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What is the difference between eCommerce and Marketplace?
What is E-Commerce?
E-Commerce (Electronic Commerce) refers to buying and selling products or services online. It allows sellers to reach multiple buyers through the internet and showcase products in various formats, such as text, images, audio, or video.
E-commerce helps reduce costs by eliminating the need for physical stores, storage space, and large staff, making business operations more efficient while expanding customer reach.
Since e-commerce websites are owned by sellers, managing and maintaining them is crucial to ensure security and smooth operation. Fortunately, modern platforms like WooCommerce and Magento make website creation and management easy, even without coding knowledge.
What is a Marketplace?
An online marketplace is a platform that connects multiple sellers with customers looking for various products or services. The platform owner ensures that reliable sellers and interested buyers come together to facilitate sales.
Marketplace owners earn commissions from each sale and focus on promoting their platform to attract more visitors. They also work to bring in new sellers and customers, increasing the variety of products available and the overall traffic to the site.
Types of eCommerce
1.Business to consumer (B2C)
This business model involves selling products or services directly to buyers, such as purchasing cosmetics or paying to watch a movie in a theater. Most transactions occur between online retailers and consumers over the internet, offering convenience and accessibility.
2.Business to business (B2B)
This business model involves transactions between businesses, such as manufacturers selling to wholesalers or wholesalers selling to retailers. The sales cycle is typically longer due to high transaction values and volumes, with frequent repeat purchases.
3.Business to Government (B2G) or Business to Administration (B2A)
This business model focuses on selling to government agencies. It typically begins with a bidding process where businesses submit proposals, product details, and price quotes based on government requirements. If selected, a contract is signed, usually as a forward purchase agreement, with inspections of both the seller and the product or service to ensure compliance.
4.Consumer-to-Consumer (C2C)
This business model allows customers to buy and sell products directly to each other through third-party platforms like Shopee, Lazada, and eBay, which facilitate transactions. This type of online trading has become increasingly popular.
5.Consumer-to-Business (C2B)
C2B (Consumer-to-Business) is the opposite of B2C. In this model, individuals create products or services that businesses purchase. Compensation can be in the form of money or other negotiated benefits. With the rise of the internet and social media, C2B connections have become easier and more widespread.
6.Consumer-to-Administration (C2A)
This e-commerce model involves transactions between individuals and government agencies or local authorities through websites or online platforms. It is mainly used for accessing public services or making payments for government-related expenses, such as healthcare, social security, or taxes.
7.Government to Government (G2G)
This refers to the collaboration between governments in sharing information, communicating data, and integrating electronic systems. It enhances efficiency, improves communication, and streamlines operations, ultimately providing better services to the public.
8. Government to Consumer (G2C)
It is the relationship between government agencies and citizens or consumers, involving interactions like answering questions or online activities such as paying taxes, providing information, or registering land and vehicles.
The Difference Between eCommerce and Marketplace You Should Know
1. Time and finances
E-commerce allows you to create a website with varying levels of complexity based on your needs, but it takes time, effort, and money to build and maintain. On the other hand, a Marketplace is a platform where sellers (Vendors) and buyers (Customers) can easily register, list, and sell products without having to design a website. It’s quicker to start a business and requires less initial investment compared to e-commerce.
3. Product promotion
Selling products on a Marketplace allows sellers to reach a large customer base quickly and gain trust from buyers easily. On the other hand, selling through an e-commerce website requires more time and money for promotion and building trust with customers.
2. Profit from sales and product volume
In a Marketplace, the profit comes from a commission deducted from the Vendor's sales, which is lower than in e-commerce, where profits are made by selling products directly on their own website. To earn a larger profit in a Marketplace, a Vendor needs to sell more products through the platform.
4. Product list
E-commerce requires sellers to keep inventory in a warehouse to quickly fulfill orders, which involves renting space and taking on financial risks, such as unsold products getting damaged, lost, or stolen. In contrast, a Marketplace platform allows sellers to list their products without the need to keep inventory or bear the financial risk of unsold stock.