Top Differences Between Marketplace Apps And E-commerce Apps

You must have often heard the terms marketplace and ecommerce being used when referring to online shopping and selling. However, although they have similar business purposes, i.e., buying and selling online, there are some basic differences between them. And what is it that, you may ask? Well, in simple words, a marketplace is a platform that allows different sellers to sell their products, while ecommerce is a website that solely sells products of the owner’s brand. 

A marketplace may have multiple vendors, while ecommerce is a single-vendor platform. Still, sounds confusing? To help you understand better, here are the top five differences between a marketplace app and an ecommerce app that you should know.

What Is A Marketplace App?

A marketplace is a website that sells products of multiple vendors. It sells a wide range of products, attracting different types of customers. This functions just like a shopping mall. The mall is the marketplace app where the owner allows various sellers to set up shops to sell their products. It is a one-stop shop for customers since various products are sold in a single place.

A marketplace app consists of three parties: the marketplace administrator (owner of the website), the vendors, and customers. Amazon and eBay are popular examples of marketplace apps.

What Is An Ecommerce App?

Ecommerce is a website that sells a single vendor's products to multiple customers. Popular brands like H&M, Nike, Sephora, and more create eCommerce websites since they have a massive group of customers. Since ecommerce belongs to vendors, setting up and maintaining sites must be done by the vendors themselves. The website's security, proper functioning, and on-time updation are also the vendor's responsibility. Since ecommerce app development is made quite easy with technology these days, building a website for your brand is highly recommended.

An ecommerce app consists of two parties: the vendor and customers.

Marketplace App VS Ecommerce App

Here are the top 5 differences between marketplace apps and ecommerce apps.

Investment

Since the seller owns the ecommerce app, apart from the investment related to the website, they also need to invest in digital marketing beforehand to attract more customers. On the other hand, the initial investment for marketplace apps is much lower as the vendors themselves manage the stock. However, the development of marketplace apps costs much higher compared to ecommerce apps since it requires better functionalities to make it easy for multiple vendors and buyers.

Inventory

Marketplace apps do not have inventory since they only provide a platform to connect sellers and buyers. Ecommerce apps, on the other hand, are required to hold inventory to meet customer demands.

Marketing And Brand Recognition

Sellers in a marketplace can use consumer trust and recognition and immediately get exposure to a large audience of potential buyers. On the other hand, ecommerce app owners have to invest a lot of money and time to market the app, brand, and products.

Cash Flow

Since revenue is made from a percentage of the transaction, marketplace apps will enjoy a better profit margin. On the other hand, ecommerce apps take more time to get a positive cash flow since the initial investment to build the app is higher.

Software Used

The structure of marketplace apps is more complex since they need to handle multiple third-party vendors. Therefore, you need to use cloud/SaaS platforms like Sharetribe, Arcadier, Marketplace, etc., to build the app. Ecommerce apps, on the other hand, are much simpler and can be built using platforms like OpenCart, Magento, Shopify, and more.

Final Thoughts

While both marketplace and ecommerce apps involve online sales, they are very different when it comes to different aspects like execution, cost, control, and more. In addition, both of them have a fair share of hurdles in development and marketing. Having a deep understanding of the differences, pros, and cons of the two approaches will help you decide the one that best suits your business based on your business's model, products, and requirements.