Which is Best For Your Business: Online Marketplace vs. E-commerce Platform

Which is Best For Your Business: Online Marketplace vs. E-commerce Platform

Is it better to open an account and sell at a popular online marketplace like Facebook Marketplace, Shopee, Lazada, or Carousell? Or are you better off investing in an e-commerce website of your own? In this podcast episode, Truelogic Managing Partner Berns San compare e-commerce platform and online marketplace to help you decide which one is for your business.

With the digital economy booming and consumer habits evolving, the choice between establishing an e-commerce platform or leveraging online marketplaces has become pivotal for business success.

Berns San Juan highlighted the critical factors entrepreneurs should consider when making this decision, emphasizing that each route offers distinct advantages depending on business goals and market dynamics.

“Your choice in terms of which channel to sell from will have a lot of impact on your business. The platform will determine your sales strategy, how much business capital you’ll have to put down, and what your customer experience will be like,” he said.

E-commerce Platforms vs. Online Marketplaces

San Juan delved into the strategic differences between e-commerce platforms and online marketplaces. “An e-commerce platform, your own website, is like looking for the location yourself and then setting up your own brick-and-mortar venue online,” he explained. This approach requires intensive involvement in website maintenance, monitoring, and customer service, akin to managing a physical store.

In contrast, San Juan likened online marketplaces to renting space in a bustling mall, where vendors benefit from existing foot traffic and a ready customer base. “Marketplaces attract a lot of customers due to the variety of products offered, similar to the foot traffic in major shopping malls,” he explained. This model simplifies the initial setup but limits control over branding and customer relationships compared to owning an e-commerce platform.

Marketplaces involve a tripartite relationship between vendors, customers, and marketplace managers. e- commerce, websites though, is only strictly between you and your customer.

According to recent data, e-commerce growth in gross merchandise value ranges from 8% to 45%, with an average of approximately 15%, far outpacing the single-digit growth rates seen in traditional retail sectors.

Reflecting on the growth trends in e-commerce versus traditional retail, San Juan highlighted the rapid expansion of online sales channels, underscoring the missed opportunities for businesses not yet online. “The rate of growth in online purchases significantly dwarfs the rate of growth in traditional retail,” he emphasized.

Person purchasing through an online marketplace

Top E-commerce Platforms in the Philippines

The e-commerce landscape in the Philippines is dynamic and evolving, driven by consumer demand for convenience, variety, and reliable service. Let’s explore the top e-commerce platforms that are transforming online shopping in the Philippines.

1. Shopee

Shopee stands tall as the undisputed leader in Philippine e-commerce, boasting approximately 54 million monthly visitors and a significant 46% market share. This platform has garnered immense popularity due to its user-friendly interface, extensive product range, and robust marketing strategies. With 3 million Android app downloads, Shopee has solidified its position as the go-to destination for B2C transactions. Its competitive edge lies in its expansive reach and frequent promotional campaigns that attract both sellers and buyers alike.

2. Lazada

While trailing slightly behind Shopee with 24 million monthly visitors and 1.4 million Android app downloads, Lazada remains a formidable force in the Philippine e-commerce scene. Known for its comprehensive logistics network and efficient delivery options including same-day and next-day services in key urban centers, Lazada caters not only to B2C but also facilitates C2C and cross-border transactions. The platform’s strength lies in its diverse product offerings, with fashion emerging as a particularly lucrative category.

3. Zalora

Zalora, originating from Singapore, has carved a niche in the Philippine market with its focus on fashion and cosmetics. Garnering 1.1 million monthly visitors and approximately 175,000 monthly app downloads, Zalora appeals to fashion enthusiasts seeking a blend of international brands and local favorites. With a catalog boasting over 50,000 products, including niche and cult brands, Zalora caters to discerning shoppers looking for style and variety.

opening the Zalora app ecommerce platform

Top Online Marketplaces in the Philippines

Several standout online marketplaces cater to a variety of consumer needs and preferences. Let’s discuss some of the leading platforms that have carved out significant spaces in the digital marketplace arena.

1. Carousell

Formerly known as OLX, Carousell has evolved into a prominent online marketplace in the Philippines. With approximately 3.9 million monthly visitors and nearly 100,000 Android app downloads, Carousell facilitates both consumer-to-consumer and business-to-consumer transactions. Originally a platform for classified ads, Carousell now hosts a wide range of products including electronics, fashion items, beauty products, and even real estate listings.

2. Facebook Marketplace

Introduced in 2016, Facebook Marketplace has swiftly become a popular avenue for buying, selling, and trading goods within local communities. Integrated seamlessly into the Facebook app, this platform boasts a massive user base, enhancing accessibility for users looking to discover items in their vicinity. With nearly 496 million users globally, Facebook Marketplace has redefined social commerce by combining the convenience of online shopping with social networking.

3. Amazon

Although Amazon‘s presence in the Philippines sees about 976,000 monthly visitors, it remains a formidable force in the global e-commerce sphere. Known for its extensive product range and efficient delivery services, Amazon appeals to Filipinos seeking international brands and diverse offerings that may not be readily available locally.

Girl shopping using the Amazon online marketplace

4. eBay

With around 800,000 monthly visitors in the Philippines, eBay continues to thrive as a consumer-to-consumer marketplace offering a plethora of products ranging from collectibles to electronics. Despite its evolution and the rise of newer platforms, eBay remains a go-to destination for buyers and sellers looking for unique and hard-to-find items, making it ideal for collectors and enthusiasts.

Choosing Between E-commerce Platforms vs. Online Marketplaces

Why use a marketplace versus running your website? Here are the considerations you want to make if you opt to sell on a marketplace rather than through a dedicated website.

Revenue Considerations

“When opting for a marketplace, it’s crucial to understand the revenue dynamics. Marketplaces typically charge commissions ranging from 5% to 25% on sales. These commissions can significantly impact profit margins, especially for products with lower markups.” In contrast, owning an e-commerce platform allows businesses to retain a larger share of revenue, albeit with the responsibility of managing all operational costs.

Personalization and Brand Control

“One of the key advantages of owning your e-commerce platform,” Berns elaborates, “is the ability to personalize every aspect of the customer journey. From website design and user interface to product placement and promotional strategies, businesses have full creative control.” This level of customization not only enhances brand identity but also fosters deeper customer engagement and loyalty, which can be challenging to replicate within the confines of a marketplace’s standardized templates and limited branding opportunities.

customer journey personalization for ecommerce marketplace

Marketing Strategies and Reach

Berns emphasizes the strategic implications of marketing within each model: “On your own e-commerce website, you have the freedom to implement a wide range of marketing strategies tailored to your brand’s unique goals. This includes SEO optimization, social media campaigns, paid advertising, and more, all designed to drive traffic and conversions.”

In contrast, while marketplaces provide immediate access to a large customer base and potentially higher visibility, effective marketing often requires additional investment in sponsored placements and compliance with platform-specific algorithms and guidelines.

Data Ownership and Customer Insights

A pivotal concern raised by Berns is data ownership: “In a marketplace environment, businesses do not typically have access to detailed customer data beyond transactional information. This limits their ability to build direct relationships with customers and execute targeted marketing campaigns based on comprehensive insights.”

Conversely, owning an e-commerce platform allows businesses to collect and analyze first-party data, enabling personalized marketing initiatives, customer retention strategies, and enhanced customer service experiences.

customer data insights for marketing

Where Should You Sell Your Products Online?

Summarizing the decision-making process, Berns advises, “Businesses should assess several factors before deciding on their e-commerce strategy. Considerations include profit margins, technical capabilities,  desired level of brand control, marketing goals, and the strategic importance of data ownership.”

For businesses with robust technical resources and a strategic focus on long-term brand building and customer relationships, owning an e-commerce platform may offer greater flexibility and control. Alternatively, marketplaces provide a viable entry point for businesses seeking immediate market access and reduced initial investment.

To delve deeper into the evolving landscape of digital marketing and e-commerce strategies, subscribe to the Truelogic DX Podcast on Spotify, Google, and Apple Podcasts. Explore the latest trends, news, and transformative insights shaping the future of online commerce. Don’t miss out on unlocking new opportunities and staying ahead in the digital economy.

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