E-Commerce Platform vs 3rd Party Marketplace: Which Is The Right Platform For You? By Olwen van Dijk-Hildebrand

E-commerce sales are on the rise, especially in South-East Asia. The exponential increase in revenue from e-commerce is driving more businesses to adopt an e-commerce platform or sign onto a third-party marketplace. 

Statista reports that revenue from e-Commerce markets will likely reach US$126.40 billion in 2022. E-Commerce revenues are expected to grow 14.59% annually, with a projected market volume of US$249.70 billion by 2027.

Similarly, Accenture reports that digital commerce will dominate the APAC markets. The use of e-commerce is only going to increase from here, and if your brand isn’t on the bandwagon yet, maybe it’s time to climb on board.

To back this up even further, eMarketer reported in February 2022 that we can expect e-Commerce sales to surpass US$7 trillion by 2025 despite the slight slowing of growth in the post-COVID-19 pandemic period.

But where should you start? With so many options available, it’s important to put the right foot forward and not waste any more time, so let’s get some basics out of the way first:

What is an E-Commerce Platform vs. a Third-Party Marketplace?

An e-commerce platform is a software application that lets online brands manage their website, operations, marketing and sales in one location. Good examples of e-commerce platforms are Shopify, BigCommerce, WooCommerce, Magento, and Volusion, but there are many more. 

In a nutshell, e-commerce platforms like these allow brands to integrate the software with existing websites and other software applications, providing customer interaction without straying from the company brand. For example, an online cosmetics company may be using an e-commerce platform like Shopify or BigCommerce to sell their products from their website.

This differs from third-party marketplaces. Third-party marketplaces are existing platforms that allow sellers to place their products or services for sale using the third party’s website or application. Examples include Lazada, eBay, Amazon, and TMall.

So what’s the big difference between them?

Think of it like this: using an e-commerce platform is like having your own brick-and-mortar storefront, with your business’s branding and messaging – you’ve bought or rented some shelving from a provider to put into your own store. 

A third-party marketplace, on the other hand, is more like renting space in a department store to showcase your products or services – you didn’t have to do all the work of putting the shelves in place, nor do you get to stick your branding all over the storefront, but you still get to stock out your corner of the store.

What are the benefits of each option?

As with anything, there are ups and downs to both options. 

E-Commerce Platforms

An e-commerce platform comes in three key packages: OpenSource, SaaS (Software as a Service), and headless commerce. Each of these comes with its own requirements and capabilities. For example, Open Source e-commerce platforms, like PrestaShop or OpenCart, allow you to customize practically anything by giving you full access to the software’s internal code.

This can be incredibly useful, letting you tailor the look and feel of the platform to your – and your customer’s – preferences. However, without the required skill set it can also be time-consuming and more work. 

In that sense, SaaS and headless e-commerce solutions are simpler options. Both these types of e-commerce platforms offer a more plug-and-play answer to the e-commerce question. A SaaS or headless e-commerce platform is an existing service which you use to power your online storefront, like Shopify or BigCommerce website.

These are ideal for people who might not have the time or skills to build their own online store in an open-source platform, however, keep in mind that they are maybe less flexible when it comes to customization depending on your subscription.

Third-Party Marketplaces

Third-party marketplaces come in all shapes and sizes, of course, and are often busy websites with high traffic. This makes it an ideal place for many smaller businesses to get their products out and increase their sales.

The advantage of places like Shopee, Lazada, eBay, Amazon, or TMall is that they attract a large number of would-be customers, and with the right approach, even the smallest of sellers can reach their target audiences.

One of the great things about marketplaces is that you have the potential to reach customers who would otherwise never look for your products or services. That voluminous traffic, however, is also a double-edged sword. While it can certainly reach a vast number of customers, you also run the risk of not attracting the right ones. 

Another downside of third-party marketplaces is that you have to compete for space and attention with many other sellers, even though they may not be your direct competitors. You run the risk of losing your own brand amids the branding of the marketplace host, and of not being able to stand out between all the other vendors.

So, should you go for an E-commerce platform or a Third-Party Marketplace?

At the end of the day it comes down to three key things:

1. Your Business Needs
   The scale, products, and operational needs of your business are going to be the first that dictate which choice you make. A larger brand with a massive catalogue might be better served by investing in an e-commerce platform, while a company with a minimal number of products may prefer to start on a smaller scale in a marketplace or smaller platform. The diversity of your products also matters. If you are a dedicated whole food company, then you could tailor an e-commerce platform to your needs, while you may get lost in a third-party marketplace and miss out. 

2. Your Customers
   Do your customers like specific services you could offer with an e-commerce platform or will they be just as comfortable in a marketplace? Are there specific things you would like to offer your customers that you may not be able to do on a third-party platform? If you know that your customers prefer to see your company’s branding then it’s important to give them what they prefer to maximize their experience.

3. Your Budget
   At the end of the day, it really does come down to the money. If you have the funds to invest in an e-commerce platform, then why not go for it? But if that’s not the case then a third-party marketplace might just be where you start. Remember that if you set up an e-commerce platform you may need to hire someone to set it up for you or train you to use the back end.

Answering all these questions will help guide you to making the right choice. Your brand might prefer to start on a third-party marketplace before setting up an appropriate e-commerce platform solution. Alternatively, if your company chooses to integrate its e-commerce platform, then do your research and choose the platform that meets your requirements and suits your capabilities. If needed, you’ll also need to bring in a specialist to set it up for you.

If you’re thinking of starting an e-commerce business in Southeast Asia, now is the time to start. When it comes to web and app development, you can rely on 2Stallions. As a digital marketing agency, we can help to develop an instant e-commerce website that can market your business online and boost your sales.  Talk to us today!

Originally published: 15 October, 2020
Updated: 25 November, 2022