Insights
D2C vs Marketplaces: Which channel is right for your eCommerce brand?
You might be living under a rock if you are unaware of the rise of eCommerce. Even before the pandemic, the industry grew rapidly and in the post-pandemic world, it has left a spell on consumers which is hard to pass.
Brands are now focusing on getting to their consumers as fast as possible, with the best channels. Thanks to the internet evolution, they now have multiple channels to reach out to consumers- from marketplaces to social media to their own eCommerce websites.
This article focuses on the 2 major channels of online selling for D2C brands- an eCommerce website or an established marketplace (read Amazon, Noon, Flipkart, etc.). But first, let’s understand what D2C is and what are its benefits of the same.
D2C- what is it and how did it rise to popularity?
D2C is short for direct-to-consumer. In eCommerce, D2C refers to a company that sells its own products directly to the end consumer- without any distributor network or platform.
Earlier, the main categories that were involved in D2C were clothing brands and consumer electronics but now there are 100s of such categories in place, selling directly to consumers.
B2C, on the other hand, involves selling to customers by using a third-party website.
Several famous brands operate in both D2C and B2C spheres.
D2C vs B2C
Let’s look at some of the differences between having your own eCommerce website and placing your product on an online marketplace.
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Definition
Marketplace
ECommerce Website
An online marketplace is a website where a seller (brand or 3P) can list, promote, and sell products against a monthly/quarterly fee and/or takes a cut of the final sale price as part of the retailer margins Some of the popular online marketplaces globally are Amazon, Walmart.com, eBay, Alibaba, etc
An eCommerce website is a brand-owned website (Brand.com), where it can list, promote, and sell products. Most D2C sellers will use an eCommerce platform to create their website and manage marketing, sales, and operations.
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Audience
Marketplace
ECommerce Website
Online marketplaces provide shoppers with variety, low prices, and fast shipping speeds. As a result, they attract massive audience numbers which give your brand potential access to a vast set of audiences, high-performance SEO, and marketplace-loyal customers.
Conversely, an eCommerce website doesn’t have the privilege of pre-existing traffic & It’s on the brand, to reach out to customers, advertise the products, and optimize your keywords to build your own segment of the audience. It allows the brand total control over the type of traffic you want to have on your website and how you attract them.
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Cost of selling
Marketplace
ECommerce Website
Many marketplaces charge referral fees as a commission against a sale on their platform, driving up your cost of acquisition and it can get expensive with the more volume you sell. On leading marketplaces such as Walmart, Amazon, etc, these charges are usually a combination of a monthly fee and percentage of sales based on category.
There are no marketplace fees when selling on your own website, however, there are other expenses that come with running your own websites such as website maintenance & development, platform fees depending on whether you use Shopify or BigCommerce, and payment transaction fees.
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Retention
Marketplace
ECommerce Website
Marketplaces have respective guidelines in place against soliciting emails or asking shoppers to visit external websites as well as enabling to group similar items together to help shoppers find the best price, delivery date, etc. This can be a challenge at times, as it’s difficult to leave an impression, as the goal of the marketplace is to make a sale irrespective of the brand
Winning on conversion on your D2C website can make your brand presence felt more prominently than on a marketplace, where your brand may well get lost among thousands of other competing products offering the same deal or faster shipping. Brands can also offer incentives to register for an account or sign up for a newsletter to give themselves a direct line to reach the shoppers.
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Barriers to entry
Marketplace
ECommerce Website
Online marketplaces require stringent entry norms to be met by brands before registering on the platform, ranging from having a registered business and competitively priced products to demonstrating significant expertise as well as online selling experience
Any brand can set up an eCommerce website of their own provided they carry the necessary technical or marketing abilities to design a website and attract customers.
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Seller tools
Marketplace
ECommerce Website
Online marketplaces provide various toolkits to help brands accelerate their business by leveraging the data from real-time shoppers and capitalize on micro-marketing opportunities such as Product research tools, Sales reports, Marketplace ads, etc
Few eCommerce websites provide the business analytics tools to strengthen your D2C business such as Built-in tools, such as Shopify KIT management, Third-party apps, such as repricing tools, product recommendation plug-ins, and live chat.
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Sustainability
Marketplace
ECommerce Website
Online marketplace stores are essentially a more business-friendly model with speed to launch, allowing easy traction for your D2C business. However, the brand may cease to be independent of the external macro-environment including marketplace rules and other sellers. You may have limited control over your brand and the customer experience, and you have thousands of other sellers to compete against, making it difficult to scale up your business
eCommerce platforms are probably more effort-intensive to launch & require the brand to put effort into designing the brand store, creating brand awareness, and attracting customers. After passing the initial phase, a brand can have absolute control over growing the business, creating customer experiences and driving customer loyalty & thereby making it easy to scale up.
