Direct To Consumer Strategy: Ecommerce vs. Marketplace
The ecommerce market is projected to reach ₱2.2 trillion from 2024 and 2028. And with this growth comes a new challenge for businesses nationwide: knowing where to position themselves digitally to get a share of the online marketplace.
Many vendors going online grapple with choosing between online marketplaces vs. ecommerce websites, gauging which option can offer them the best bang for their buck. Suppose your business goes with marketplaces like Shopee or Lazada, utilizing these channels can help you gain visibility for your business.
On the other hand, building your ecommerce website strengthens your brand positioning and opens more opportunities for sales and marketing. With your own website, you’re setting up space for your consumers to directly interact with you.
So, what should you do? Should you leverage the established reach of marketplaces or invest in building your own ecommerce shop?
Before We Go Into Choosing a Digital Platform, Let’s First Understand Direct-to-Consumer (DTC) Marketing?
Direct-to-consumer (DTC) marketing is a strategy businesses use to bypass traditional retail channels and sell their products and services directly to their target audience.
So, from its definition, brands going online to sell their wares are in the direct-to-consumer business. If they have their own ecommerce platform, they’re pure direct-to-consumer sellers. And if they use popular marketplaces for product placements, their brands are DTC marketplace sellers.
Online commerce offers exciting opportunities for businesses, however, navigating through the options can be confusing. While both ecommerce websites and marketplaces offer access to online customers, they significantly differ in terms of control, branding, and overall strategy.
Understanding their distinctions is essential for effectively strategizing how to get your audience to add-to-cart and checkout.
Building Your Ecommerce Marketplace
An ecommerce website is a software solution allowing your business to create your own online store. Think of it as a digital equivalent to renting a physical storefront where you have complete control over the design, functionality, and user experience of your store.
Things to Look For When Choosing a Website Builder
- Feature-Rich Platforms: When choosing a website builder, poke around the features they offer like product management tools, shopping cart functionality, secure payment gateways, and integrations for other digital sales platforms.
Having access to these features and adding them to your website can improve the shopping experience you provide for your consumers. - Scalability: The goal of any business is to grow, develop, and achieve sustainability. You want your brand to choose a platform that can match the needs of your business, allowing you to add features and functionalities as you change.
- Customization for Personalization: Part of building your online store is adapting an appropriate ecommerce web design that reflects your unique identity. When choosing a builder, make sure to assess the level of customization they can offer to ensure you can create a page that reflects your brand.
The Challenges of Having an Ecommerce Platform
- Initial Investment: Setting up your own online store comes with a significant initial investment. Regardless of whether you use a website builder with preset templates or have it designed by a professional, there are website costs to expect like platform fees, web design, and marketing efforts.
It’s worth noting that your ecommerce website and its operations (upkeep, delivery, warehousing, and more) should not exceed 10% to 15% of your sales. Otherwise, it can become a liability rather than an asset for your business. - Marketing and Traffic Generation: After building your official ecommerce website, the next challenge would be how to drive traffic to your page—which wholly depends on your marketing campaigns.
Some of the strategies you may need to ideate and implement are: - Technical Expertise: Having your own business website means you would have to manage your ecommerce platform. This may require a level of technical expertise for setting up, maintaining, and troubleshooting.
Still need expert advice?
Partnering with Online Marketplaces
A digital marketplace is a virtual shopping mall where multiple vendors sell their products. Popular examples of digital marketplaces are Shopee, Lazada, and eBay. These platforms handle much of the infrastructure needed for your brand, providing a built-in customer base through their existing user traffic.
Generally, DTC marketplaces don’t carry any inventory of their own, and they charge fees for every vendor that they have. It helps to be more visible – or, as Facebook likes to call it, “discoverable” – on platforms that invest heavily in sales promotions.
This way, customers can compare you with others and make their choice.
Things To Look For in an Online Marketplace
- A Demographic “Match:” Some brands find marketplace arrangements worthwhile because the platform’s demographic reach is a match to their market, or close to it. If you know your products will sell well on Shopee, SM Malls Online, or Watsons Online, why not be on them?
- Preferred Vendor Visibility: Customers have many ways to determine whether the seller is trustworthy and reliable. They can look at how many products the seller has sold, review ratings, and read fellow customer reviews on the entire purchase-to-delivery experience.
But brands can get a boost in credibility if they are designated as a preferred vendor (which is signaled in Shopee), or receive a more formal designation, such as “Official Store” attached to their brand name, or, like in Lazada, carry the “LazMall” status, which customers highly trust.
These features increase your chances of engagement, building not only your brand’s awareness but also potential conversions. - Product Listing Requirements: To effectively showcase your products without issues, ensure you can comply with the product listing requirements of online marketplace platforms. These requirements often involve specific guidelines for product images, descriptions, and specifications.
The Drawbacks of Being a Marketplace Vendor
- Fees And Commissions: A marketplace creates a ready-made store for you and gives you incoming traffic to help you sell. In exchange, you have to pay commissions—which could be up to 30% of your sale or a flat fee. Sometimes it’s both.
- Little Or No Access To Customer Sales Data: Marketplaces tend to impose access restrictions to sales data on their platform, even if they’re your transactions.
In the short to medium term (or if you’re a startup), it might be a livable compromise. But in the long term, setting up alternative sales channels is worth considering. - Limited Brand Control: Online marketplaces like Lazada and Shopee have their own identity and personality. Partnering with them for product distribution typically entails your products adapting their branding.
This can limit how you present yourself to potential customers and lessen your chances of brand recognition and recall.
Leveraging a Hybrid Approach for Direct to Consumer Ecommerce
As Nico Share, Brand Manager of Ardent World, recounted in a recent Truelogic DX webinar, they chose a DTC online marketplace over an ecommerce website at the start of COVID-19 because that would give them immediate visibility.
He said: “If you try to build your own selling platform, then you will have to invest in, one, the infrastructure; and second, the traffic.”
So, before jumping the gun and building their own ecommerce platform, they used marketplaces like Shopee and Lazada to understand the size of their potential online market. For them, selling in DTC marketplaces was not a wasted effort.
“You wouldn’t realize that [there’s] demand online, which will push you to the next step,” said Share.
At the same time, they realized that building their own website was the way to go and made that their goal. Alongside their partnership with marketplaces, Share didn’t give up their efforts on SEO and continued maintaining some social media visibility.
As a growing FMCG brand, Ardent World realized they wanted better control and understanding of their customer sales data to help them plan forward.
“It’s not enough to know where [customers] are, because we also need to know why they are there,” Share said.”
Nico Share’s experience from Ardent World teaches brands that investing in various digital direct-to-consumer channels isn’t an either/or proposition. While the ultimate goal may be to create your own e-commerce website, leveraging online marketplaces to build brand awareness, customer trust, and financial resources can be a smart first step before transitioning fully to your platform.
As an expert Digital Marketing Agency, Truelogic helps you understand the differences between DTC platforms, their respective advantages, and the ideal choice for your business. Just by learning how to leverage these direct-to-consumer marketing platforms, you’re a step closer to achieving your brand goals.
Are You Ready to Drive Growth for Your Brand?
If you’re choosing between ecommerce and online marketplaces, you can stop right there. You simply don’t have to. All you need is to strategically plan how to utilize both forms of distribution channels to continue growing your business.
Do what Nico did. Use marketplaces to get to know your customers and increase brand awareness. And when you’re ready, move on to building a website for your brand to have more control over your sales and marketing tactics.
There’s no need to worry about losing your marketplace visibility when moving to an ecommerce platform. Through in-house website SEO, ecommerce SEO, and social media campaigns, you can support and build your very own website.
If you’re ready to start growing your business digitally, get in touch with Truelogic today and let us help you strengthen your online presence. With our extensive experience in digital marketing, we can collaborate and create effective marketing strategies to optimize your brand.
