E-commerce or Marketplace: Which should you invest in?

What is e-Commerce?

The term e-Commerce refers to the online marketing of products or services via the internet through a website, application or platform, where transactions are made through computers or mobile devices using different payment methods such as credit cards, Paypal or MBWay.

There are various types of e-Commerce depending on the profile of the target audience and the category of business they are in. The most common models are e-Commerce B2B (business-to-business), where commercial transactions are carried out between companies, and e-Commerce B2C (business-to-consumer), where a company sells products or services directly to the end customer.

Some services may be outsourced (e.g. logistics), but there are no intermediaries involved in the purchasing process. The brand is solely responsible for all contact with the end customer, from purchase to delivery.

What is a Marketplace?

A Marketplace is an online platform that brings together products from different suppliers, offering a wider and more diverse range of products compared to an e-Commerce business. In this case, the seller or store can trade their products or services without having to pay for the maintenance of the site's infrastructure.

Some of the most widely used Marketplaces in Portugal are KuantoKusta, OLX, Ebay and Aliexpress.

What are the main differences between E-commerce and Marketplace?

The biggest difference between E-commerce and Marketplaces lies above all in the control you have over your business. With E-commerce, you have greater flexibility in managing your business, while with Marketplaces you have to abide by the rules and regulations imposed by each platform.

Generally, Marketplaces allow for greater visibility, in that, by offering different products from various brands, they have a greater capacity to reach a greater number of people, as well as, in many cases, there is greater dissemination and popularity of Marketpalces, making the public tend to trust these platforms more.

At the same time, when it comes to E-commerce, the brand can have total control over the customer experience and data monitoring, unlike Marketplaces where part of that control is shared with each platform.

Initial investment is another difference, as setting up an E-commerce business, such as an online store, generally requires some investment on the part of the brand, in contrast to easier access to Marketplaces.

Should you invest in E-commerce or Marketplaces?

Deciding where to invest is an important decision for any brand. It's essential to understand the differences between the two business models and how each or a combination of the two aligns with the strategy you have defined for your brand.

To build a unique identity and have total control over your brand, the ideal is to invest in e-commerce (e.g. an online store). If you want greater reach and visibility, Marketplaces are the right choice to reach more people.

Many brands choose to combine online stores and marketplaces to take advantage of the benefits of both and diversify their online presence. You should evaluate your brand's goals and objectives, available resources and your target audience to decide where to invest intelligently. Regardless of the choice, it is essential to be prepared to adapt to changes and developments in the market.

There are cases of big brands - such as Amazon - that work as a combination of both business models, by selling their own brand's products and, at the same time, allowing third parties to sell products on the same platform.

The importance of systems integration for E-commerce businesses

For brands looking to invest in E-commerce, it's important to emphasize that in order to automate daily tasks and ensure the effective transfer of information between the systems used - stock management, orders, payments, shipments - fully integrated management of your entire business becomes essential.

M&A Digital specializes in software development - ERP, CRM, CMS - as well as systems integration to create simpler and more optimized workflows in order to increase productivity in every business.

By integrating your systems, you can speed up your processes, reduce costs and see where there are opportunities for improvement, in order to achieve a competitive advantage for your brand.

By 2040, 95% of purchases will be made through E-commerce. (Nasdaq)