What is a marketplace and how does it differ from a b2b eCommerce?

A marketplace is an e-commerce platform that connects people who want to sell products or services with people who want to buy them, with an operator in the middle who curates the participants and usually earns a commission. A B2B eCommerce, by contrast, is the company's own store, selling only its own products to business customers.

The head of digital at a regional building-supplies distributor is asked a simple question at the executive committee. A competitor's catalog has tripled in a year, with brands the distributor does not carry and prices it cannot match, and the competitor does not appear to have bought any of that inventory. The explanation is that the competitor stopped being only a seller and became a host. Other companies list their products on its platform, ship them from their own warehouses and pay a commission when an order is placed. The same buyers who used to call the distributor's sales representatives now begin their search on someone else's screen. For a commercial leader, the question that follows is not technical. It is whether to build a store, join a marketplace or open one.

The shift to online shopping has not been gradual. Companies that had not even thought about having an eCommerce, or that saw the idea as distant, had to adopt digital strategies to have one, not only to increase sales but also to make up for losses. That urgency produced a wave of stores, and it also exposed a strategic choice that many companies made by default instead of by design. This article explains what a marketplace is, how it works, how it differs from a B2B eCommerce and what it means for the margin, the customer relationship and the operating model of the company that adopts it.

What is a marketplace?

A marketplace is a broader notion of online sales than a conventional eCommerce. The simplest way to picture it is an online shopping mall in which different brands offer their products under one roof. On such a platform different sellers can advertise, and customers find a wide range of options in one place. The person or company that manages the marketplace acts as a supervisor and a facilitator between the supplier and the buyer, and may or may not receive a commission for each purchase made through the platform.

In recent years these platforms have grown steadily because of the advantages they offer companies. Their appeal is that they are fast, effective and economical for both suppliers and customers, which is why more companies are opting for this type of platform. There are hundreds of marketplaces, and among the best known are Amazon, eBay, AliExpress, Airbnb and Mercado Libre. Each shows that the model is not limited to physical goods, since Airbnb intermediates accommodation and others intermediate services.

The reason executives should care is structural. A platform business creates value by facilitating exchanges between participants instead of by producing and selling goods itself. A marketplace multiplies the catalog without multiplying inventory, and it turns the operator's main asset into the relationships and the trust between sides. The price of that leverage is dependence on the quality of the sellers, because a customer who receives a poor experience from a third-party seller blames the platform.

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How does a marketplace work?

A marketplace can work with different categories and can vary according to the type of offer. A service marketplace intermediates professional or personal services, a product marketplace intermediates goods, and a hybrid model combines both. Whichever type of offer the business chooses as its base, four elements must be considered, and each one carries an operating decision.

The platform is the first. It enables communication between suppliers and customers and facilitates access both for suppliers who upload their products or services and for customers who make their purchases. The providers are the second. They offer their services or products on the platform, create categories, define their terms and conditions, upload information and manage their own shop. The customers are the third. They purchase, search, view the different shops presented by the eCommerce, search by catalog, make comparisons and add products to the wish list. The administrator is the fourth. This role grants access to suppliers and assigns the commission, either by supplier or as a single commission for all.

The operation is simple in principle. Companies or suppliers register online, and the administrator approves or denies access, in addition to providing the terms and conditions that will govern the marketplace. Then the suppliers upload their products, and the administrator can supervise the upload and see what information the providers have submitted. In practice, each of these moves is where the model succeeds or fails. Approval criteria determine the quality of the assortment, commission design determines whether good sellers stay, and supervision of product content determines whether customers trust what they see. Adobe describes the typical capabilities of a multi-vendor marketplace on Adobe Commerce in these terms, with vendor registration and approval, commissions set by store, vendor or product, vendor portals to manage products and orders, and carts that can include products from several vendors.

The ICX article on registration and creation of vendors in the marketplace shows the vendor onboarding step in detail, and the guide on how to execute mass actions in Magento helps administrators manage large catalogs once sellers begin to upload.

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How does a marketplace differ from a B2B eCommerce?

Confusion can arise between the two because the operation is very similar. Both are used to sell products or services. The difference is that the marketplace works as an intermediary between suppliers and buyers, while the eCommerce is like any shop that sells only its own products. That difference changes almost everything beneath the surface: who owns the inventory, who sets the price, who answers for the delivery, who owns the customer data and where the margin comes from.

Most marketplaces currently operate under the B2C business model, but there are B2B marketplaces such as Alibaba and Amazon Business, and it is possible to use either model. Amazon announced the launch of Amazon Business on April 28, 2015, with multi-user business accounts, approval workflows, purchase order numbers, tax exemption management, business-only pricing and integration with procurement systems. Those features show what separates a business marketplace from a consumer one. Business buyers do not just need a catalog. They need control over who may buy, up to what amount and under which terms.

A B2B eCommerce operated by the manufacturer or distributor itself answers a different need. It protects the relationship with the customer, allows negotiated prices, credit terms and customer-specific catalogs, and feeds the company's own CRM with data about what each account orders. A marketplace gives access to demand the company does not already have, in exchange for sharing the customer relationship and part of the margin. For a company with a strong brand and loyal accounts, the store is usually the foundation. For a company that is hard to find, a marketplace can be the fastest route to new buyers.

The decision is rarely binary. Many companies sell on third-party marketplaces to acquire customers, and then work to move repeat demand to their own store. Others open a marketplace of their own to extend their catalog with complementary sellers. The ICX piece on five essential tips to sell successfully on Amazon addresses the first path, and the analysis of the characteristics of a B2B eCommerce that reduces costs addresses the second.

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Which model fits which kind of company?

Consider three scenarios, framed as illustrations of the reasoning rather than as reported cases. A consumer-goods manufacturer sells through retailers and wants to reach small independent stores it does not serve directly. Visiting each store is expensive, and a distributor that already does so keeps most of the margin. McKinsey's analysis of digital B2B ordering in fragmented retail notes that fragmented retail is a market of more than $2.8 trillion worldwide, that digital ordering portals can lower the cost of sending sales representatives and delivering to stores, and that partnering with eB2B platforms can extend coverage while requiring negotiation of trade terms and data sharing. For this manufacturer, joining a platform can be the pragmatic way to reach stores, and building its own ordering portal can be the way to keep the data.

A specialized industrial distributor has the opposite problem. Its value lies in technical advice, credit and delivery reliability, and its accounts are few and valuable. Listing on a generalist marketplace would expose its prices to comparison and hand over the relationship. A B2B store with customer-specific catalogs and prices strengthens the accounts it already has, and a limited presence on a marketplace can serve as a source of new leads.

A retailer with a broad physical presence, finally, may see the marketplace as a way to widen the assortment without buying stock. By inviting vetted sellers to list complementary products, it can compete with larger platforms in categories where it lacked range. The risk is quality control. Every third-party order that arrives late is a service contact that the retailer's team will answer, so the operating model must include seller performance standards, penalties and a clear policy for returns.

What are the risks of a marketplace, and how are they managed?

The same structure that makes a marketplace attractive creates its main exposures. The first is dependence on sellers. An operator's reputation is only as strong as its weakest seller on the day a customer has a problem, so approval criteria, product content standards and a visible process for complaints are part of the product, not an administrative afterthought. Operators that treat onboarding as a volume race usually find that service costs rise faster than commissions.

The second exposure is data and channel conflict. When a manufacturer sells through its own store and also lists on a third-party marketplace, price differences between the two erode trust with distributors and confuse customers. The mitigation is a pricing policy agreed before launch, with rules on minimum advertised prices, bundles unique to each channel and a clear view of which customers belong to which channel.

The third is operational. Orders that combine products from several sellers need coordinated payments, taxes, shipping and returns, and each seller needs the tools to see and manage its part. Companies that decide to open a marketplace should therefore pilot with a limited category and a small group of sellers, measure order accuracy, delivery times and complaint rates, and only then open registration more widely. The discipline is the same one a commercial leader applies to any new channel, which is to prove the unit economics at small scale before committing to growth.

What this means for the C-level

For the chief executive, the choice between store and marketplace is a decision about who owns the customer. Joining a marketplace trades control of the relationship for reach, and opening one trades capital and operating complexity for a broader offer and a commission income. Neither is wrong, but each should be chosen against the company's strategy for loyalty and customer lifetime value, not only against the next quarter's sales.

For the chief financial officer, the economics differ in structure. A marketplace operator earns commissions with no inventory risk, but carries platform, support and fraud costs. A seller on someone else's marketplace gains volume at a lower contribution margin because of fees, advertising and price competition. It matters to model the contribution margin per channel, with commissions, fulfillment and returns included, before comparing sales between channels. For the commercial and service leadership, the issue is consistency. A customer expects the same standard of experience whether the product is shipped by the company or by a partner, and the company that opens a marketplace inherits that expectation.

This is also a pricing question. In a marketplace, buyers compare offers from several sellers in seconds, so the company's pricing rules, floors and promotional discipline must be explicit. Companies that enter without them discover that the channel sets their price for them.

How to start on Monday morning

Begin with the business model, not with the technology. Ask the commercial team to describe, on one page, who the customers are, what they buy, how they find the company today and which part of the relationship the company is unwilling to hand to anyone else. That page will show quickly whether the priority is reach, margin or control.

Then test the economics of the channel you are considering. If you are weighing a third-party marketplace, calculate the contribution margin of the five best-selling products after fees, shipping and returns, and decide which customers you would try to move to your own store afterwards. If you are weighing opening a marketplace, define the first category and the first twenty sellers, the approval criteria, the commission schedule and the minimum service standards, and test with a limited audience before opening the doors. In both cases, assign an owner who answers for the whole experience, because a marketplace spreads responsibility across companies and the customer will still hold one brand accountable.

How ICX helps

ICX Consulting helps commercial leaders choose and design the model before they choose the platform. The work begins with digital eCommerce for B2B, where the channel strategy, the customer segments and the economics are defined, and extends to the business model and the processes that make it operable. When the decision is to build, ICX implements the solution on Adobe Commerce, whose flexibility and scalability support complex catalogs and multi-channel strategies. Request a diagnostic with an ICX consultant to decide whether your next channel should be a store, a marketplace listing or a marketplace of your own.

A marketplace is, above all, a business model decision. The ICX Business Model Canvas Toolkit provides an editable template, a practical guide and a validation checklist to define the customer segments, value proposition, channels and revenue streams of the model you are considering.

Frequently asked questions

Is a marketplace better than my own online store?

Neither is better in general. A marketplace offers immediate reach to existing demand but shares margin and customer data, while your own store gives control of price, experience and data but needs traffic you must generate. Many companies use marketplaces to acquire customers and their own store to retain them.

How does a marketplace make money?

The most common source is a commission on each sale, which the administrator can set per seller or as a single rate for all. Operators may also charge for advertising, premium seller features or services such as payments and fulfillment. The structure should reward quality sellers instead of only maximizing volume.

Can a B2B company run a marketplace?

Yes. Business marketplaces such as Alibaba and Amazon Business show the model works for business buyers, and a manufacturer or distributor can open a marketplace limited to its sector or network. It requires approval of sellers, product data governance and features such as purchase approvals and customer-specific terms.

What platform is needed to open a marketplace?

The platform must support seller registration and approval, product moderation, commissions and a seller portal. Adobe Commerce can be extended with multi-vendor marketplace extensions or specialized marketplace software, and the choice should follow the operating model defined first, not the other way around.

Whether a company joins a marketplace, builds a store or opens its own platform, the decision shapes who owns the customer for years. If you are facing that choice, talk to an ICX consultant before the platform choice makes the strategy for you.