How to Create a Multi Vendor Marketplace
“ In 2021, digital platforms accounted for a 45% increase
in companies' revenue, a 25% increase since 2019.
Here, we'll talk about different types of multi vendor marketplaces and share some tips on multi vendor marketplace development.
Topics we cover in this article:
- Definition and types of multi vendor marketplaces
- Differences between B2C and B2B multi vendor marketplaces
- Examples of multi vendor ecommerce marketplace solutions, including best multi vendor marketplace software
- Multi vendor marketplace examples
- Tips on multi vendor marketplace development
Types of Multi Vendor Marketplaces
Multi vendor marketplaces by the target audience
- B2B multi vendor marketplaces connect businesses with other businesses, for example, manufacturers to distributors. By carrying out orders and financial transactions online through an online marketplace, businesses facilitate multiple business processes, such as sales and procurement. Amazon Business, eWorldTrade, and IndiaMart are good examples of B2B multi vendor marketplaces.
- B2C multi vendor marketplaces connect businesses to individual consumers. A B2C multi vendor marketplace can be compared to a digital retail store where buyers can shop for a variety of products offered by different providers. Amazon.com and Booking.com are good examples of B2C marketplaces.
- P2P (or C2C) multi vendor marketplaces connect individuals on a single platform where they trade goods and services with each other. eBay, Etsy, and Uber are good examples of P2P marketplaces.
Multi vendor marketplaces by focus
- Vertical marketplaces are ecommerce websites that cater to a particular niche market. Airbnb is an example of a vertical marketplace that connects people looking to rent a property with those offering accommodation.
- Horizontal marketplaces are ecommerce stores that offer a variety of products or services from different vendors across many industries. Amazon and AliExpress are the most famous examples of horizontal marketplaces.
Multi vendor marketplaces by management approach
Fully managed marketplaces are ecommerce stores where marketplace owners exercise full control over marketplace operations to ensure quality, reliability, and security of ecommerce transactions. Such platforms undertake critical assessment functions such as finding the most trustworthy providers, performing vendor and customer verification and background checks, ensuring product and service quality, and so on. As a consequence, these marketplaces offer superior customer service and are typically more expensive.
Multi vendor marketplaces by purpose
- Product marketplaces are marketplaces where people buy and sell products. Amazon, Flipkart, and Walmart are examples of product marketplaces.
- Service marketplaces are marketplaces that cater to the service industry. Platforms like Fiverr, Upwork are marketplaces that offer freelance services.
- Hybrid marketplaces are marketplaces where people can expect to sell and buy both services and products on the same platform. Olx fits into this category.
Benefits and Challenges of Multi Vendor Marketplaces
Firstly, let's talk about its advantages.
- Offering digital shopfronts for a variety of sellers means you're also offering a wide range of products and services to your customers. Buyers, in turn, always appreciate an opportunity to look through an array of options on a single platform rather than look for different products on different websites. Having a variety of products brings new customers and new market opportunities.
- Operating a marketplace model gives you an opportunity to forgo having a large inventory since each vendor is responsible for maintaining their stock. Having little to no inventory releases a considerable financial burden that would have otherwise befallen your ecommerce business. Redirecting those freed funds elsewhere, say to scaling up or improving existing operations, will help focus on making your business more efficient, lucrative, and attractive to prospective partners and potential investors.
- Sellers are also largely responsible for their own logistics, which means that you, as a marketplace operator, will not deal with the shipment and fulfilment process, thereby delegating those responsibilities to your vendors. As a marketplace operator, you'll instead concentrate on verification, quality assurance, and marketing.
Now, let's look at the disadvantages of operating a multi vendor store.
- Quality assurance and maintenance is a laborious and costly process that involves different and complex activities. As the number of sellers and customers rise, so does the cost and time of quality assurance, which is surely a drawback of operating a bigger marketplace.
- Despite the fact that some of the fulfilment and shipping responsibilities are delegated to vendors, you'll still have to look out for deliveries as well as oversee other important operations to ensure that customers are well served and vendors continue to be reliable.
- Digital marketing can also prove expensive. For example, CPV on Facebook has significantly risen over the past year, creeping up almost +90% since December 2020 while YouTube's CPM rose 108% year-over-year in July 2021, both largely due to ad-tracking transparency regulations by Apple.
- Customer management is also both time-consuming and expensive. You'll most probably have to operate a 24/7 customer service and technical support team, integrate your marketplace platform with various customer service add-ons such as live chatbots and so on.
Multi Vendor Marketplace Examples
Amazon – best B2C multi vendor marketplace
Alibaba – best B2B multi vendor marketplace
Multi Vendor eCommerce Platforms
Types of multi vendor ecommerce solutions
Multi vendor marketplace open source
SaaS/Managed or hosted multi vendor marketplace
Best Multi Vendor Marketplace Software
Multi Vendor Marketplace Development: How to Build a Multi Vendor Marketplace?
Things to keep in mind while setting up a multi vendor marketplace
These are a few questions you should ask yourself to arrive at a multi vendor marketplace business plan and a specific strategy:
- Are you planning to expand your current business or extend your existing ecommerce solution to incorporate a marketplace business model?
- What is the purpose of your marketplace?
- What niche are you trying to seize?
- What is your target audience? What are they buying and why?
- Who influences your customers' buying decision?
- What are your customers' pain points? Are there any solutions you can offer with your marketplace?
- Who are your vendors? What are they selling and why? Where are they currently selling their products or services?
- Who influences your vendors?
- What are your vendors' pain points? Can you solve them?
- How are you planning on making money? Are you going to settle on transaction fees? A flat rate? Subscription fees? Advertising fees?
How to create a multi vendor marketplace website
- Use a ready-made, out-of-the-box marketplace software like Mirakl or a multivendor marketplace builder like Yo!Kart
- Choose an open source ecommerce solution with marketplace extension, multi vendor marketplace app builder, marketplace cms, and essential production-ready modules
- Install a multi vendor marketplace plugin if you already operate an ecommerce site on platforms like WordPress
- Create a marketplace from scratch
Your preferred method of development will depend on several factors that revolve around your business plan, your goals, your budget, and finally, the set of features you'd like your marketplace to have.
In fact, marketplace functionality is of utmost importance. Your platform users, both merchants and buyers, must have an excellent user experience. If your marketplace website is too complex to use or too slow to load, your prospective buyers will easily switch to a solution that's simpler and more convenient.
Both vendors and buyers will certainly require at least the following standard features:
- Registration, authorization and security. Your users will need to sign up with their personal details and a password. If your business model requires verification procedures, there should be a comprehensive mechanism that allows you to perform verifications as smoothly and swiftly as possible.
- User and account management. Granular account management is imperative for both customers and merchants in B2B. In B2C, however, only vendors might require granularity in account and user management where they can specify roles and permissions for managing a store.
- Catalogue management for vendors and shopping lists for customers. There should be a publishing mechanism for sellers to upload products and provide product specifications and descriptions. Customers, on the other hand, might require multiple shopping lists or access to certain account-restricted price lists that have been contractually agreed upon.
- Search and filtering. You need to provide both vendors and buyers with an efficient search and filtering mechanism. Integration with a reliable search engine is, therefore, a must.
- Analytics and statistics. Analytics dashboards and sales statistics will help your vendors track and analyse their activities, such as leads, views, items sold/not sold, and so on.
- Multi vendor marketplace template. Vendors will likely require themes and templates to make their digital stores more appealing to prospective buyers, so you'll have to invest in design and front end development to make sure your vendors have several attractive options for their storefronts.
- Marketing options. Boost options, advertising, newsletters, coupons codes, and other marketing functionality provides you, as a marketplace owner, with more monetisation options and your sellers with opportunities to promote their product and increase sales.
- Ratings and review system. This feature allows buyers to leave product reviews and rate sellers thus increasing the credit of trust with the platform and keeping sellers motivated.
- Payment options. Your platform must be able to support advanced payment functionality and integrate with the best multi vendor marketplace payment gateways. Support for credit/debit cards, ACH, payment services like Paypal and Stripe are an absolute must.
How to set up a multi vendor marketplace with Virto Commerce
Previously available as an extension, Virto Marketplace is now fully available as a freestanding solution with all essential features required to get your MVP to market out of the box. Specifically designed with B2B complexity in mind, Virto Marketplace can nonetheless incorporate any business model, including B2C and so on.
Because Virto Marketplace is fully customizable, you’ll be able to iterate and improve on your working product as you mature and scale. With Virto Commerce's unique expertise, you can create a truly memorable customer experience that will attract more buyers, vendors, and partners to your multi vendor marketplace.