose the opportunity to make efforts to resell to the same consumers (retargeting). The reason is, you don’t have the information to build a customer list.
In fact, the opportunity for sales transactions through retargeting is very large.
4. Less Support Branding
Buyers who have just made transactions on the marketplace may not know your name as the seller. In their minds, transactions are made between the buyer and the marketplace, not you.
From a business point of view, this is not profitable. Because, you can’t build your brand properly.
As you know, branding can help you increase engagement with consumers. Engagement is consumer involvement with your product.
With maintained engagement, it will create loyal consumers for the long term.
5. Limited Market
In general, the marketplace targets certain markets. Apart from being related to business strategy, it is also due to the cost factor. For example, even if a marketplace is successful in Indonesia, the same conditions may not occur in other regions.
So, if your business strategy wants to target consumers from all over the world, using a marketplace may not be the best choice.
Advantages and Disadvantages of Online Stores
On the other hand, an online shop is a website owned by a businessman to sell his products online.
Online stores are suitable for all types of businesses, whether in the form of goods or services, personal or corporate. Let’s look at the various advantages and disadvantages first.
What are the advantages of building an online store?
Building an online store will give you the following benefits:
1. You Are In Full Control
You can imagine not being in a market, but your own shop. You can determine the shape of the building, the color of the paint, the layout of the items you sell, and more. In essence, you have complete control.
You can also use your own approach when building an online store. Do you want more promotions? Or do you want to provide an educational approach through your online store?
Who knows, buyers will come based on the belief that you are an expert in the product you are selling. For example, creating a blog as done by this local clothing brand Ditzbrand.
2. Bigger Profit Margins
What happens when you don’t get caught up in a price war? Yes, you are free to determine the value of the products you sell.
Having your own online store allows you to earn big profit margins. The reason is, you can determine the profit per product item. In addition, you can also set which products you want to boost sales.
You also don’t need to pay for advertising to promote one of your newest or best-selling products. Just set up your online store and everything will be ready in no time.
3. Easier in Retargeting
Retargeting is a way to re-attract consumers who have visited your online store, whether they have made a purchase or not.
How many sales opportunities can be increased through retargeting? The answer is 161%!
The reason is actually quite simple. By reminding consumers of products they have seen, it means we understand consumer needs.
This approach is quite effective because almost 70% of ads that use the retargeting approach always manage to lead to purchase transactions.
In addition, you no longer need to use large promotional costs, because retargeting focuses on potential consumers only.
4. Freedom in Branding
If you want your business to be known by consumers, starting with an online store is the best choice. Because, you can build your brand more effectively. You cannot get this if you use the marketplace.
Keep in mind that 73% of consumers prefer to make transactions with brands that provide a unique shopping experience. This data shows that your potential to be able to attract consumers is much greater if your online identity is known by the public.
Branding can be related to the vision and mission of your business. Branding is also related to how you present your company’s image through dominant colors, educational approaches, and more.
After all, many beginners start a business from their own online store. In addition, if the product you have happens to be very unique, of course it will be difficult to determine the right category in the marketplace.
5. Not Relying on Third Parties
If you manage to build a brand and create strong engagement, your business will be able to survive for the long term. Your online store has an important role to build your business continuity.
In addition, you are not dependent on third parties. Not only in terms of sales, but also from the existence of your business. Imagine if your product sales were selling well, but suddenly your marketplace closed its business. You will be affected, right?
Therefore, considering this factor from the start of building a business is highly recommended.
6. Targeting the Global Market
The development of the internet allows you to reach anyone around the world. The products you offer are no exception.
If you build an online store that operates well, the opportunity to target the global market is very wide open. This might be problematic if you use a marketplace due to their different business strategies.
Not reaching the global market can be a disadvantage. This is because various information states that products from Indonesia are popular with the world community.
An example is Salam Rancage, which successfully exports various handicrafts from recycled materials. Starting from a capital of Rp. 500 thousand, the profit per month of this business reaches more than Rp. 20 million! In fact, it continues to grow as demand increases.
Of course this is enough to give you inspiration on how you will build your business, right?
What Are the Disadvantages of Building an Online Store?
There are also many advantages of online stores? Then, what obstacles do you need to consider?
1. Investment Required to Create a Website
Creating a website requires investment, because you have to subscribe to hosting and buy a domain name. Hosting is a storage facility for online store files, while the domain name is the name of your online store.
This means that, in contrast to business models such as marketplaces, where the capital is Rp. 0, building an online store still requires initial capital.
Fortunately, currently there are hosting and domain service providers that offer various attractive promos. For example, with certain packages you will get a free domain.
A recommendation for those of you who are just starting an online business is to choose the most affordable WordPress hosting package first.
Then, if your online store grows bigger and you need more storage, you can upgrade your package. The goal is to keep your online store running well.
Keep in mind, your foresight in choosing a cheap and quality hosting service provider is the key to your business strategy.
2. It takes independence to manage it
After building your online store website, another thing to do is to manage it independently. Yes, because you are in full control of the online store, every aspect of its development is determined by you.
It’s actually quite simple. You can start by building a system for your online store: from store design, product arrangement to the purchase flow.
Thinking of using a website creation service? No problem. Some beginners do it too.
However, knowing the basics of website management will certainly be more helpful. Because, your online store must be managed properly for the long term. One of them, you can make sure all the features of the online store have been installed properly.
Apart from internal management, you have to think about how to bring customers to your store.
In the marketplace, you only need to promote products. Building an online store requires that you promote your online store website first.
For this, you can apply an SEO (Search Engine Optimization) strategy. SEO aims to make your online store visited by potential customers through search engines, which of course is free.
One thing that is no less important is managing the security of your online store system. This aims to build the credibility of your business.
However, you don’t have to worry when building your own online store. Various guides for managing websites properly are available on the Niagahoster blog and you can make them references.
Marketplaces vs Online Stores
Selling on the marketplace is like depending on your business on a third party. You can’t be in complete control, either in terms of profit margins or the market you want to create.
Also, the marketplace is not the right place to build your own brand.
However, the marketplace has prepared all the systems for you. Even to become a regular seller no registration and service fees will be charged.
Conversely, if you build an online store you will have complete control. Something that is not owned by business people who use marketplace services.
Not only that, you have the opportunity to get bigger profits and reach a wider market.
When building an online store, you will need a little investment and some skills to manage your own shop.
Marketplace vs Online Store: Choose the Best For Your Business
After studying the differences between marketplaces and online stores, you will know the advantages and disadvantages of each of these platforms, right?
Choose the platform that best fits your business needs. In fact, you can use both at the same time for more optimal results.
However, building your own online store is still the best recommendation. The reason is, you have the flexibility to build your own market, determine profits, and manage it for the long term.
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