Single-Vendor vs. Multiple-Vendor Marketplace

Just a few decades ago, online shopping was a sure novelty, employed by only a select few geeks hunting for obscure action figures on eBay. As the early screeching dial-up sounds trickled down into our homes and people populated the flat ancient-looking chatrooms, so did the online shopping slowly but invariably took off. The single-vendor shops that came into existence in 1991 were quickly outpaced by multi-vendor marketplaces. However, a real inflection point in ecommerce did not occur until 2017, when the smartphone penetration hit 80% worldwide, and Americans started to shop online as often as they took out the trash. For the past two years, in particular, we’ve seen an unprecedented growth of online marketplaces of various kinds. So far, this year 220,000 more sellers joined an Amazon marketplace, while 46% of surveyed online retailers consider merging their fulfillment networks to compete against the Amazon giant. Predictably enough, the year 2020 saw the highest annual US ecommerce growth for the last two decades, amounting to an incredible jump of 44%. Right now seems to be the right time to go online or expand your digital operations.

In the previous piece, we’ve looked at a marketplace taxonomy which differentiates between horizontal and vertical marketplaces, while here, we’ll concentrate on differences between single and multi-vendor stores. We’ll explore how the two differ and which option suits your business needs best – such information might come in handy in case you’re either thinking of joining in the ecommerce craze, switching from one model to the other, or connecting your store to a larger marketplace.

Definition: single-vendor versus multiple vendor marketplace

A single-vendor ecommerce store is a marketplace where a single seller sells its products to multiple customers. Such stand-alone stores typically don’t provide for a broad range of products and services.

A multi-vendor ecommerce store is a marketplace where multiple sellers come together to sell their products and services to multiple customers. In multiple-vendor marketplaces, customers have a chance to buy products from different sellers or brands.

Unlike a single-vendor store, where the business relationship is two-fold, in a multiple-vendor store, there are typically three entities involved: a website administrator (owner), vendor, and customer.

Advantages and disadvantages of single vs multi-vendor marketplaces

Operating or doing business with a single or a multiple-vendor ecommerce store has both its advantages and disadvantages.

Single-vendor vs. multi-vendor for customer

From a customer’s standpoint, when it comes to a single vendor marketplace, creating and maintaining a relationship with only one supplier can be perceived as an advantage – it is easier to streamline operations, incorporate and integrate systems with a single supplier rather than many. By placing orders with just one supplier, businesses can also reduce their administrative and other supplementary costs to a minimum and achieve attractive pricing by leveraging volume. On the other hand, in a multi-vendor reality, there are always opportunities to take advantage of competition among suppliers. If one of them fails, there is always someone else to fall back on.

Single-vendor vs. multi-vendor for owners

Financial risks

From the owner’s perspective, operating a multi-vendor store is financially less risky, because you don’t stick to just one niche but diversify your offering by including other parties in the picture. Also, having multiple sellers means you don’t have any inventory, which is a seller’s responsibility – not investing in your website’s inventory substantially reduces your financial risks.

Quality of products

On the other hand, it is difficult to supervise each seller in a multi-vendor relationship and see if they deliver quality products. However, having a correct vetting process while onboarding can help mediate the risks of running into a fraudulent or unreliable partner.

Choice and alternatives

Speaking of choice, in a multi-vendor marketplace, customers can browse through product offerings from different suppliers and switch between options within the same market space without leaving the site. A single-vendor store, on the other hand, implies certain restrictions in terms of choice and available inventory, meaning that if a customer doesn’t find the offering to their satisfaction, they leave the site and turn to another store.

Traffic

Vendors you host on a multi-vendor website will essentially be the drivers of your traffic. In the case of a single-vendor store, you will be responsible for all your marketing, establishing an online presence, and driving traffic (on top of maintaining all your business operations, inventory, and logistics).

Pricing

The brunt of poor traffic is not the only challenge awaiting web stores. Being the sole owner of the site, you cannot afford to lower your prices below a certain threshold. Your customers are more than likely to shop around and end up at a marketplace where someone else offers a lower price because they can afford to.

Responsibilities

In a multi-vendor model, the roles and responsibilities of the owner and sellers are clearly defined: your role as an owner of the marketplace involves maintaining the website, its infrastructure, and driving traffic, while the sellers don’t have to worry about anything but closing the sale. On the contrary, as an owner of a single-vendor store, you’ll wear multiple hats and look-see into every aspect of your business – from website maintenance to logistics.

Development

A basic ecommerce website might be fairly inexpensive and easy to set up, considering there’s a plethora of plug-and-play websites and ecommerce store builders like Shopify. Setting up a multi-vendor store is a more complex process as it involves custom solutions, numerous integrations, and multiple iterations.

Single-vendor versus multi-vendor for suppliers

A marketplace offers numerous opportunities for vendors as well: it helps minimize the development and deployment of an ecommerce website, provides a cost-effective entry into either B2C or B2B ecommerce, and an opportunity to reach new markets and customers.

However, for trading at a marketplace, you’ll be exposed to commissions and fees as a supplier, which might sometimes make a prolonged partnership with the marketplace questionable.

Moreover, your products will always be compared to those of your competitors immediately on the website, forcing you to drive your prices lower or look for other ways to attract customers.

We have summarized all the top benefits and limitations of a multi-vendor B2B marketplace in our previous piece, which you may check out for a more in-depth look into the multi-vendor models for suppliers.

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Top benefits and limitations of a multi-vendor B2B marketplace

Setting up or integrating your ecommerce store into a marketplace

The choice of an ecommerce platform is critical regardless of whether you decide to set up your own ecommerce site from scratch or digitize your existing offline operations. If you’re operating a small business, it might be worth trying to go with a simpler and more affordable solution that requires minimal setup and practically zero coding skills like Wix, Squarespace, Shopify, Ship4Shop, and others. However, if your business operations are complex, you’ll need a solid and more customizable solution.

Virto Commerce is a B2B ecommerce platform that’s built explicitly with medium to large B2B businesses in mind. It is outstandingly flexible, composable, and extensible. It has all the necessary features for running a successful ecommerce store: catalog, order, contract, and inventory management, third-party system integrations, order-specific workflows, and access controls, among many other features specific to a B2B environment. Moreover, Virto Commerce enables seamless integration with marketplaces and ensures your store complies with the marketplace requirements.

As a reputable marketplace partner, Virto Commerce will make sure all your product data is structured, optimized, and prepared for integration. As part of its marketplace integration solution, Virto Commerce offers management of your product data, including connecting product data and inventory to marketplaces in real-time, streamlined order management, integration of sales, tax, and shipping data. Virto Commerce, being API-based, can help you reach new markets literally overnight by automatically fetching, cleansing, preparing, distributing, and synchronizing product content across multiple channels.

Whether you decide to operate a single- or multi-vendor store or a single-store integrated into someone else’s marketplace, Virto Commerce has a solution for you. You may book a demo now and see how we can help.

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Marina Vorontsova
Technical author and eCommerce advocate