Marketplace vs Ecommerce: Shopping Trends to Consider

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by Dimitris Tsapis

February 5, 2021

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In 2020, online sales grew at incredible levels. With the pandemic keeping more people at home, they spent more time online and online shopping.

In the early months of the pandemic, online retail grew 44%.  In Q3 2020, it was up 37% year over year. The majority of online sellers saw increases. Some 63% of the top 1,000 retailers grew online sales by more than 15%. Experts predict the opportunity will continue to grow online sales into 2021.

So, where’s the best place to sell?  In this article, we’ll take a look at marketplace vs eCommerce strategies, including:


Marketplace vs eCommerce

If you’re thinking about marketplace vs eCommerce when it comes to selling online, you need to understand the difference and the trends that are shaping how goods are being sold online.

The Difference Between eCommerce and Marketplace

marketplace vs ecommerce
Image from Cobbleweb

There’s one key difference between the way consumers use marketplace and eCommerce stores. In eCommerce, consumers are shopping at either branded stores or searching for specific products. This means a significant investment in marketing to drive consumers to products and stores.

In social marketplaces, the experience is more tailored for discovery. The consumers are already there. As the 1.82 billion daily average users of Facebook are scrolling through their feeds, your products are featured. Targeting tools allow you to pitch products to niche audiences and those matching buyer intent personas. However, you’re not necessarily reaching buying-ready consumers.

Additionally, marketplaces are hosted on third-party platforms, like Facebook. You are therefore more dependent on the regulations and subjective rules of the platform, compared to hosting your own e-commerce store. However, if you're willing to make that small sacrifice, you will most likely benefit from a lot more traffic when first starting out.

Marketplace Trends 2021

Social commerce on marketplaces has arrived. Nearly $90 billion was spent on social marketplaces in 2020, such as those offered by Facebook, Instagram, Etsy, Alibaba, and other private marketplaces.

As social selling matures, these are the big trends that are impacting the marketplace.

  • Live Video - Popular globally, live video shopping is ramping up in the US.
  • Chatbots - Call it “conversational commerce,” AI-enhanced Chatbots have become increasingly popular tools for personalizing product sales
  • Enhanced Integration - Social selling sites and eCommerce marketplaces are starting to allow integrated cross-channel selling
  • Stories - More than a billion accounts use Instagram and Facebook Stories daily. You can now insert product ads into story streams.

The Benefits of Using Marketplaces

The largest platforms on the planet have Artificial Intelligence (AI), Machine Learning (ML), and sophisticated algorithms baked into their DNA. Google uses it to serve up the best results for its search engine and the most relevant products for its Google shopping. Amazon’s recommendation engine is responsible for more than a third of its total online sales.

This same sophisticated targeting is available to small and medium-sized businesses when working with social marketplaces. Social marketplaces are trying to show the products with the best chance of selling. That’s how they earn their cut.

Facebook’s catalog feature, for example, allows multiple ways to showcase products.

  • Dynamic ad targeting - Relevant product ads based on consumer behavior or lookalike audiences.
  • Collection ads - 4 catalog items under a “hero” image or video.
  • Carousel ads - Multiple images users scroll through. Images can be generated dynamically with an individual click through to product pages.

eCommerce Trends 2021

2020 saw a proliferation of new eCommerce sites. Shopify, for example, reported that the number of online stores grew by more than 60% in the first half of the year. That’s a lot more competition than ever before.

Here are some of the trends that are emerging for eCommerce stores in 2021:

The Benefits of Using eCommerce

In the marketplace vs eCommerce discussion, one place where eCommerce wins big is with first-party data. That’s the data you collect about your customers. This deep knowledge is a powerful weapon to market and sell. In 2021, first-party data is becoming even more important as major web browsers, including Chrome, Firefox, and Safari have announced they are getting rid of cookies and third-party trackers.

This first-party data lets you zero in on your customers and use the insight to offer upsells and cross-sells.

Trends Affecting Marketplace and eCommerce Sales in 2021

In 2020, we all learned the importance of being agile and pivoting. If you’re considering marketplace vs eCommerce platforms for 2021, there are some major trends that will apply to both.

1. Evolving Consumer Behavior

Consumer behavior shifted dramatically in 2020 and continues to evolve. Besides the increase in overall online shopping, there were other dramatic shifts as well. One of the most shocking trends was the lack of brand loyalty. McKinsey research reports that consumers switched brands at unprecedented rates. 36% of consumers tried new products and brands.

This provides new opportunities for brands and products in 2021, but it’s also a potential danger. Customer churn is deadly for brands. Without expanding your marketing and sales channels, expect churn to grow in 2021.

2. New Payment Options

Most online sellers have integrated with major online payment platforms, such as Apple Pay, Google Pay, Samsung Pay, or PayPal. Some are starting to accept cryptocurrencies as well. Overstock, for example, has added Bitcoin as a payment method.

3. Dynamic Pricing

Dynamic pricing automatically adjusts prices in line with competitors and inventory demand. Software can help track market conditions and raise or lower prices to maximize sales and remain competitive.

4. Customer Experience

A superior customer experience (CX) is no longer a nicety. It’s essential. Forrester predicts it will become the core brand differentiator – more important than price.

5. Product Visualization

Online selling has exceptionally high return rates. One of the reasons consumers cite is that the product they receive doesn’t match what they saw online. Better visualization helps overcome this problem. Look for higher-quality images, more use of 3D product visualizations, and visual confirmation of colors and customizations.

Spending on sellers using augmented reality is estimated to be $60 billion in 2020. Expect this trend to grow rapidly in the next two years. More than 120,000 sellers are expected to offer AR tools by 2022.

6. Voice Shopping?

Is 2021 the year where voice shopping realizes its potential?  When you consider that one out of every four households now owns a smart speaker and more than a third of owners have used it for shopping, you can see the potential.

7. Continued Agile Practices

And, the agile and pivoting thing?  Expect to make that a permanent part of adapting to economic conditions and marketplace disruptions from here on out.

What’s Best for My Business - eCommerce or Marketplace?

So, with all this new information, where should you be putting your efforts?  The short answer is both.

Most retailers are already multi-channel sellers whether they think about it or not. If you’re selling on your website and using Facebook marketplace or Amazon, you already there. Multi-channel selling is the best way to broaden your sales footprint.

Amazon will tell you that 63% of online shopping searches start on their site. That may be true, but it’s not the only place consumers look. A study by the folks at BigCommerce analyzed where US consumers shop. Here’s what they found:

  • 74% of consumers shopped at large retailer sites
  • 54% shopped at marketplaces
  • 44% shopped at web stores
  • 36% shopped at category-specific online retailers

There’s a lot of overlap in that study, but one thing is clear. When you’re considering marketplace vs eCommerce, remember that selling across multiple channels significantly increasing the reach and the breadth of your marketing.

It also reduces your reliance on using any one sales channel where things can change quickly. When Amazon stopped FBA (Fulfillment by Amazon) shipping for retailers to focus only on shipping essential goods, it was a reminder to everyone selling on the platform who is in control. Or, those retailers that had their accounts suspended without warning.

Marketplace vs eCommerce: You Decide

One thing’s for sure in 2021, online shopping on marketplaces, platforms, and websites will continue to grow. Sales are expected to increase by 8.7% on top of the record performance in 2020.

So, eCommerce platform vs marketplace? It’s not really a question of one or the other deal. It’s more about how you want to market your online brand and manage sales opportunities.

Explore multiple social marketplaces alongside your website and other selling platforms. The larger your online footprint, the bigger your online presence grows. You may find that a combination of sales channels will be your best approach.

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