Tech Decisions That Matter When Choosing Between a Marketplace and an E-commerce Platform

Back in 2020, many small business owners saw marketplaces like Amazon and Etsy as a golden ticket to fast online sales. And why not? They offered instant traffic, easy setup, and what seemed like an endless stream of potential buyers. But let’s take a look at 2025 — the situation has changed. According to eCommerceDB and Shopify Enterprise Reports surveys, nearly 60% of growing brands now prefer building their own online stores. So what changed?

In this article, we’ve gathered the latest data and expert insights to help you decide between selling on a marketplace or launching your own e-commerce platform. Let’s dive in!

The Real Difference Between a Marketplace and an E-commerce Platform

Let’s start with the basics.

A marketplace is like a digital shopping mall. You’re just one of many sellers — imagine yourself in a busy Amazon hallway or showing your handmade jewelry on Etsy. Whether it’s eBay or service platforms like Fiverr, you’re part of a multi-vendor e-commerce site. Yes, there’s a lot of traffic, but also a lot of competition. And the customers? They’re not really yours.

An e-commerce platform, on the other hand, is like your own store. Think of a quiet boutique in a local neighborhood, where you choose the wall colors, the music, and how you greet customers. With platforms like Shopify, WooCommerce, or BigCommerce, you control everything — from branding and pricing to collecting and using customer data.

So, what’s the real difference between a marketplace and an e-commerce platform?

It comes down to ownership, control, and your relationship with customers:

1. Marketplaces own the audience. You rent space in their ecosystem. That might seem easy initially, especially when you’re just starting, but it also means you must follow their rules. You can’t reach out to customers directly. You don’t have access to their emails. One algorithm update or policy change can make your store invisible overnight.
2. With your own store, you own the relationship. Every click, every email, and every purchase helps you learn and grow. That data is extremely valuable. It lets you personalize your offers, build customer loyalty, and create products people actually want.

A Story You Might Relate To

Let’s look at the difference between marketplaces and e-commerce platforms through the story of a candle maker from Portland. Sarah started selling her handmade candles on a popular online marketplace and was excited by the fast stream of orders. But after a few months, she noticed a worrying trend: most of her traffic came from the platform’s own search engine. When a new brand appeared offering lower prices, her sales suddenly dropped.

She had no way to contact her past customers, no access to their email addresses, and no clear understanding of what went wrong. It felt like her business didn’t really belong to her. That’s when she decided to open her own Shopify store. It took effort, of course. But within six months, Sarah built a loyal community, launched her first subscription box, and increased her revenue by 40%, with no algorithm involved.

That’s the core of the “marketplace vs. e-commerce platform” question: do you want to be a guest or the owner of your digital space?

But let’s not rush the answer — we’ll look at the pros and cons next.

Pros and Cons: Marketplaces

Now, let’s dive deeper and look at the real trade-offs when using digital marketplaces. This is not just about features — we’re talking about hidden realities that can make or break your business.

✅ Pros

• Instant Visibility
  Digital marketplaces bring millions of users to your products. It’s like setting up a table in Times Square — people will see you. For someone just testing the waters, this can be gold. You get instant exposure, ideal for validating ideas before investing in a full online store.
• No Need to Market (At First)
  If you know how to play the game of marketplace marketing, your listings can start generating revenue without a single Instagram ad. Think optimized product titles, strategic categories, and seasonal promotions. The marketplace takes care of traffic; you just plug in.
• Built-In Infrastructure
  Marketplaces offer logistics, payment processing, dispute resolution, and even customer support. For a small business owner juggling 20 things at once, this can feel like a lifesaver. You don’t need to be a tech wizard or hire a full dev team to start selling.

❌ Cons

• High Fees
  Here’s the kicker: those platforms take a big cut — anywhere from 15% to 45% per sale, depending on your product category and the platform. Suddenly, your carefully calculated profit margin isn’t looking so healthy.
• Low Brand Loyalty
  Customers remember Amazon, not your brand. Even if they loved your product, they’ll likely buy the next version from whoever is cheapest or shows up first. You’re basically leasing customers, not owning them.
• Algorithm Risk
  Let’s talk nightmare fuel for a second. Imagine waking up to find your product has vanished from the first page of search results. What happened? An algorithm tweak. That’s the dark side of the marketplace industry — you’re not in control of your own visibility.

According to Marketplace Pulse, the average Amazon seller now spends over $3,500 monthly on ads just to maintain visibility. That’s not growth — that’s survival.

There’s another question that we recommend asking yourself as an online store owner. There’s an unspoken deception: many founders think they’re building a business, but in reality, they’re renting a shelf space in someone else’s store. And the rent keeps going up.

So, before entering the marketplace, ask yourself: Is your goal to test and validate, or to create something of your own?

If you’re still unsure, our team of marketplace solution developers and e-commerce website developers can help you craft a strategy that considers your product, market, and growth goals.

🛍️ Pros and Cons: Your Own E-commerce Store

Creating your own online store is like opening your own coffee shop after years of working at a chain café. You’re no longer limited by the menu, corporate uniform, or someone else’s rules. But with freedom comes responsibility. Let’s break down the pros and cons of this choice.

✅ Pros

1. Full Control Over Your Brand
   Imagine you’re a designer creating unique handmade accessories. Selling through a marketplace, you notice that your earrings get lost among hundreds of similar items. People come for the “product,” not the “brand.” Now imagine you have your own site, with neat branding, a story, and a vibe. Every detail — from the logo to the animations on the page — works to make you memorable.

👉 This is what custom eCommerce marketplace design looks like: full visual and strategic alignment with your style and goals.

Customers remember you, not the platform. It’s not just pretty — it’s the foundation for long-term loyalty.

2. Own Customer Data — Your Own Rules
   Let’s be honest: when you sell on a marketplace, all the data stays with the platform. You don’t know who your customers are, what they’re interested in, or what they bought in the past. Now, compare that to your own site, where you see the full picture — from demographics to behavioral analytics. You can build email marketing, loyalty programs, and personalized offers.

For example, one of our clients, an owner of a natural cosmetics store, shared how her sales grew by 38% after implementing an automated email sequence aimed at repeat purchases.

👉 Without data, there’s no growth. And your own store gives you access to it.

3. Better Margins, More Profit
   This is one of the main “invisible” benefits. Marketplaces often take a 15% to 45% commission on sales. Add advertising costs to that, and your profits start to shrink fast.
   When you work through a digital product marketplace or create a marketplace for services on your platform, you control the price, promotions, upsells, and the entire customer journey. You don’t share the revenue with the platform — just with the tax office 😅

For example, if you sell online photography courses on a well-known platform, after commission and taxes, you might earn $12 from a course priced at $49. Moving to your own platform, your profit would be $40+ from the same price — and your conversion rates increase thanks to a custom landing page.

❌ Cons

1. Traffic Won’t Come on Its Own
   On a marketplace, you get an audience “by default.” But on your own site, you’re invisible until you run ads, do SEO, or build a social media following. This is often the biggest pain point for small business owners, especially in the first few months.

But at the same time, this is where the real growth potential lies. By building a solid eCommerce marketplace strategy, you are no longer dependent on algorithms or third-party commissions — the growth is in your hands.

Today, a lot of solutions exist to help you start smoothly: from micro-influencers and email newsletters to SEO content and flexible budget ads.

2. Initial Investment
   You can’t avoid this: building your own store is an investment. Development by multi-vendor eCommerce website developers can cost anywhere from $5,000 to $50,000+ depending on the scale and features (e.g., if you plan to create a marketplace platform as a service or a multi-seller eCommerce site).

But it’s important to understand: you’re not just paying for a website. You’re investing in an asset that fully belongs to you.

You’re building a platform that can scale, adapt, and be handed over for management. It’s no longer just a store — it’s a digital asset that will work for you for years to come.

Why Brands Are Choosing Independence in 2025

1. Customer Ownership – Maximizing First-Party Data Value

Brands are increasingly favoring first- and zero-party data as privacy regulations such as GDPR and iOS updates limit access to third-party data. Owning direct customer data not only ensures compliance but also enables the implementation of personalized marketing strategies that build trust and loyalty. By utilizing this data, brands can create tailored experiences, optimize cross-channel campaigns, and innovate in ways that third-party data simply cannot support.

2. Multichannel Strategy – Diversification for Resilience

The shift toward independence is also driven by the need to reduce risks associated with reliance on centralized platforms. Consumer shopping habits are changing, with preferences leaning toward omnichannel experiences that seamlessly integrate physical and digital touchpoints. 

Leading brands are adopting direct-to-consumer (D2C) models alongside marketplace strategies to collect first-party data and build deeper customer relationships. This dual approach helps brands remain flexible in response to changing consumer behavior.

3. Technology Accessibility – Empowering Non-Technical Founders

The rise of user-friendly tools like Shopify, Wix, and headless CMS solutions has democratized e-commerce. Now, even founders without technical expertise can efficiently launch branded stores or marketplaces. Additionally, AI-driven platforms allow for hyper-personalized customer interactions, which are crucial for competing in the fast-paced market landscape of 2025.

4. Hybrid Models – Balancing Market Presence with Brand Independence

A growing trend among companies is to start on well-known marketplaces to quickly gain visibility and scale, then transition to independent platforms to retain control over branding and customer relationships. This hybrid approach allows companies to leverage marketplace infrastructure while gradually building their own ecosystem for long-term growth.

5. Consumer Focus – Meeting Evolving Expectations

In 2025, consumers will demand more personalized and frictionless shopping experiences. Brands that excel in providing individualized interactions—through AI tools or innovative D2C channels—will be able to outpace competitors. For example, advanced AI systems help companies analyze behavioral patterns to anticipate customer needs and ensure seamless interactions across all touchpoints.

By integrating these trends into their strategies, brands can position themselves as leaders in a rapidly changing market, strengthening customer relationships and ensuring sustainable growth.

When Should You Choose a Marketplace?

Starting on a marketplace is like renting space in a popular shopping mall: the traffic is already there, and you just focus on sales. This is especially valuable when:

• You are testing a new product or market
  For example, you’ve created a line of minimalist jewelry. Investing in your own website and marketing from the start could be too risky. On a marketplace like Etsy or Amazon Handmade, you can quickly check if there’s demand and adapt the product before scaling.
• You don’t have an audience yet
  If you’re a new artisan or creative professional without social media or an email base, a marketplace for services or a digital product marketplace can help you reach your target audience without spending money on ads.

For example, Fiverr has over 4.2 million active buyers (as of 2023), and Upwork handles over 100,000 weekly job postings. These service marketplaces have already aggregated potential clients for you.

• Your product is an impulse buy
  Accessories, unique home decor items, Canva templates, or Figma plugins all sell great on digital marketplaces where users “browse,” get inspired, and buy right away.

According to Etsy, 79% of buyers are looking for something special, but not necessarily specific. This makes the platform perfect for unique, emotional purchases.

🛒 Great Marketplaces to Start With

• Etsy — The best online selling platform for creative goods. People come here to buy unique and personalized items. It’s a great choice for artists, crafters, and designers.
• Amazon Handmade — A larger and more structured platform, ideal for those who want to reach a mass market and ensure steady volumes (though Amazon takes strict commissions and requires high-quality standards and customer service).
• Fiverr / Upwork — Perfect marketplaces for services for designers, marketers, copywriters, and musicians. At first, you’ll spend time creating your profile and case studies, but over time, the platform can become a steady source of orders.

🧩 What to Keep in Mind:

Marketplaces are a quick entry, but not the final growth point.
For many entrepreneurs, a marketplace is a real lifesaver at the beginning: you don’t need to figure out advertising, hire designers or developers, or build a loyal audience from scratch. You just register, upload your product, and wait for the first orders.

🎯 But over time…
You start noticing that your profits are “leaking.” The platform takes up to 45% of each sale, and the more you sell, the more you lose on commissions. At the same time, the buyer still thinks they bought “on Etsy,” not from you. And now, you’re not just a seller; you’re an invisible supplier to a system that dictates its own rules.

📉 Contact with the customer?
Forget about it. On most platforms, you can’t even email the buyer without risking a warning.
Without access to customer data, you can’t build a system for repeat sales, loyalty programs, or email marketing. Everything that helps a business survive and grow in 2025 is off-limits.

💡 But everything changes if you use a marketplace as step №1 in your e-commerce marketplace strategy.
You can:

• Test your products and prices on a hot audience,
• Find out which products sell best,
• Collect your first reviews and visual case studies,
• And most importantly, gain confidence and data to make the next step wisely.

And this is where the real fun begins.

Your Own Platform is Not Just an Alternative, but an Investment in Freedom

When you create your own online marketplace platform, whether it’s a digital product marketplace or a marketplace for services, you’re no longer dependent on other people’s algorithms. You manage the visuals, build your own audience, and set your discounts, upsells, and CRM yourself.

This is not a fast start. But it’s sustainable growth.

Your own multi-vendor ecommerce website becomes an asset that can be scaled, passed to a team, and used to attract investment. And unlike renting space in a “shopping mall,” it becomes your own building, with your own sign, rules, and opportunities.

📌 So, if your goal is not just to “sell” but to build a brand, sooner or later, you’ll have to move to your platform. It’s better to be prepared for this in advance.

When Should You Build Your Own E-commerce Store?

Imagine you’ve been selling handmade jewelry on Etsy — the first few months went great. Orders, positive reviews, likes on photos… But one day, you wake up and see your sales have dropped by 70%. Why? Algorithms. Someone paid more for ads, someone posted a trendy design, and someone became “friends” with the platform itself. Your product listings just stopped being shown.

And at that moment, you realize:
“I don’t control anything. Not the traffic, not the data, not the growth.”

🛒 This is when it’s time to build your own store

Here are the real signals that you’ve outgrown marketplaces and are ready for your own e-commerce platform:

• You already know what sells and can focus on your most profitable products.
• You want to retain customers, not pay for every new one.
• You have ideas to improve the customer experience, but you’re limited by the platform’s templates.
• You’re ready to invest in marketing, growth, and a strong website.

What does owning your own e-commerce platform give you?

✅ Control over UX and visuals
You decide what your site looks like. With the right approach to e-commerce marketplace design, you can build trust from the very first second.

✅ Your own sales channels
Email marketing, push notifications, retargeting, affiliate programs. All of these work only if you own the data, not if you’re just a guest on a marketplace.

✅ Flexible pricing strategy
Want to add subscriptions, bundles, or upsell? Customize promotions for specific customers? On your own platform, you can do it all.

✅ Scalability
If you plan to expand — from physical goods to digital ones (for example, platforms to sell digital products) or even build a digital product marketplace — it’s best to build this flexibility from the start.

📊 Numbers that speak louder than words:

According to Statista, more than 60% of brands in the U.S. and Europe will invest in their own e-commerce infrastructure by 2025, preferring to control their data and profitability. In fact, by 2023, 76% of footwear retailers and 71% of consumer electronics sellers in the U.S. and Europe planned to increase investments in their e-commerce technologies. This shift shows that brands want more control over customer data, margins, and the user experience.

Shopify reports that the average conversion rate on owned stores is 2-3 times higher than on marketplaces if the right marketing funnel is set up.

And now — a bit of real-life experience 🚀 

Recently, a team reached out to us. They started on Amazon, and everything was going great… until a competitor came along with a similar product priced $1 lower. Sales stopped. They realized they needed to build their own brand, so we helped them launch a multi-seller e-commerce platform where they sell their products and attract other manufacturers. Within a year, they saw 4x growth and expanded to the European market.

This is the power of an enterprise marketplace platform built from scratch to support a growth strategy.

📌  If you’re focused on short-term hypothesis testing, choose a marketplace.
      If you want to build an asset that works for you for years to come, create your platform.

You might need the help of experienced marketplace solution providers. Because a strong foundation is 80% of success in digital.

The Smart Middle Ground – Combine Both

A combined strategy is one of the most sustainable growth paths chosen by digital-first brands.

Many beginner sellers start on digital marketplaces to test demand, get their first orders, and gather valuable data: what people are buying, at what price, and who their customers are. Then, they build their own sales channel via their platform.

📩 Marketplaces help scale through traffic and volume, while your online store builds loyalty, repeat purchases, and brand recognition.

This is how brands like Glossier, Gymshark, and Nomad developed — they began with high-demand platforms, and later invested in their own platforms to strengthen control and increase profitability. This is one of the most flexible e-commerce marketplace strategies, reducing risks and supporting sustainable growth.

Final Checklist: Marketplace vs Your Own Store

Thinking About Your Next Move?

The choice between marketplace vs e-Commerce is not black and white. It’s about your goals, timing, and how much control you want. Want to explore how a custom marketplace platform as a service could help you grow? Or maybe you’re thinking of launching your own niche types of online marketplaces?

In our next article, we’ll walk you through exactly how we helped a client launch a music marketplace from scratch, including tech stack, timelines, and lessons learned.

Stay tuned — or reach out if you’re already thinking of building something ambitious.

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