Public vs Private marketplace

When it comes to selling products, should you create your own website or use public marketplaces like Amazon and Alibaba?   

Which one are you?   

Choosing between a private platform and a public platform (or both!) is a decision that businesses face at the outset (beginning) <= What do you mean? and it should be based on the specific sales process and goals of the business.   

Firstly, you need to determine what your main objective is. Do you want to acquire as many new customers as possible? Expand business with existing customers? Or reduce customer acquisition costs? Depending on the different goals and types, the suitable choice will also be different. Generally speaking, businesses can be divided into several categories: one-time, retention, and transitional.   

One-time businesses focus on selling products, and it doesn’t matter who the buyer is. These businesses are not trying to retain customers, but rather to make as many sales as possible.   

Retention businesses retain customers for the long term once they have them. These businesses focus most of their energy on existing customers and develop more business with them.   

Transitional businesses manage an important potential customer base and develop some of them into long-term customers. At the same time, because some customers will Might be lost after a single the first or a few sales, such businesses also need to constantly expand new customers.   

Marketplace Platforms   

A marketplace platform can help businesses acquire and grow customers, expedite decision-making, and shorten the sales process. There are two common types of marketplace platforms: public and private. Both of these platforms are more effective in promoting sales than other traditional methods. They have different characteristics and strengths. It is worth noting that some marketplaces may have both public and private components. For example, Amazon has a public marketplace where anyone can list and sell products, but it also has a private marketplace called Amazon Business, which is only accessible to registered businesses and provides additional features customized for B2B sales. Similarly, Shopify is primarily a private marketplace platform, but it also has a public app store where third-party developers can sell their apps and integrations to Shopify merchants. However, overall, the differences and characteristics between the two are still very clear.  

Then which one to choose? Is the investment return of choosing one solution worth it? Public platforms are costly but share company’s products to a lot of potential customers, however that also bring enormous competition and cost decision behavior (Also some IP issue can happens) However, they have potential high returns and high volatility. Private platforms are a more controllable and affordable solution, but they typically require more self-management and maintenance costs. They may not directly bring you sales profits, but they can retain customers well.  

On-Demand Selection  

Suitable choices vary depending on different business types and needs. For one-time businesses, we recommend using 100% public platforms because their main focus is on sales volume, and public platforms can help them achieve this goal quickly. Retention-based businesses should use 100% private platforms because they are more concerned about long-term customer relationships and retention, and the professionalism and good user experience of private platforms are very beneficial for retaining customers. For transitional businesses, we tend to recommend a combination of both, using 70% private platforms and 30% public platforms because they need to manage potential customer groups and develop long-term customers while continuously acquiring new customers. The combination of the two platforms can maximize the advantages of both.  

In fact, in the B2B business, a growing customer is more valuable than several single customers. First, the cost of acquiring new customers is usually higher than retaining existing ones. This is because to attract new customers, companies need to carry out advertising, marketing, sales promotion, and other activities, which require a lot of time, energy, and money. Second, a growing customer typically has a higher lifetime value. Once a company wins a customer, that customer is likely to buy more products or services and become a loyal long-term customer. This not only increases the company’s sales revenue but also reduces the acquisition cost per customer and improves the company’s customer satisfaction and brand loyalty. In addition, a growing customer can also bring more business opportunities. They may recommend the company’s products or services to their partners, friends, and colleagues, thereby bringing new customers and business to the company.  

In addition, the target market is also a key factor in choosing a marketplace platform. Public marketplace platforms typically target the global market, which means you can reach more potential customers. However, this also brings more intense competition and higher advertising costs. Private marketplaces usually focus more on the local market and specific industries, which can help you better understand customer needs and market trends. 

From here, we can see that making a choice is not as simple as we might think. Knowing oneself and knowing others, doing enough preparation, will be a key step to success. 

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