An e-commerce mall, or EC mall, is an online shop that consolidates the e-commerce sites of multiple companies and stores. EC malls allow customers to open their own stores from existing platforms or list their goods on a product-by-product basis, making it relatively easy to start selling quickly.

In this article, we will describe the characteristics and types of EC malls and the advantages and disadvantages of opening a store to provide a deeper understanding of them.

What’s in this article?

• What is an EC mall?
  
• Types of EC malls
  
• Advantages and disadvantages of EC malls
  
• Choosing the best method for opening an EC mall through understanding costs
  

What is an EC mall?

An EC mall is a shopping site that functions as an online marketplace, where multiple companies or brands can open stores or offer their products for sale. Just as in an actual shopping complex, where numerous stores are located on the same site, an EC mall involves a single e-commerce platform where multiple companies open shops to sell their items.

The services offered by EC malls are extremely convenient for buyers, allowing them to shop from the comfort of their homes at any time of the day without visiting a physical store. Hence, the number of users is vast, and the EC site market in Japan is growing rapidly every year.

Features of EC malls

Since EC malls use pre-built e-commerce systems, there is no need to set up a site from scratch, and it is relatively easy to create a shop without expert knowledge.

In addition, since an EC mall does not require a company to acquire an independent domain name, as is the case with a company’s own EC site, it saves time and effort. What’s more, by using an EC mall that is already well known, it might be easier to attract customers than a standalone company sales site.

On the other hand, it must be noted that it is difficult to promote branding in EC malls because they charge fees for opening a store as well as listing fees, and there is limited flexibility and freedom in the layout and design of the sales pages. Later in this article, “Advantages and disadvantages of EC malls” will be described in detail.

Differences between EC malls and in-house EC sites

Unlike a mall-type EC site, where multiple businesses or stores sell their products through an EC mall, an in-house EC site – where the company creates its own site – requires the preparation of a server and its domain.

Furthermore, it is important to plan the site’s launch well in advance, as it requires expertise to operate one that attracts a high percentage of visitors, and the time needed to complete the launch and the initial costs can be high.

In-house e-commerce sites do not require store opening fees or sales-based commissions as mall types do, and since it can be freely designed and customised, it is possible to develop a site for an original brand with added value. Therefore, profit margins are expected to be higher in the long run than the mall type.

It is important to understand the characteristics of each of the EC mail-order businesses

When starting an EC mail-order business, customers often wonder whether to use an EC mall or to set up their own EC site.

As mentioned earlier, the e-commerce market is expected to grow significantly. However, to ensure business success, it is important to understand the characteristics of both EC malls and in-house e-commerce sites before deciding which type is best for your company.

Types of EC malls

The following are the three types of EC malls. Since each has its characteristics, thoroughly consider which type to choose before deciding.

Marketplace EC mall

The marketplace type lists items on EC malls on a product-by-product basis and applies to “listing” products rather than “opening” your store.

With this type, you only need to register the seller’s information and the items you want to sell to build a store page, which can easily save you time, effort, and operational costs.

Nevertheless, since most sales pages on EC malls are displayed in a standard format, it is difficult to illustrate the unique aspects and branding of the product, making it tough to differentiate, which then leads to a harder time gaining recognition as a store.

Tenant EC mall

The tenant-type EC mall is similar in structure to a large shopping mall where each vendor has its own physical store.

In this type, each brand or other organisation opens a comprehensive store page in an EC mall to handle many products. As a result, visitors to EC mall sites often use them to purchase from a specific shop.

In the tenant type, store pages are opened for each brand or shop, and a certain amount of page layout and design is possible, making it easier to promote one’s brand than in the marketplace type, where each product is listed individually.

However, it must be noted that this type requires higher operating costs and labour than the marketplace kind.

Integrated management EC mall

An integrated management EC mall is a site that consolidates multiple corporate brands and transforms them into a mall.

For companies with multiple branded stores with different concepts and target demographics, centralised management and operation of what were originally separate operations on a single platform can reduce costs compared to operating numerous EC sites separately.

A key difference between marketplace and tenant-based EC malls is that the integrated management type tends to be more expensive because it requires companies to build their own to consolidate and manage multiple in-house brands.

Advantages and disadvantages of EC malls

Now that the general framework of EC malls has been briefly explained, the following are the advantages and disadvantages of them.

Advantages of EC malls

• High appeal to customers
  An EC mall, already widely known and recognised, attracts many customers to shop daily. In other words, since EC malls have the ability to attract customers to the site itself, it is easy for them to find the site and expect a certain number of visitors to their stores and products. What’s more, when a company’s shop or product is ranked, it is expected to generate a significant amount of publicity, which increases the likelihood of a greater number of purchases.

• Easier to gain trust and security
  EC malls usually conduct a pre-screening process before opening a new store. Accordingly, if a shop meets the screening criteria of an EC mall, it will help promote the credibility of its brand.

• Easy to open a store in a short period and less time-consuming to operate
  With an EC mall, creating an e-commerce site from scratch is unnecessary. EC malls make it easy to open a shop to sell products by following instructions and entering the necessary information using the prepared templates. This makes it possible to start a business quickly and reduces the burden of running a store.

• Support system by the EC mall management
  The EC mall provides support for store owners. For example, the site provides information on how to increase profits, a frequently asked questions page, and a contact form. This is a big advantage, especially for businesses unfamiliar with online shops.

Disadvantages of EC malls

• High costs to open a store
  There are various operating expenses associated with setting up a store and selling products in an EC mall, including the cost of opening one and commissions based on sales. Since these fees are higher relative to the sales and growth of the EC mall, an in-house e-commerce site might be more cost-effective in terms of long-term profit margins.

• Tendency to be less original as a brand
  While the ability to use pre-designed templates provided by the EC mall is convenient for store owners, it imposes restrictions on page design and layout, making it difficult to customise the pages of your shop, and your brand might lack originality.

• Intense price competition among stores
  In EC malls, it can be challenging to maintain prices for one’s products due to intense price competition with similar items sold by many companies and individuals who have stalls in the same category. It can be hard to sell items from your store when other products are priced lower than your company’s or similar ones on the market.

• Difficult to collect customer data
  With your own EC site, you can collect and analyse customer data to develop effective sales strategies. Still, with external EC malls, you might be unable to collect information for your store, depending on which EC mall you use. As such, in order to implement a long-term business strategy based on accurate customer data, it might be necessary to consider implementing your own EC site in the future.

Additionally, those who plan to enhance the payment function and simplify the payment flow when opening and operating their platforms and marketplaces involving multiple parties, such as stores (vendors and sellers) and customers (buyers of products), can use Stripe Connect to ensure smoother and more efficient business development.

For example, a portion of a customer payment on a platform can be allocated as a sales commission, and sales can be appropriately split among multiple parties.

Choosing the best method for opening an EC mall through understanding costs

The above is an overview of EC malls based on their characteristics, types, advantages, and disadvantages.

EC malls have the greatest advantage in attracting customers, but there are various costs associated with opening a store. Costs vary depending on the plan offered by each, but on top of the initial expense, there is a monthly fee and a sales commission for each purchase.

Furthermore, the scope of use of EC malls, such as image capacity limitations, also differs between standard and advanced plans, so when selecting a plan to open a store, compare it with your monthly sales goals and choose the best one for your business.

While e-commerce sites offer a low barrier to entry, you need to be wary of the fees charged for using them. In particular, profit margins might decrease if the amount of sales commissions and other charges increases as sales grow. Also, depending on the plan for opening a new shop, it could take time to illustrate the features and appeal of the company’s store, which might be an obstacle. Therefore, consider opening your own e-commerce site if your business is on track to generate a certain amount of revenue from an EC mall.

If you are considering e-commerce, understand the unique characteristics of both an EC mall and your own EC site, and strive to launch one and properly manage your store while researching ways to increase sales on a daily basis.