Magento marketplace is also a kind of online website but it is a more complicated model. So what are the main differences between Magento marketplace websites and E-commerce ones? Let read this article:
1.Less initial investment
With an e-commerce website, besides the initial investment for building website, a considerable amount of money you need to spend is for inventory cause customers will trust more if you can offer various kinds of products. Magento Marketplace offers the advantage of letting their sellers handle their stock on their own, which can considerably reduce your initial investment. The cost for launching a marketplace is roughly the same the cost for an e-commerce website although it is more complicated and has more complex elements.
2. Larger inventory
As I said above, your e-commerce website cannot be successful if it only contains some inventory available in stock. The greater the inventory, the more likely it will be for a customer to find what they are looking for.
On the contrary, the amount of inventory on the marketplace is actually huge but for each seller and marketplace owner, they do not have to invest much money for inventory cause that huge inventory is the sum of all participants. Moreover, in the Magento marketplace, you can choose to deactivate a product that doesn’t sell with the push of a button. Since you never bought it, there are no costs associated.
3. More scalable
With Magento marketplace, operators do not actually buy and store any products, they just connect multiple products from different sellers so it takes considerably less financial risks than traditional E-Commerce websites which require a huge investment on inventory. Therefore, the Magento marketplace achieves economies of scale more easily.
4. Two-way customer relationship
Selling product to customers doesn’t mean you are successful. You should have strategies to encourage customers to turn back to your web store many times. In fact, you also have to provide them with top-notch customer service. Magento marketplace plays more of a mediator role that monitors transactions between buyers and sellers and only steps in if something goes wrong between the buyer and the seller.
5. Positive cash flow
The result of these various savings is clearly felt in the finances of the company. While e-commerce web store has to spend a huge amount of money for initial investment and try to sell all inventory, Magento marketplace has better profit margins cause they earn money from the commission for each transaction. With that money, you can subsequently re-invest into their activity in order to achieve a perennial growth.
6. More technology and management functions required
Because the primarily earning of Magento marketplace comes from the commission deducted from sale transactions so marketplace operators always try to boost the volume of the product more than E-commerce website. Because Magento marketplace has to deal with a great number of transactions, it is no doubt that more technology, more management functions should be applied and business owners should stress on the automation of its systems as much as possible.