Last updated - October 28, 2022
In the modern world, online marketplaces take customers away from shopping malls. Due to the rapid development of websites like AliExpress, eBay, Etsy, or Amazon, such online platforms have become very popular. To adapt, we need to take into account how the market is changing. This article will help you to understand what factors to consider if you want to create a multi-vendor website.
The multi-vendor online marketplace is a huge selling platform. On these sites, many merchants (vendors) have their store (profile). They sell various goods and services. These are modern options to sell physical or digital products. According to Gartner analysts, 15% of medium and large online stores will have opened their marketplaces by 2023.
Why is it worth it to create a multi-vendor platform? The multi-vendor marketplace is an equally beneficial decision for all parties – customers, merchants, and the platform owner. Customers get more choices. Sellers get a customer base, and the platform owner gets a brand with revenue. The multi-vendor website differs from other types of marketplaces. Any ordinary Internet store cannot have such a wide range of assortments and a large customer base as a multi-vendor marketplace has.
Now let’s discuss what you need to take into account before you start building your multi-vendor marketplace platform.
1. Define your product niche
If you want to start a multi-vendor website, there are many options. First of all, you need to develop an idea for a marketplace and bring it to mind by testing.The best way is to determine what service or product your platform will offer.
Thus, if you choose an option to create an online multi-vendor marketplace, your platform can provide the buyers with lower costs giving an opportunity to purchase directly from sellers or suppliers.
2. Determine your target audience
It is a critical stage. You’ll have the opportunity to communicate with numerous demographics. For example, communicate with consumers of any age, marital status, with specific needs, and preferences. Thus, it’s easy for marketers dealing in one-size-fits-all services or products to begin covering every stratum. Instead, they should concentrate on meeting specific customer needs.
It makes no sense to launch the multi-vendor marketplace if no one needs it. Therefore, before moving on, you should prove that there will be demand for your online marketplace. It doesn’t matter how hard you work — if the idea doesn’t address the problems of buyers and sellers, the marketplace will be closed.
3. Select the best business model
Further on, you need to define the business model of your online multi-vendor marketplace. Here you conclude on the ‘who to whom’ issue and choose the thematic category. Initially, multi-vendor marketplace creators think about the service logic that will be implemented on their e-commerce platform.
In terms of it, they decide about platform types such as Customer-to-Customer (C2C) or Business-to-Customer (B2C). It is crucial for choosing marketing campaigns, and monetization strategies.
Moreover, to create a business model, it’s highly recommended to satisfy the following requirements:
- Your marketplace platform is valuable
- Your marketplace platform is responsive
Finally, considering all the issues mentioned above will allow you to form a multi-vendor marketplace business model.
4. Think about a revenue strategy
Selecting a suitable monetization model for your marketplace is essential. There are many options, but not all will work in every situation and with every vendor. Indeed, you should select wisely. Let’s take a look at them:
- Subscription fee (eBay, Amazon, WIX): Buyers and sellers make monthly/yearly payments for using the site. On some sites, only one party pays. For example, vendors pay $15 per month for a subscription.
- Transaction fee (Etsy, eBay, Shopify): The system charges a flat fee on every successful trading transaction. It must be a transaction made through your website. For example, sellers pay 4% of the trade.
- Listing fee (OLX, Delivery Hero, Etsy): The seller pays for the placement of the goods. The cost usually depends on the product category (clothing, electronics, drinks, etc.). As an example, products that vendors list on their marketplace account can cost $13 each.
- Premium listings (Google, OLX): Basic features on the market are for free. Premium features require payments and have different costs. With this option, vendors can place their listings at the top of the feed for a few weeks or longer.
- Advertising (Amazon, Facebook, eBay): Featured advertisements are an excellent option for sellers. It is a way to show and advertise their goods and services. This option helps to increase their visibility in online marketplace platforms.
5. Choose a software platform
Selecting the right software is crucial to building accurate business logic for your marketplace. There are two main options: choose ready-made or build it yourself. Anyway, be careful because some platforms only let you make minor customizations and thus not fully suit your needs. In the end, it can be a more expensive alternative.
A ready-made software
It’s easy to get overwhelmed when deciding which platform is right for your business. There are various options, and it is challenging to make a better choice.
They can be open-source solutions like Magento or licensed ones such as Shopify Plus subscriptions.
Also, self-hosted solutions which typically offer greater flexibility but lack some features elsewhere.Cloud-based platforms that host themselves on remote servers accessible via internet connection. They work anywhere there is an active cell phone signal.
All these choices have advantages over one another. That all depends upon what type of online store you want to have. So, take time exploring each variation before making any final decisions. We recommend you to check these products: Magento, Shopify, WooCommerce, CS-Cart Multi-Vendor, Sharetribe, Yo!Kart.
From-scratch development
One of the best ways to develop the online marketplace is to build it by yourself. You will have an opportunity to control the functions of your platform fully. Also, it offers flexibility in creating features/rules. These features suit whatever business logic needs are. You will have a lot of additional tailored functions. It is useful during the development process.
You might be wondering about available technical solutions. So, here are some of your key options:
Development team based in-house
This option is ideal for upgrading your team and collaborating on your project with motivated individuals.
Team of freelancers
You may use Upwork, PeoplePerHour, Fiverr, and Freelancer services. It helps you to hire a freelancer or a freelance developers team.
Development company specializing in building marketplaces
Such development teams already have vast experience and know the process of building a marketplace platform inside out.
6. Promote your platform
You’ll need to build traffic by the time your multi-vendor website is up. It is essential to attract both shoppers and merchants to the platform. You may do this using payable Google Ads, Twitter Ads, LinkedIn Ads, etc.
Conclusion
Starting an online marketplace will be a very future business. This direction will be on the top in the following years.
So, if you decide to launch a multi-vendor marketplace, you should consider the opportunities for ready-made solutions for such projects. It is crucial to think over the site monetization scheme. Also, choose the business plan for the short and long term, and think in advance about the relationship of partners with end customers on the site.
The process of online multi-vendor marketplace creation can be time- and cost-consuming. That’s why we recommend you turn to a software company specializing in marketplace development. It will save your business from many hardships.
