The eCommerce boom is like a shining star, visible to all.
It is no surprise that eCommerce has completely changed how shopping happens today. Several eCommerce services like Amazon, Flipkart, eBay, etc., have already crossed $100 billion in revenues, making it evident that an eCommerce website is a must for all businesses, irrespective of their size.
With the eCommerce business growing over the years, it has also led to business diversification. A simple online store can no longer do the trick. Now the trend has become two-fold. You can either start selling on a multi-vendor marketplace, or else you could set up your own multi-vendor marketplace.
In this blog, we will explain the multivendor eCommerce marketplace details, show you why you should have your own marketplace, and highlight some of the essential parameters you should consider while building it.
What is a Multi-Vendor eCommerce Marketplace?
A multi-vendor eCommerce marketplace is an online store with several vendors selling their products and services. It is a platform where individuals can trade goods and services. The platform connects buyers with multiple individual sellers. Some of the most popular multi-vendor marketplaces are Fiverr, Airbnb, and Etsy.
The operator connects third-party sellers and buyers in a multi-vendor marketplace and receives a commission in return. This helps the eCommerce stores to gain more exposure for their products in the marketplace, while the marketplace owners focus on improving customer experience.
Why Should You be Creating Your Own eCommerce Market Place?
You would want more control over your shopping experience whenever you go online shopping. An eCommerce marketplace developed by an experienced eCommerce development company can help you with that.
Mentioned below are some of the merits of an eCommerce marketplace that can impact both customers and marketplace owners.
- A marketplace can provide customers access to a broader range of products and services, thus increasing the chance of getting more sales.
- A marketplace can provide excellent customer data that allows you to segment customers in a better way and improve engagement.
- In a marketplace, you can test new products and brands more easily.
- The marketplace model is easier to scale compared to a single eCommerce store due to the lower requirement of inventory investment.
- The eCommerce marketplace can use a diversified monetization model. For example, you can charge a third-party seller a commission for having a premium listing on your marketplace.
Creating a multi-vendor eCommerce marketplace also comes with additional benefits. First of all, the incurring cost is low while the revenue is high. Since you do not have to do business-related activities like logistics, storage, and stock control, you will get ample opportunities to focus on other important issues that will help the business grow. Moreover, you get more customers, since there are many goods in one place.
If you are contemplating creating a multi-vendor eCommerce marketplace, you first must understand the various types of multi-vendor marketplaces.
Types of Multi-Vendor eCommerce Marketplace
Better known as B2B, these marketplaces allow businesses to exchange goods and services. An example is Alibaba which sells products to other businesses.
Also known as B2C, these marketplaces allow businesses to provide their goods and services to end-users. For example, Amazon and Flipkart.
Commonly known as C2C, this form of the multi-vendor marketplace allows customers to engage with one another.
In this type of eCommerce marketplace, different buyers bid for a product until the end period. A popular example of such a marketplace is eBid.
These types of marketplaces do not depend on selling products alone. The platform allows users to raise money to improve business ideas. A good example of such a marketplace is Kickstarter.
Now let us discuss what you need to consider before you start building your multi-vendor marketplace platform.
Factors To Keep in Mind – Developing a Multi-Vendor Marketplace
Define Your Product Niche
There are several options if you are looking forward to building a multi-vendor eCommerce website. First, you need to develop an idea for a marketplace and bring it to mind by testing. The most effective way is to determine your platform’s product or services.
So, if you choose an option to create an online multi-vendor marketplace, your platform can help the buyers with lower costs. Thus, giving an opportunity to purchase directly from the suppliers or sellers.
Determine Your Target Audience
This is an important stage. You will have the opportunity to communicate with several demographics. For example, communicate with consumers of any age, or marital status, with specific preferences and needs. Thus, it becomes easier for marketers with all-in-one services to concentrate on meeting specific consumer needs.
It will make no sense to launch a multi-vendor eCommerce website if no one is interested in it. Hence, it is imperative that you should prove that there will be demand for your online marketplace before moving on. Your idea should address the problems of buyers and sellers. Else, it would not matter how hard you have worked for your project.
Select the Business Model
Next, you must define your business model for the online multi-vendor marketplace. Here you change direction from ‘who to whom’ issue and choose the appropriate category. To start with, multi-vendor marketplace creators should think about the service logic that will be implemented on their eCommerce platform.
The creators need to decide about the platform types, such as B2C or C2C. Selecting the best business model is crucial for marketing campaigns and the monetization of strategies.
Additionally, to create the best business model, it is necessary to satisfy the following requirements:
- Your eCommerce marketplace platform is valuable
- Your multi-vendor marketplace platform is responsive
Think About a Revenue Strategy
Selecting an appropriate monetization model for your eCommerce marketplace is crucial. There are several options, but not all will work with every vendor and in every situation. Let’s discuss some of the strategies.
Subscription Fee: Buyers and sellers make periodic payments (monthly/yearly) for using the site. On certain sites, only one party pays. For example, eBay, Amazon, and WIX.
Transaction Fee: The platform charges a flat fee for every successful trading transaction. It must be a business made through your website. For example, Etsy, Shopify, and eBay.
Listing Fee: The seller pays for the placement of the goods. The listing cost usually depends on the product category (electronics, clothes, food, etc.). For example, OLX, Etsy, and Delivery Hero.
Premium Listings: Usually, the basic features on the marketplace are free. However, premium features are fee-based, and the price varies with facilities. For example, Google and OLX.
Advertising: Featured advertising is an excellent option for sellers. It is a mode of showing and advertising their goods and services. This method helps to increase visibility in the marketplace.
Choose a Software Platform
Selecting the right software is essential for building accurate business logic for your online marketplace. There are two options: Select a readymade software or build it yourself.
If you are selecting readymade software, be careful because some platforms only let you make minor changes that might not be complete as per your needs resulting in you paying more for suitable alternatives.
One of the best ways to create a platform is by building it yourself. You will be able to control the functions of your multi-vendor platform completely. Also, it allows you flexibility in creating features/rules based on your business logic requirements. You will also have a lot of additional tailored functions.
If you are wondering about the available technical solutions, you can either use freelance services or hire the services of a development company specializing in building marketplaces.
Promote Your Platform
It is essential to build traffic by the time your multi-vendor eCommerce platform is up. It is necessary you attract both sellers and buyers to your platform. You can use payable services like Google Ads, LinkedIn Ads, Twitter Ads, etc.
Starting an online marketplace is the business for the future. Building a platform now is thinking ahead of time.
So, if you decide to build an eCommerce multi-vendor platform, you should always consider the opportunities for such platforms. It is essential to think about the site monetization scheme. Also, choose a business plan for short and long-term needs and consider effective customer servicing.
The process of creating an online multi-vendor marketplace is a time-consuming affair. It is also cost-consuming. Hence, we recommend you seek the help of a software company specializing in multi-vendor marketplace development, like Skein Technologies. It will make your business run smoothly.