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Hackernoon logoHow to Launch a Successful Multi-Vendor E-commerce Marketplace and App: 2020 Edition by@ankush-mahajan

How to Launch a Successful Multi-Vendor E-commerce Marketplace and App: 2020 Edition

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@ankush-mahajanAnkush Mahajan

A senior digital marketer and ecommerce marketing. analyst.

Search Google for the highest revenue-generating e-commerce stores, you’ll find names like Amazon, eBay, Walmart, Ebay, etc. All these online
stores work on different business models but the one common thing among them is that they are all multi-vendor marketplaces.

Considering the popularity of multi-vendor marketplaces, many aspiring entrepreneurs now want to launch similar stores like Amazon, eBay, or Ebay. However, starting a multi-vendor marketplace is not a walk in the park. In this post, I will try to explain each and every important thing of a multi-vendor marketplace that definitely help you to start your online store easily.

What is a Multi-vendor Marketplace?

An online ecommerce marketplace is a platform where various merchants from different locations sell their items or products under a roof. The owner of the marketplace handles the transactions work & logistics and whereas inventory is managed by the sellers.

Interesting Stats about Online multi-vendor marketplaces:

  • Based on gross merchandise, Taobao is the most popular online marketplace in the world.
  • Amazon is the leading marketplace in the USA.
  • More than 300,000 third-party sellers started selling on Amazon in 2017.
  • A better price is the leading reason why people prefer to buy on online marketplaces.
  • 31% of first-time shoppers prefer to buy on online marketplaces.
  • Revenue cut by marketplace operator is the leading reason why merchants prefer to have their online stores.

Stats source: statista.com

How does a Multi-vendor Marketplace Work?

  • Sellers register on the marketplace. It can be a paid or free registration.
  • Customers can buy the products from their choice of the seller.
  • Admin can charge a certain fee on each transaction. The percentage of commission can be decided at category level, product level, & seller by seller.
  • Payment is transferred directly to the admin account. Admin after deducting his commission transfer the rest of payment to seller’s account. It can be handled by manually or automatically.
  • Admin deserve the rights to cancel any order.
  • Product delivery can be handled by either admin or seller.
  • In the case of a faulty product or any query, the customer can complain directly to the seller or on the online portal.

Must Read: As digitisation becomes a necessity for B2B, so will marketplaces

Types of Multi-vendor Marketplaces

Mainly, there are 3 types of online multi-vendor marketplaces.

B2B multi-vendor marketplaces: B2B marketplaces are those where the sellers sell products to other businesses at a wholesale rate. On B2B marketplaces, customers prefer to order in bulk quantity. Alibaba or Walmart are the popular B2B multi-vendor marketplaces.

B2C multi-vendor marketplaces: B2C multi-vendor marketplace is a platform where various sellers sell their products or services to customers on sale. Amazon or Flipkart are the popular names in the online B2C marketplaces.

C2C multi-vendor marketplaces: C2C marketplaces are those where customers can sell their products or services directly to other customers. Ebay, Taobao are the best examples of C2C marketplaces.

Revenue Channels for a Marketplace Owner:

There can be multiple revenue generation channels on an online marketplace. However, it can be changed depending upon the nature of a business.

  • By selling their own products.
  • By selling paid subscription services like Amazon Prime.
  • A certain commission on each transaction.
  • Monthly or yearly subscription charges from sellers for selling
    on the portal.
  • Through paid advertisements.
  •  Display featured products.
  • By affiliate programs.

How Products and Services are delivered in a multi-vendor marketplace?

There can be multiple revenue generation channels on an online marketplace. However, it can be changed depending upon the nature of a business.

On most multi-vendor marketplaces, products are delivered to the customer by the admin.

In some business models, sellers also deliver the products by hiring a logistics team.

The buyers get the products or services directly from sellers. For example: Make My Trip.

Why multi-vendor marketplaces are preferred over single stores

Benefits for sellers or vendors:

  • Readymade traffic
  • No website setup & managing cost.
  • Better opportunities to market their products with a brand value.
  • Dedicated support

Benefits for customers:

  • Variety of products
  • Get the best deals.
  • Better price & quality products.

Benefits for the Marketplace Owner:

  • Higher profits through different revenue generation channels.
  • No inventory management headache because the sellers take care of inventory.
  • Because every seller will be managing his shop on their own, you don’t need to hire people to do this.

Must-have features in a multi-vendor marketplace

Important features from an Admin point of view:

  • Product catalog to maintain standardization of inventory
  • Easy accounting & tax management
  • Real times shipping rate calculator
  • Multi lingual & multi currency to sell in different locations
  • Multi level administrative access
  • Intuitive reporting and sales dashboard
  • Multiple payment gateways & digital wallets
  • Easy integration with third-party tools
  • Advanced order management
  • Multiple revenue generation channels

Important features from a seller point of view:

  • Separate store for each vendor
  • Bulk product upload
  • Flexibility to customize their stores
  • Shipment of products by vendors
  • Seller- buyer communication
  • Vendors sales & analytic tool
  • Dedicated support
  • Automated task processing
  • Mobile app
  • Marketing aids for sellers

Important features from a buyer point of view:

  • Better customer experience
  • Discount coupons
  • Push notifications
  • Rating & Review
  • Order tracking
  • Single checkout (Add different seller’s products in the same cart)
  • Mobile apps for easy access
  • Easy returns management
  • Other features such as product comparison, similar products,
    Wishlist, etc.

How to start an Online Multi-vendor Marketplace:

You can start an ecommerce marketplace either by building it from scratch or using the readymade solutions. Building a multi-vendor marketplace from scratch is a time-consuming process and requires a lot of investment. However, with the help of readymade solutions, you can launch a multi-vendor marketplace in a few hours and without any technical knowledge.

Here is a list of best turnkey multi-vendor e-commerce platforms:

Yo!Kart

When it comes to starting a multi-vendor marketplace, Yo!kart stands high. It is a dedicated multi-vendor marketplace platform to easily launch ecommerce marketplaces like Amazon, eBay, Alibaba, etc. The platform offers 1-year free technical support and free installation on all
packages.

Best Features:

  • Fully customizable & scalable platform
  • High user interface & attractive design
  • Multiple payment gateways
  • Product catalog system
  • RTL language support
  • Mobile apps for buyers & sellers
  • User-friendly dashboards for admin and sellers
  • Guarantee to handle 1 million products

Weakness:

  • No free themes and addons

Shuup

Shuup is a new entrant in the multi-vendor industry. The platform offers many attractive features that make it stands high in the list of multi-vendor solutions.

Best Features:

  • AR & VR related functionalities
  • Product catalog system
  • Single checkout
  • Easy order management
  • Customizable & flexible
  • Search Engine friendly
  • Responsive design

Weakness:

  • Highly expensive
  • Paid customer support

X-Cart

X-Cart is a popular open source e-commerce platform. With X-Cart you can easily start single or multi-vendor stores.

Best Features:

  • Separate vendor panel
  • Customer to vendor communication
  • Act on behalf of a vendor
  • Individual commission rate for each vendor
  • Built-in layout editor
  • Product catalog system

Weakness:

  • You need a development team to manage the store
  • Technical support is not completely free

To see the detailed feature comparison of top multi-vendor platforms, read this post: https://www.business2community.com/ecommerce/top-multi-vendor-platforms-to-start-an-online-store-like-amazon-ebay-02181880

Share your thoughts in the comments section in case you want to add any information in this post.

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