Multi Vendor Marketplace Development: A Comprehensive Guide

With the wide popularity of platforms like Amazon and eBay, many businesses seek to follow their footsteps and build an eCommerce marketplace. Such a store offers the customers access to a wide variety of products and thereby increases the revenue potential. If you are not yet introduced to a multi vendor marketplace, this blog will resolve your doubts. We will discuss the overview of a multi vendor marketplace, various types, and how to build it. Let’s dive in.

  • What is a Multi Vendor Ecommerce Marketplace  

The name is indicative in itself – it is an eCommerce store where multiple vendors or sellers (these terms are interchangeably used in the blog) can sell their products. You can imagine it to be a big shopping mall that hosts multiple small shops run by individual sellers.

The business model is as follow: the marketplace operator connects the sellers and the buyers and in turn, receives a commission from the sellers. The third-party sellers find it convenient to feature their products on the marketplace in order to gain more exposure. The operator is responsible for aspects like order processing, shipping, due payments handling, etc. We will discuss on marketplace business model in detail later in the blog.

Since the consumers can get a wide product assortment in one place, they also prefer to shop from multi vendor marketplaces.

  • Types of Ecommerce Marketplaces

Before investing in eCommerce website development for building an online marketplace, it’s important to know the types of the same.

  • Horizontal Marketplace

A horizontal marketplace is considered a one-stop shop. It allows the buyers to purchase numerous products of various categories under one roof. Example? Amazon.

You got the idea already, isn’t it?

  • Vertical Marketplace

A vertical marketplace offers products to a niche market sector. For example, Airbnb is an online marketplace for vacation rentals, lodging, and tourism activities.

Different Business Models in an Online Marketplace 

  • Franchisee Model

Here, franchisee stores from a specific vertical or region or both are accumulated together. It allows the marketplace operator to provide a niche or localized service.

Usually, B2B marketplaces adopt a franchisee model. They operate with a communication engine for keeping all the franchisees within the marketplaces updated about the changes. It ensures a standardized method of operation.

  • Retailer Model

Here, the operator sets up the platform and allows the third-party sellers to join the marketplace to sell their products. From the buyers’ perspective, they are purchasing the product from the third party seller as the packaging, return shipping label, warranty – everything is in accordance with third-party seller’s brand regulation. The online marketplace arranges for shipment and delivery.

If you are curious, let us tell you this is how Amazon operates. The third-party sellers list their products on Amazon. When the visitors make a purchase, Amazon arranges for shipment and delivery. But the product that the customer receives is from the third-party sellers’ brands.

  • Dropshipping Model

This model is becoming popular these days. Here, the third-party sellers need not keep the products that it sells in stock. The seller makes a bulk purchase from the manufacturer but the latter doesn’t send the entire inventory to the seller. Instead, when the customers place an order to the third-party seller the product is shipped directly to them.

Just as in the retailer model, the products feature the return shipping label and others from the seller’s branding. It is a cost-effective model as the third-party sellers need not stock inventory before getting an order.

  • How to Create a Multi Vendor Ecommerce Marketplace

Here are the few things you should pay attention to while creating a multi vendor marketplace.

  • Determine the Revenue Structure

There are several ways to generate revenue in an online marketplace. These are as follow:

Commission Based – The marketplace operator will receive a commission for the products sold by the vendors.

Advertisement Based – The vendors may pay an advertising fee to the operator in order to feature product listing in a prominent place and drive visibility.

Subscription-Based – The operator may charge the vendors a subscription fee for listing their products on the marketplace.

Orders Processing Charge – The operator may charge a fee for processing payment and shipping services.

You can combine two or more of the above-mentioned methods to generate revenue.

  • A Robust Search Functionality and Product Categories

With so many products available in your store, make sure to include multiple categories. It will help people to narrow down their search. Further, include a robust search functionality so that people can easily find out what they are looking for. From auto-complete to auto-correct – there are many functionalities that you can leverage.

  • A Unique Dashboard for Each Vendor

Creating a unique dashboard for the vendors will help them to easily access the marketplace. The dashboard will allow them to manage their profile, product listing, payment methods, commission rate, shipping info, and also generate a personalized report to improve their performance.

Remember, the performance of each vendor is integral to the overall performance of the marketplace. Therefore, paying attention to their convenience will be beneficial for your marketplace.

We admit that building a multi vendor marketplace is not as easy as it sounds. Unlike an online storefront, such a robust website has numerous elements. That’s why it’s better to engage a professional website development company. With their experience, advanced tools, and expertise, the designers will equip your store with advanced features and functionalities.

  • Analytics

Enable traffic and conversion analytics for each vendor to let them get an insight into where their customers come from and create a strategy on how to convert them. These data will also help you to create a marketing strategy for your marketplace.

  • Streamlined Experience

Make sure that your store offers a seamless experience to the vendors and shoppers. For instance, you can send notifications to the vendors when an order is placed and to the customers when an order is shipped. Keep them updated throughout the entire order and payment lifecycle.

You can also brainstorm other features to fulfil the expectations of the vendors & the customers and thereby enhance their experience.

  • Multiple Payment Gateways

Since an online marketplace caters to a wide range of audience, it’s better to include various popular and secured payment gateways to enhance their convenience. From UPI to credit/debit card – choices are many.

We hope our insights will help you to build a robust and user-friendly online marketplace. For more information, feel free to reach us.

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