Dot Com vs Marketplace
In the online business space, where and how you sell your product is just as important as the product itself. There’s a lot of noise to cut through, and when you do differentiate yourself, you have to make sure that you’re speaking to the right people and that you have something valuable to say.
With that in mind, there are two main routes to take when promoting your product: using a dot com website or using a marketplace. Both can accelerate the number of people exposed to your brand, alongside the number of people who actually buy from your brand. The difficulty, though, lies in selecting which path makes the most sense for your business model and goals.
That’s why our marketing experts have put together this simple guide to dot com vs marketplace – helping you pick a clear winner for your marketing strategy.
The Dot Com vs Marketplace Breakdown
Two differences stand out between a dot com website and a marketplace: traffic and customers. But before we dive into those differences, let’s start with what a dot com website is. These are primarily built and used for information, not to make online transactions. A marketplace, however, is any external e-commerce website where a brand’s products are sold. Doesn’t exactly roll off the tongue, right? In short, it’s an online space where you can browse and buy goods.
That said, a marketplace can also include e-commerce retail sites where a brand sells its products to the retailer, and the retailer sells them to customers. Likewise, open marketplaces (such as Amazon Seller Central) are third-party sites that allow brands to sell products to their audiences.
So, difference number one between dot com sites and marketplaces is traffic. Dot com sites tend to rely on external sources for traffic – sources like Google search results, social media, and paid advertisements. Marketplaces, on the other hand, have an additional source from their own internal traffic.
Take Amazon for example, where 56% of shoppers start their product searches online. They arrive at the site looking to buy coffee, but they end up browsing socks, dog treats, and TVs. The products on marketplaces benefit hugely from users knowing that they can go directly to the platform and be able to find a number of items (even if they didn’t initially intend to buy them). It’s like going to the store for milk and bread and coming home with gardening tools.
Difference number two between dot coms and marketplaces is the customer. For dot coms, customers and their data are fully visible to brands. That means brands can invest in building loyalty more easily because they can track the full user journey and behavior. For marketplaces, however, customer actions are only monitored on the marketplace and by the marketplace, so third-party brands don’t have the same level of transparency to understand their audiences. Similarly, customers on marketplaces don’t have the same brand loyalty as on dot com sites because they are shown a selection of products from brands’ competitors.
What Are the Benefits of Each?
Like all elements of the digital realm, there are benefits to using a dot com website and benefits to using a marketplace. How you leverage those benefits, depends on what technology you have and what your aims are.
For instance, did you know that most consumers start their product searches on Amazon, and over 70% of online purchases are made on marketplaces? Yet, some consumers choose not to shop on certain marketplaces because they prefer a specific brand, regardless of whether the price is higher.
These are some of the core advantages of dot com and marketplaces.
Benefits of Using Dot Coms
The main perk offered by dot com websites is the access they provide to customer data. User analytics from dot com sites are typically more specific compared to marketplaces, as the brand doesn’t have multiple competitors on the site, so user behavior is more strongly associated with how the platform is designed and the user experience unfolds. As a result, brands can make more informed changes to drive conversions.
Some brands also report having higher profit margins on their dot com sites, however, it’s important to note that these sites generally have higher customer acquisition costs and fixed costs to run the dot com store.
Benefits of Using Marketplaces
Marketplaces are attractive to customers because they can shop for a variety of goods in one place, saving them time and manually comparing prices or reviews. They can also save their payment information, shortening the purchasing process. Plus, marketplaces can collect data on the types of products that customers buy, and tailor their displays to promote similar items. Not to mention, marketplaces have a lower cost of acquisition compared to dot com sites, as well as cheaper paid ad clicks.
Another significant benefit of marketplaces is that brands can showcase their products to new customers who are further along in the purchase journey. For example, if a customer searches Amazon for a large, soft beach towel, they are provided with a range of towels, all with independent reviews that build trust in both the products and the marketplace as a whole. When the customer lands on a towel that suits their needs, they’re therefore more likely to convert. Marketplaces subsequently offer great non-branding advertising opportunities with an impressive return on advertising spend, which can’t always be found on Google for the same search terms.
Using One Over the Other
Dot coms are ideal for brands looking to grow a customer base that repeatedly comes back to the site and is more likely to be a brand ambassador. These sites give brands more control over customers’ shopping experience and generate data that can be informative for in-store purchases too. Dot coms essentially let brands have more granular insights around customers, and how they interact with their brand alone.
Marketplaces are better suited to brands that want to acquire new customers and expand their usership because they expose companies to a larger volume of shoppers. Marketplaces have more people searching for generic, non-branded terms, so brands can maneuver their competitors by doubling down on their product pages, offering exclusive discounts, and utilizing the right paid ads on marketplaces. The competitive nature of marketplaces means that brands have to really finesse their value offering.
Dot com websites and marketplaces don’t have to be mutually exclusive. We’ve seen a recent trend where brands use both or turn their e-commerce pages into online marketplaces. Doing so can certainly be a smart move, but brands need to always fine-tune, test, and optimize their pages with the customer experience in mind. This balance requires matching information and details from the dot com site with the format and SEO needs of a marketplace, and shouldn’t be a quick transformation.
There’s no “one size fits all” approach to deciding between selling on a dot com site or a marketplace. The best strategy is to experiment with both and find what provides the top results for your business. Ultimately, you want to sense-check what strongly resonates with your audiences, and which platform is the most effective at getting the products from people’s fingertips and into their hands.