Today, you can buy and sell anything online. Amazon is one of the best examples of an online platform where you can buy and sell both physical and digital products. Inarguably, digitization is the superpower behind this on-going trend.
According to BrizFeel’s 2018 research report, 57% of people prefer to shop online. There are several reasons why people prefer online shopping over the offline option, some of which include price transparency, better customer service, and convenience of ordering.
For the aspiring entrepreneurs who are still dreaming of becoming a successful entrepreneur in the ecommerce industry, building an online multi-vendor marketplace is a profitable and prominent business idea. The idea is even more lucrative if you don’t manufacture any special and unique goods.
The unprecedented success of multi-vendor marketplaces such as Amazon, eBay, and Alibaba isn’t hidden from anyone. According to Internet Retailer’s report, the sales on these multi-vendor marketplaces accounted for 52% of global online retail sales in 2018.
However, starting a multi-vendor ecommerce marketplace is not a walk in the park. Entrepreneurs face two major challenges when building a multi-vendor marketplace—1) when finding a cost-effective platform and 2) when figuring out ways to attract vendors to their marketplace. I will discuss in detail about the two challenges in the later part of this post.
First, let’s understand how a multi-vendor marketplace business model is better than a single-vendor ecommerce store model.
Benefits of A Multi-Vendor Marketplace Over A Single-Vendor Store
What are the benefits to the Marketplace Owner?
- No inventory management headache
- Plenty of sellers with different products
- Large customer base
- Commission on each product’s sale
What are the benefits to Sellers?
- Personal dashboard for each seller
- No web-store setup cost
- No headache of marketing
- Wider target audience means more sales
What are the benefits to Customers?
- Variety of products from different sellers
- Purchases at competitive prices with comparison of products’ pricing at different sellers
- Better shopping experience
- Improved customer service
Types of Multi-Vendor Marketplaces
B2B Online Marketplaces
On B2B online marketplaces, businesses sell their products or services to other businesses at wholesale price. Alibaba is a reputable B2B marketplace.
B2C Online Marketplaces
Amazon, Flipkart, and MakeMyTrip are a few of the well-known examples of B2C online marketplaces. On B2C marketplaces, sellers from different industries or regions sell their products or services across demographics.
C2C Ecommerce Marketplaces
C2C marketplaces are those where customers sell directly to other customers. OLX is one of the best examples in this category.
Horizontal marketplaces can be B2B or B2C. On a horizontal marketplace, you can find products under different categories from different sellers. Amazon is one among the best examples of a horizontal marketplace.
Vertical marketplaces can also be B2B or B2C but on these kinds of marketplaces, you will find a specific category of products from a particular seller. The audience size on vertical marketplaces is narrower as compared to that on horizontal marketplaces. Uber & Airbnb fall under the category of a vertical marketplace.
Revenue Models for Multi-Vendor Marketplaces
One question that every multi-vendor marketplace owner asks is, “How will I earn money?”
Therefore, I’ve listed below the best possible revenue generation channels for a multi-vendor ecommerce marketplace:
You can charge a monthly or yearly subscription fee from sellers to sell on your marketplace.
You can charge a certain fee from sellers who are interested in featuring their services or products on the home page of your website.
Amazon or Flipkart use this revenue model. It helps you earn commission on every product sale from a seller.
Sell Your Own Products
Again as Amazon and Flipkart do, you can start selling your own products at your marketplace.
Apart from the above, you can earn big bucks by adopting different advertising methods such as Affiliate Products, Banner Ads, and Adsense Ads.
How to Start a Multi-Vendor Marketplace?
Once you find your ecommerce business niche, the next step is to build the online marketplace.
There are many tested solutions in the market for starting a multi-vendor marketplace. If you have time, money, & sound technical understanding, you can hire a web design and development company to build your online marketplace.
However, many startups and entrepreneurs prefer to choose a ready-to-launch multi-vendor marketplace platform instead of hiring a custom web development company. Readymade marketplace solutions are a cost-effective, scalable, and easy to use option, especially for those who don’t have time to deal with programming and technical matters.
YoKart is one of the best multi-vendor marketplace platforms that provide a number of built-in features while ensuring great flexibility. Among all the readymade multi-vendor ecommerce platforms, YoKart is the most cost-effective marketplace solution. Before making a final call, you must choose to try a demo.
Basic Features of a Multi-Vendor Marketplace
- Order tracking
- Single page checkout
- Coupons/ discounts
- Multiple payment options
- Mobile apps
- Location-based search
- Reviews & ratings
- Import & export (for sellers)
- Vendor dashboard
- Product catalog (for sellers & Admin)
- Analytic & reporting
- Multiple administrative accesses
Note: The feature list can be expanded as per a business’s requirements.
How to Attract Vendors to Your Multi-Vendor Marketplace:
Once you have launched your ecommerce marketplace successfully, another big challenge is how to attract vendors to your multi-vendor marketplace. I am sharing a few quick tips that will certainly help you to get more vendors on your marketplace:
- First, run surveys through online polls or go to the market yourself to understand sellers’ pain points in the traditional market.
- Share your business idea with sellers. Help them understand how your web platform can solve their problems.
- Show them the other benefits such as wider audience reach and increased sales.
- Start running social media or email marketing campaigns to approach sellers who are already associated with other web platforms. Highlight to them the benefits of selling on your ecommerce marketplace.
- Conduct training sessions to make the sellers aware about your marketplace features.
- Offer zero subscription or commission charges in early days.
- Share your sellers’ success stories on different platforms to encourage other sellers to partner with you.
- Try other offline marketing techniques like distributing pamphlets, investing in hoarding ads, and attending trade fairs to build relations with other merchants.
If you have any other tips to share, write to us in the comments section.