Online Shop vs. Marketplace - How to make the right decision

We can only keep repeating it like a mantra: Those who, in uncertain times such as these, continue to rely on being able to persist simply through brick-and-mortar retail will face a bleak future. The decision to sell online and enter the e-commerce market has become virtually obligatory as a result of the pandemic. For traders and retailers who have not yet relied on online sales, the first question that arises is: Own online store or marketplace - which is the right sales channel for me?

Marketplaces like eBay, Amazon, Etsy and Co. are often chosen as sales channels. This is not always the right decision. For many online traders, having their own online shop or even a combination of both sales channels makes more sense.

But how can you as a trader make your choice?

Your decision should depend on several factors - because this question is not just about pure sales. You should also ask yourself how the choice between marketplace and online store will affect your advertising and determine your brand building. So your long-term goals are critical. To be able to commit, you need to assess the advantages and disadvantages of marketplaces or your own online store. With the following article, we will help you identify your options and introduce you to platforms that are suitable for selling your products.

Own Online Shop or Marketplace - Which is Which?

What is a web store?

A web store, also called an online store or online store, is a point of sale that belongs entirely to the business owner - you. An online store is from the basic structure like a normal website, but with the addition that there is a product inventory and these goods can be purchased directly. You sell your products directly to the clientele, almost as if they were entering your retail store. Just digitally.

What are online marketplaces?

Online marketplaces are the service of a third-party provider that enables many companies at the same time to offer products online on their platform. The best-known providers are Amazon, eBay or Etsy.

Below we present some of the most important marketplaces in the german DACH region.

Online marketplace Germany: These marketplaces exist

atalanda

The German company atalanda primarily offers regional traders a platform for online sales and is active in several German cities such as Wuppertal, Bochum, Heilbronn or North Friesland. Customers can buy products from the region online on this local marketplace and have them sent to them or pick them up themselves.

Thus, company profiles without online sales, with regional online sales and with online sales and shipping are possible. Those who want to sell on atalanda pay a monthly fee of 29.95€ plus a fee of 8 % of the net value of the goods and are bound for one year.

Otto

Otto is one of the best-known German companies and has mastered the leap from the former catalog mail order company into the digital age. Since 2019, Otto has been offering Otto Market, an online marketplace for retailers and traders. However, the company is very selective and some criteria must be met to be allowed to sell on the marketplace. For example, it requires a German corporate legal form, a German warehouse, a German VAT ID and German customer service. Merchants who want to sell on the marketplace have to expect a fee between 7 and 15%, depending on the category offered.

Etsy

Special items Vintage goods or handmade products can be found on the well-known online marketplace Etsy, which has taken a supremacy in the DIY sector after DaWanda's closure. Anyone offering unique and handmade goods can find a suitable platform here. However, there are also many private and small sellers on Etsy who make an extra income from their hobby. Traders do not have to pay a basic monthly fee, but they do have to pay a $0.20 listing fee per item and 3.5% of the product price to the platform.

Kaufland

Anyone who has missed real.de in this listing so far will now find it. In spring 2021, Kaufland integrated the existing real marketplace on kaufland.de. Since then, numerous product categories from the non-food sector such as toys, electronics, furniture or bicycles can be found on the online marketplace. Over 25 million items from 7,000 retailers are already listed and attract thousands of visitors to the site every month. Anyone who wants to sell here has to pay a monthly net fee of 39.95 EUR. In addition, sales commissions of at least 6.5% are added to the sellers, depending on the category.

Metro

Another big name has also stormed e-commerce with an online marketplace. Here, traders and dealers are addressed who offer relevant products for gastronomy, restaurants or traders. Especially non-food products play a role. Traders on this marketplace have to pay a monthly fee of 29.99€ from a monthly net turnover of 500.002€ - in addition to the sales commission, which is between 7 and 13 percent.

MediaMarkt

With Mediamarkt.de, another player has recently been added. On the online marketplace, traders can sell their products for €39 per month and a category-dependent sales commission. There are also several conditions attached to the sale: sellers must have a company headquarters and a bank account in the EU, German-speaking customer service and very good accessibility as well as an EAN for all products.

eBay

What once started in 1995 as a digital flea market and auction house for private and used items has now become a commercial sales platform. It is still possible to post items for auction, but for professional sellers, posting at a fixed price is more interesting. In addition, price suggestions can be activated. The variety of products offered is extremely large - from furniture and jewellery to vehicles and care products, almost everything can be found here. The costs incurred by commercial traders depend on the choice of eBay package and the product category selected. For example, a commercial eBay shop can be booked from €32.95 per month and additional sales commissions of between 5 and 14% are due.

Amazon

Amazon is the online giant when it comes to online marketplaces. The platform, which began in 1994 with the online shipping of books, is now an online marketplace and product search engine in one. People willing to buy usually search first on Amazon when they are interested in a particular product. Amazon has a large reach and can record up to 30 million unique visits per month - in Germany alone. The giant pays well for this: if you want to sell more than 40 items per month, a monthly basic fee of 39€ is due. In addition, there are sales fees of between 7 and 15%. If you want to use the FBA service and have your goods shipped by Amazon, additional fees apply.ds shipped by Amazon, additional fees apply.

idealo

Even though idealo is not a traditional marketplace (anymore) and has ditched the direct purchase option, it plays a crucial role in the world of e-commerce. idealo is a leading price comparison portal that helps consumers find the best deals on a wide range of products. By providing comprehensive price information, Idealo enables consumers to make informed purchasing decisions and get the best value for money. For retailers, Idealo in turn acts as a platform to showcase their products to a wide audience and improve their competitiveness.

What online shop systems are there?

What is the alternative to marketplaces like the ones mentioned above? Your own online shop. There are many online shop systems that make this possible and we have already presented some in our blog, e.g. Magento, Shopware or WooCommerce.

However, we would like to commit ourselves. As a Shopify Plus agency we are already well-versed in Shopify since 2012 and were one of the first Shopify Plus agencies in Germany.

Shopify is, in our eyes, one of the most innovative shop systems and commerce platforms on the market and enables retailers of all sizes to sell and brand successfully. The system, which was founded by German Tobias Lütke in Canada, is cloud-based and therefore a fail-safe, flexible system. Merchants who rely on Shopify do not have to worry about hosting, backups or version updates. There are already prefabricated themes that also work excellently on mobile devices, as well as a large number of apps to add individual functions to your own shop.

Shopify and especially the enterprise version Shopify Plus allow 100% individualisation through custom programming and react quickly to new market requirements.

Shopify Marketplace: How to connect your online store to online marketplaces

To connect Shopify to online marketplaces, you should first consider which marketplaces you would like to use. Then select one of the numerous apps and integrations in the Shopify App Store with which you can connect your shop to various marketplaces.

Magnalister

Magnalister is a Shopify app that allows merchants to connect their Shopify store to various marketplaces. The app facilitates selling on platforms like Amazon, eBay, Etsy, Rakuten, real.de and many more.

With Magnalister, merchants can export their products directly from their Shopify store to marketplaces and manage orders from different marketplaces in their Shopify admin area. The app automatically syncs product information, inventory, and pricing between the Shopify store and marketplaces to ensure all platforms are up to date.

Pricing:

• Free installation

Channable

Channable is a comprehensive tool that helps Shopify merchants manage and optimise their product data for different marketing channels and marketplaces. It facilitates the process of product listing, inventory management and order tracking across multiple platforms. In doing so, Channable supports integration with over 2500 platforms, including popular marketplaces such as Amazon, eBay and Google Shopping, as well as various price comparison sites and affiliate networks.

Pricing:

• Core Standard: $49/ month

• Marketplaces: $104/ month

• PPC Standard: $125/ month

• PPC & Insights: $160/ month

Marketplace Connect

Marketplace Connect allows merchants to list and sell their products on various popular marketplaces such as Amazon, eBay, Walmart and Etsy directly from their Shopify shop. The app synchronises stock levels across all connected channels, reducing the risk of overselling and ensuring stock levels are accurate and up to date. Merchants can use customisable templates to create marketplace-specific product listings that meet the requirements of each platform.

Pricing:

• Starter Plan: $19.99/ month

• Business Plan: $29.99/ month

• Advanced Plan: $49.99/ month

• Plus Plan: $69.99/ month

Online shop or online marketplace: What are the advantages and disadvantages?

First, we would like to give you an overview of all the advantages and disadvantages of online stores and marketplaces so that you can weigh them up at a glance. In the further course, we will go into more detail about the advantages and the disadvantages.

Advantages of marketplaces

According to a study by comScore and USPS, almost every online shopper visits online marketplaces before making a purchase. This means that people already come to an online marketplace with a fixed purchase intention and it takes over the function of a search engine - only for goods.

Easy entry

Anyone who wants to sell online can get started quickly by using a marketplace. There is no need to set up a complete online store, no programming and no large advertising budget to even attract the first interested parties to the site. The basic framework already exists through the marketplace provider and you only need to fill your own small section. Thus, this sales channel can be a good step to draw attention to yourself online in the first place.

Existing audience

The range is also already given. Marketplaces have usually existed for many years and offer a number of products from different retailers. Over time, this has ensured that the target group knows the name of a marketplace, trusts the platform and therefore repeatedly browses there. You could benefit from this already existing reach and also from the good name of the platform.

Choice of payment options

Marketplaces know their customers and therefore in most cases offer all payment options relevant for the local market, such as Paypal, bank transfer, credit card or purchase on account. Sellers on these platforms can offer potential customers a choice of options right from the start, which can lead to fewer abandoned purchases.

Faster shipments

Amazon has led the way and many other marketplaces are following suit and also offering fulfillment options. This enables retailers (for an additional charge, of course) to store their goods directly with the provider and have them shipped from there. For buyers, this makes fast receipt of goods a reality and can significantly reduce waiting times and the resulting frustration.

If you look at the arguments in favor of marketplaces, it seems very tempting to get started right away. However, the disadvantages are also significant and should not be ignored.

Disadvantages of online marketplaces

Whether individual design or special offers - the list of disadvantages is at least as long as the list of advantages.

The marketplace fee

eBay, Amazon and Co. do not offer their platform out of pure niceness, but of course want to earn from it. That's why both monthly fees and additional sales commissions per product are very common. In some cases, you have to cede up to 15% of your sales to the provider. These costs cut into profits significantly and can tear quite a hole in a company's financial lineup.

Competitive pressure

Of course, with your own online store you are not immune to competition, but at least potential buyers cannot be distracted by competing products on the same page. Just like in a real market, every brand shouts out your USPs and wants to convince the browseeer of its products. If you fail to do that, your target audience will click away to the competitor.

Price wars

Do you know the buy-box principle? Amazon made it big, and now it's being adopted by several other platforms as well. If several providers offer the exact same product, the one who presents the product best wins the buy box, i.e. the link in the "Buy now" button. One of the most important factors here is the price. The product that is offered at the lowest price is most likely to be highlighted - after all, a marketplace acts in the interest of the buyer. For you, this means that you have to constantly adjust your prices and undercut competitors. Loss of sales is therefore almost inevitable. Only if you have a product that is unique and manufactured by you or offered in an individual bundle, the fight for the buy box is unnecessary - the price comparison with similar products still remains.

No branding and brand loyalty

On platforms like Amazon, you are one of many sellers and probably have a product that can be found again in a similar way. Searchers will therefore primarily orient themselves on the price and the reviews - the brand often plays a minor role. Drastically spoken: Your buyers may never know of your existence. Branding and design options on online marketplaces are limited, so the likelihood that the buyer will remember your brand the next time around is reduced. You thus have a much harder time building a community that is loyal to your brand and repeatedly buys from you.

Limited advertising opportunities

Newsletters, embedding your Instagram feed, retargeting ads and more are hardly possible, if at all, if you only sell on marketplaces, because you simply don't have the ability to set the necessary codes to do so. Even if you advertise your marketplace store on Facebook, there's always the risk that consumers will be looking at related products at the same time. By doing so, you would be directly advertising for your competition.

Dependency

The last item on the list of disadvantages - and perhaps the most important - is the merchant's dependence on the marketplace, especially if it is used as the sole sales channel. If you sell on an online marketplace, you do not have your own domain and website, but only a place or store within the marketplace. In addition, if you violate marketplace rules, have negative reviews or shipping delays, your products may be listed lower and you may lose relevance as a merchant. You have little leverage when it comes to the algorithm or search results. eBay merchants know this too well - as soon as the provider makes innovations to the system, it happens that click and sales figures plummet.

The advantages of having your own online store

You can only make the decision between marketplaces or online stores if you know the pros and cons of both channels. That's why we will show you below what distinguishes online stores in a positive and negative sense.

1. Individuality and brand building

What is only given to a small extent with marketplaces, you can fully enjoy with your own store. You have the freedom to choose photos, themes, fonts, logos, icons, and colors to match your brand. Include image videos, do storytelling and create an About Us page to tell your brand story. You can build a brand image here that runs through all channels and makes your brand unparalleled. You also have the opportunity to include key features like configurators or product tags on inspiration images.

2. All in one user interface

Having your own online store with Shopify will also open up a whole new world for you when it comes to keeping track of your data. The SaaS platform works simply and bundles all information such as shipping details, order management, marketing actions, and of course an evaluation of your website data. This makes management a breeze - even mobile from your smartphone, thanks to a simple app.

3. Building loyal customers

Email marketing, SMS marketing, the inclusion of the Instagram feed and live chat functions - these are all possibilities that you can use in your store from now on and that will help you build a real community. You can attract followers and fans to your brand and keep them engaged and aware of promotions, new products or helpful tips.

4. Fewer levies per product

Of course, there are also costs associated with running an online store. At Shopify, the basic monthly rate currently costs €27. In addition, there are transaction costs for payment methods, which can range between 1.4% and 2.99% plus a maximum of €0.35 per product sold. Overall from the running costs still well below the fees that marketplaces charge their merchants. So in the end, you are left with more profit.

5. Technical independence

One thing first: Even with your own online store, you have to take a certain leap of faith in the system, because hosting, updates or backups are not in your hands with a cloud-based system like Shopify - which saves you time and money, by the way! At the same time, though, you're also immune to algorithm changes, because there's no such thing on your own sales channel, of course. On top of that, your Shopify store is fail-safe and your customers can access it 24/7, no matter how many people pay you a visit at once.

6. Your prices and promotions

You also have a free hand when it comes to pricing. You can make offers and discounts at any time of the day or night and adjust your prices as often or as infrequently as you see fit. The decisive advantage is that your competitor is no longer breathing down your neck and the price war is therefore much more relaxed than when customers see all the products from different suppliers side by side in one search.

7. Multi-channel sales are possible

If you choose an online store with Shopify, you can expand your sales channels very quickly and easily and sell directly on social media channels like Instagram, Facebook or Pinterest. A POS is also available - so if you decide to add a brick-and-mortar store at some point, Shopify can provide the right POS system.

8. Place for good customer support

Customers can always reach out to you if you want them to. With a dedicated store, you can answer the most important questions on a FAQ page, or offer live chat directly to help customers decide on your products faster.

9. Unlimited advertising possibilities

Advertising is essential in e-commerce to be seen. In your own webshop, you can use the whole repertoire of advertising and use email marketing, set a Facebook or Google Pixel to retarget your website visitors on these channels, easily activate your products for Google Shopping and optimize your site for Google Search. All without fear of directly advertising to the competition.

Disadvantages of own online store

1. Rebuild range

Unlike marketplaces that already have many thousands of monthly visitors, with a store you start from scratch. You need to get people to actively drive to your site by advertising. This can be difficult, especially in the beginning, but at the same time it will get you loyal customers who will buy from you repeatedly.

2. Setup time until launch

There is quite a bit of work involved in setting up an online store from scratch - even though Shopify has already shortened and simplified this process a lot. You have to allow for some time and effort to add all images and product descriptions, create legal texts like imprint, T&Cs and privacy policy, choose the right corporate design, themes and apps.

3. No trust

As a merchant on a well-known marketplace, you automatically get some of the good image and trust of the buyers. This is not the case with a newly created online store. Here you have to build trust from the ground up to convince prospective buyers. Rating systems, good customer support, a transparent appearance and a look behind the scenes, e.g. via social media or videos of the company can help.

Online marketplaces vs. own web store: Conclusion

Observing the risks of marketplace selling clearly shows that it will be difficult for you to build a successful brand with it in the long term, since you are in direct competition - even more so than in e-commerce anyway - and are also heavily dependent on the goodwill of the platform. However, online marketplaces can make perfect sense as an additional sales channel.

Our experience has shown that the strongest online retailers shine through their own web presence. Here you have a free hand and can present your products in your own online store in exactly the way you want.

So everything depends on your goals. Do you want to establish a brand, build a community of customers and fans, and grow with your business? Or do you place more emphasis on a quick entry into online sales? You decide!

For more posts on selling online, building a good online store, and many success stories from our merchants, check out the Latori Blog!