What Is a Marketplace? How It Works, Types, Pros and Cons, and How to Start Selling

A marketplace is an online platform where many independent sellers list products or services in one shared space, while the platform owner runs the storefront, the payment system and the trading rules. Sellers pay fees in exchange for access to the buyers the platform has already gathered; in Thailand the best-known examples are Shopee, Lazada and TikTok Shop.

This guide covers how a marketplace works, how it differs from selling on your own website, the main types, what to prepare before opening a shop, how in-platform advertising works, and how to run a marketplace alongside your own site without the two channels cannibalising each other.

What is a marketplace and how does it work

Three parties are involved in every marketplace sale. The platform owner builds the app and website, pulls buyers in with its own advertising and campaigns, and sets the rules on who can sell what. The seller opens a sub-shop inside the platform, lists products, sets prices and is responsible for packing and shipping. The buyer searches and compares products from many shops in a single app, then pays through the platform's system.

The key point is that money does not go straight from buyer to seller. The buyer pays the platform, the platform holds the money until the buyer receives the item or the return window closes, and then it pays the seller minus fees. This escrow mechanism is what makes buyers willing to purchase from shops they have never heard of, because a middleman stands behind the transaction. It is also the main reason a small shop can make sales from day one without building all of its own credibility first.

Platforms earn money in several ways: commission on sales, payment processing fees, charges for optional programs such as free-shipping or cashback schemes, and advertising that sellers buy to reach better positions. Actual rates vary by platform, product category and shop type, and they change from time to time. Sellers should check the current rates in each platform's Seller Center every time they work out pricing, rather than relying on numbers they heard somewhere.

How a marketplace differs from your own website (D2C)

Selling on your own website, often called D2C (direct to consumer), means the brand owns the storefront, the domain, the checkout and all the customer data, but has to bring in every visitor itself. A marketplace gives you traffic along with the space, in exchange for living under someone else's rules. The table compares the points that matter most for the decision.

In practice, the question is less about which one is better and more about what job each channel should do in your business. Shops with small budgets and no customer base often start on a marketplace because sales come quickly. Brands that want to keep customer data for long-term marketing usually need their own website as well. If you are planning your own store, see the e-commerce website design service.

Types of marketplace worth knowing

The word marketplace covers several models, each with its own way of finding customers and competing. Knowing which one fits your product saves you from opening a shop where buyers are not looking for what you sell.

General product marketplaces such as Shopee and Lazada

Buyers arrive with intent to purchase. They type a product name into the search bar and choose based on price, review score, units sold and shipping cost. What the seller controls is the product title, images, description, price, shipping speed and chat response rate. Both platforms run official-store programs for brands (Shopee Mall and LazMall) with stricter entry conditions than regular shops and stronger buyer protection, and buyers can filter search results to show only these official stores.

Social commerce such as TikTok Shop

Most buyers did not come to shop. They find products while watching short videos or live streams, so sales depend more on content than on search. Sellers can make their own clips, run their own live streams, or let creators in the affiliate program sell for them in exchange for a commission the seller sets. Products that are easy to show in motion, such as cosmetics, kitchen tools or items with a visible result, tend to have an advantage in this model.

B2B marketplaces

Here the buyers are businesses, for example retailers looking for suppliers or factories sourcing materials. Buying behaviour is very different from consumers: there are quotation requests, negotiations over minimum order quantities, and deals usually close after several rounds of conversation. A global example is Alibaba.com. For Thai exporters, a B2B marketplace lets overseas buyers find them without attending every trade show.

Service and vertical marketplaces

Food delivery apps, accommodation booking apps and platforms for finding tradespeople are marketplaces too; they just sell services or stay within one category. A restaurant on Grab Food or LINE MAN uses the same mechanism: the platform brings the customer in exchange for a share of each order.

Pros and cons of selling on a marketplace

Pros

• Fast start. No need to build a cart, payment system or storefront; you can register and list products within a few days.
• Buyers are already searching inside the platform, so a new shop can get its first orders without paying to pull traffic from outside.
• Buyers trust the central system, including escrow, returns and reviews, which makes it easier for an unknown shop to sell.
• Built-in tools such as shop vouchers, shipping discounts, advertising and sales reports are ready to use without extra setup.
• Big platform campaigns such as double-date sales like 11.11 and 12.12 bring large numbers of buyers into the app at once, and shops that prepare stock and promotions benefit.

Cons

• Several layers of fees eat into per-unit profit, and the platform can change rates on its own without negotiation.
• You do not own customer data. Re-contacting buyers outside the platform is hard, and many platforms have policies against steering buyers to other channels.
• Identical products sit side by side in search results, buyers compare prices in seconds, and price wars start easily.
• Ranking algorithms and rules can change at any time, so a shop that relies on one channel is exposed when sales drop for no obvious reason.
• Room for branding is limited. Shop pages look alike, and buyers often remember the platform's name rather than the shop's.

What to prepare before selling on a marketplace

These steps apply to the main platforms in Thailand. Required documents and menus differ a little, so follow each platform's registration page.

1. Choose a shop type and prepare documents. An individual seller uses a national ID card and a bank account. A company or an official brand store needs a company certificate, and in some cases proof of trademark rights or a distributor appointment letter. Certain categories, such as supplements or cosmetics, need a registration number from the relevant authority before listing.
2. Calculate cost per order before setting prices. Include product cost, packaging, every platform fee, the share of shipping the shop covers and average advertising spend per order. Skip this and shops often discover they were losing money only after several hundred orders.
3. Make listings findable. Product titles should contain the words buyers actually type, such as product type, brand, model, size and the main deciding feature. Pick the correct category and fill in every attribute, because the search filters read from those fields.
4. Shoot images and write descriptions that answer questions for you. The first image should show the product clearly on a clean background. The following images should show size, usage and what is in the box. Questions customers repeat in chat are a signal that the listing is missing information.
5. Set up stock and shipping. Set a handling time you can actually meet, since late shipping and frequent cancellations hurt your shop rating. If you sell on several channels, you need a way to keep stock in sync or you will sell items you do not have. Some platforms offer warehousing and pick-and-pack services, which help with speed but cost extra.
6. Staff the chat. Chat response rate and speed are shown on the shop page, and many buyers ask before they buy. Prepare saved replies for frequent questions.

Illustrative example: profit per order

All figures in this example are illustrative, to show the method, and are not the real rates of any platform. Suppose a shop sells a water bottle at 490 baht. Product cost is 180 baht, packaging 15 baht, all platform fees combined are assumed to be 55 baht per order, and the shop contributes 20 baht toward shipping. Profit before advertising is 490 - 180 - 15 - 55 - 20 = 220 baht.

The shop then spends 22,000 baht a month on ads and gets 200 orders from them. Ad cost per order is 110 baht, so profit per ad-driven order is 110 baht. If the shop cuts the price by another 100 baht during a campaign while other costs stay the same, profit per ad-driven order drops to 10 baht. That is why the calculation has to come before joining every campaign, rather than joining out of fear of missing out.

How marketplace advertising works

When thousands of sellers offer the same type of product, the top positions in search results become valuable. Platforms sell those positions through their own in-house ad systems. In principle there are a few main formats.

• Search ads. The seller picks keywords or lets the system choose, sets a cost-per-click bid, and the product appears in search results with an ad label. The seller pays when someone clicks.
• Discovery or recommendation ads. The product shows on the home page, on similar product pages or in recommendation sections, which helps people see items they did not search for directly.
• Shop and brand ads. These show the logo and several products from the shop when buyers search for brand or category terms.
• Affiliates and creators. The seller sets a commission for people who promote the product and pays only when a sale happens. This format matters a lot on TikTok Shop.

The metric to watch is ROAS (sales divided by ad spend), but read it against profit, not revenue. As an illustrative example, a ROAS of 5 means 1 baht of ads produces 5 baht of sales, so ad cost equals 20 percent of revenue. If that product's profit before advertising is only 15 percent of the price, a ROAS of 5 still loses money. To find break-even, divide 1 by the pre-ad profit share. With a pre-ad profit of 25 percent, the minimum ROAS to avoid a loss is 4.

A common mistake is running ads for products whose listing is not ready: unclear images, few reviews, or a price far above neighbouring shops. Clicks you pay for will not turn into orders. Another is leaving keywords too broad without checking the search term report, so you pay for clicks from people looking for a different kind of product. For shops that want a dedicated team on advertising, see the Shopee ads service and the Lazada ads service.

How to run a marketplace alongside your own website

Brands selling in both channels should give each one a clear job. A common approach is to let the marketplace find new customers and serve people who already prefer buying in the app, while the brand website builds long-term relationships, collects customer data and sells products that need more explanation.

• Pricing policy. If the website is always more expensive than the marketplace, customers have no reason to buy there. One way to avoid price clashes is to keep the same price but give the website something the marketplace lacks, such as exclusive bundles, a points program or after-sales service.
• Product differences. Some brands split models or sizes between channels to reduce direct price comparison.
• Post-purchase communication. Read each platform's policy before adding messages or inserts that invite buyers to another channel, because some platforms treat that as a violation. Customers who buy on the brand website can be marketed to according to the consent they gave.
• Central stock and product data. Use an order management system or connector that deducts stock across all channels from one source, and keep one master set of titles, images and descriptions that you then adapt to each platform.
• Combined measurement. Look at total brand profit, not each channel alone. A social ad may lead people to search the brand name on Shopee instead of visiting the website; if you measure only website sales, that campaign looks worse than it really is.

Managing several shops across several platforms takes a lot of time: updating listings, joining campaigns, answering chats and reading reports. If you want a specialist team to help, see the scope of the marketplace management service.

Common mistakes when starting on a marketplace

• Setting prices by copying competitors without calculating your own fees and shipping, so the more you sell, the more you lose.
• Writing long product titles stuffed with unrelated search terms. Buyers cannot read them, and they may break listing policies.
• Joining every campaign without checking whether the required discount still leaves a profit.
• Not preparing stock before a big campaign day. Orders flood in, shipping falls behind and the shop rating drops.
• Ignoring negative reviews, or not fixing the root cause customers keep complaining about.
• Putting all sales on one platform. When rules change or the account is temporarily suspended, income disappears immediately.

Marketplaces in Thailand: what sellers should know

In Thailand, shoppers often search for products directly inside marketplace apps as well as on Google, so being findable in the app deserves the same attention as SEO for a website. Search language is mixed: buyers type Thai, English and transliterated words, for example the Thai term for an insulated water bottle and "tumbler". Product titles that include both naturally reach more searches.

Double-date campaign days and payday periods are moments when buyers wait to purchase, and many shops plan stock and promotions for the whole year around this calendar. Closing sales through chat is also a strong habit among Thai buyers; many message the shop before buying, so shops that reply quickly and to the point convert more. On tax and paperwork, income from online sales is taxable like any other business income. Talk to an accountant about registration and tax from the start. To plan online marketing across both marketplaces and your brand website, see the e-commerce marketing service.

FAQ about marketplaces

What is a marketplace, in short?

A marketplace is a platform where many sellers sell products in one place, with the platform running the storefront, payments and rules, and sellers paying fees to reach the platform's buyers.

Should I start on a marketplace or with my own website?

Shops without a customer base that need sales quickly usually start on a marketplace, then build a brand website once repeat customers appear and they want to own customer data. Shops selling expensive products or items that need a lot of explanation may need a website from the beginning.

How much are Shopee, Lazada and TikTok Shop fees?

Fee rates depend on the platform, product category, shop type and the programs you join, and they change from time to time, so check the latest figures in each platform's Seller Center before setting prices.

Do I need to advertise on a marketplace?

Not always, but new shops with no reviews or sales history usually struggle to rank in search results. Ads help products get seen early on, and you should set a minimum ROAS from the product's real profit before starting.

If you are deciding which platform to open a shop on, or you already have one and profit is lower than expected, start by calculating cost per order as shown in this guide. Then see what the Relevant Audience team can take on at the marketplace management service page.