Hackernoon logoHow to Launch a Successful Multi-Vendor E-commerce Marketplace and App: 2021 Edition by@ankush-mahajan

How to Launch a Successful Multi-Vendor E-commerce Marketplace and App: 2021 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. Also, the COVID-19 pandemic has fueled online sales of Amazon or other marketplaces. As per the stats, in the pandemic, Amazon received 35% of all online sales in the UK.

The one primary reason people prefer to buy from multi-vendor marketplaces is the competitive environment, where a consumer has the leverage to compare products of different sellers and buy at the best price.

However, starting a multi-vendor marketplace is not a walk in the park. In this post, I would like to explain each and every important thing of an online marketplace that definitely help you to start your multi-vendor store easily in 2021.

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 depending on the marketplace owner approval.
  • Customers can compare and buy the products from their choice of the seller.
  • Admin charges a certain fee on each order. The percentage of commission can be decided at category level, product level, & seller by seller.
  • Once the order is placed, the payment is transferred directly to the admin account. After the order is delivered and the product return period is over the Admin transfers payment to the seller’s account.
  • However, in-case an online marketplace is integrated with automated payout options such as Stripe Connect, payment will be transferred to each seller account instantly after the order is placed.
  • 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.

Also, there can be some other multi-vendor marketplace business types such as digital products marketplace, B2B2C marketplace, etc. that you can consider starting in 2021.

Revenue Channels in a Multi-vendor Marketplace for a Business Owner:

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

  • A certain commission on each order per sale.
  • Monthly or yearly subscription charges from sellers for selling
    on the portal.
  • By selling paid subscription services like Amazon Prime.
  • The marketplace owner can also become a seller in-case he/she wants to sell the products.
  • Through paid advertisements such as PPC, Display ads, native content ads, etc.
  •  Display some seller products in the featured products sections
  • Per order delivery commission in-case order delivery is managed by a third-party company

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

    • On most multi-vendor marketplaces, products are delivered to the customer by the admin.
    • In some business models, sellers also deliver the products themselves or by hiring a logistics team.
    • BOPIS (Buy Online & Pick in-Store) in the pandemic, this product delivery channel is the hottest trend, where a buyer order online and picked the product in-store.
    • 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 standardize inventory
    • APIs to handle Accounting & tax management
    • Real times shipping rate calculator and labeling
    • Multi lingual & multi currency to sell in different locations
    • Multi level administrative access
    • Intuitive reporting and sales dashboard
    • Multiple payment gateways & digital wallets
    • Payment gateways like Stripe Connect in-case an online marketplace owner wants to automate seller payouts.
    • Easy integration with third-party tools or APIs
    • Advanced order management
    • Customizable framework that allows them to scale as per their business requirements

    Important features from a seller point of view:

    • Separate store for each vendor
    • Inventory management and bulk products upload
    • Flexibility to customize their stores
    • Shipment of products by vendors
    • Seller- buyer communication
    • Vendors sales & analytic tools
    • Dedicated support
    • Automated tasks processing
    • Mobile app
    • Omni-channel inventory management

    Important features from a buyer point of view:

    • Better customer experience
    • Discount coupons
    • Push notifications
    • Rating & Review
    • Order tracking
    • Single checkout (Adding 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 or turnkey solutions, you can launch a multi-vendor marketplace in a few hours and without any technical knowledge.

    Here is a list of best multi-vendor e-commerce platforms in 2021:

    Yo!Kart

    When it comes to starting a multi-vendor marketplace, Yo!Kart stands high. It is a dedicated multi-vendor marketplace platform to successfully launch ecommerce marketplaces like Amazon, eBay, Alibaba, etc in 2021. It is a fully customizable ecommerce platform that comes with a wide set of features.

    Yo!Kart offers lifetime license and 1-year free technical support on all the pricing packages.

    Yo!Kart Best Features:

    • Fully customizable & scalable platform
    • Best user-interface & attractive design
    • Multiple payment gateways
    • Product catalog system
    • RTL language support
    • Mobile apps for buyers & sellers
    • Pre-integrated with APIs like Stripe Connect, TaxJar, QuickBooks, ShipStation, etc.
    • Guarantee to handle 1 million+ products

    Weakness:

    • No free themes and addons

    Shuup

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

    Shuup Best Features:

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

    Shuup Weakness:

    • Highly expensive
    • Paid customer support

    Cs-Cart:

    Cs-Cart is another powerful multi-vendor platform that was started in 2005. The multi-vendor software is used by thousands of businesses to build different types of online marketplaces.

    Cs-Cart Best Features

    • Vendor payouts
    • Advanced catalog management
    • Order re-ordering
    • Shipping and logistic management
    • Ready Addons and themes
    • Multi-shop functionality

    Cs-Cart Weakness

    • For some basic functionalities, you will have to buy paid addons
    • Admin and seller panels interface is not attractive

    X-Cart

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

    X-Cart 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

    X-Cart 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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