Benefits for the Marketplace Owner

Companies such as eBay and Amazon have proven that there is immense profit to be made from simply hosting vendor sales. These companies do not need to hold stock themselves or handle orders. They can instead focus on drawing in customers and increasing marketplace brand recognition. Vendors use the well-trafficked platforms to sell products themselves. The marketplace owner collects commissions on every sale and can charge fees for listing.

With a multi vendor marketplace you instantly increase your product offering. This gives customers better selection, further increasing traffic and sales.

• Increased product offering increasing traffic

• Reduce or eliminate mundane sales tasks

• Focus on marketing

• Revenue from commissions and marketplace fees

Benefits for Vendors

Sellers no longer have to deal with the planning, development, and costs of opening their own ecommerce store. They take advantage of existing site traffic, reducing marketing efforts and expenditures. They can utilize the marketplaces built in payment, shipping, or fulfillment features, reducing overhead. For the cost of commissions or sellers’ fees, vendors receive traffic and advanced ecommerce tools that would otherwise be impossible to gain on their own.

• Easy to start selling with minimal planning and development

• Traffic from marketplace and its marketing expenditures

• Low costs compared to building own ecommerce site

• Advanced sellers tools

Benefits for Consumers

The network of connected sellers helps customers find a more diverse set of products. Product pricing is transparent and somewhat uniform, giving them clarity on correct purchase prices. Many options for purchasing the same product makes it easy to find the best deal, shipping time, or customer service.

• Large selection of products or services

• Transparent pricing and shipping costs

• Find the best deal, shipping time, or customer service

Cloud or Hosted

Open Source, Proprietary, or Licensed

Out-of-the-box or Customized Project

Do you Need Standard or Custom Features?

When choosing your multi vendor marketplace platform, you should have a list of the features needed for your marketplace to be complete. Some standalone and ecommerce platforms may come with many of the features needed to successfully run your marketplace. These built in features are usually the most commonly used features by all marketplaces.

But your marketplace idea may be more complex or need custom logic or connections to legacy software systems. In these cases, you should choose a platform that allows for the most customizability or extensibility. This also means your developers need access to the source code of the platform. Many out-of-the-box and cloud/hosted platforms will not allow you to access the source code to make changes from within. You can only use the features and addons provided with the platform subscription.

This will work great for marketplaces based on the most common features used by other marketplaces, but for unique and innovative logic, or for connections to legacy systems like ERP’s, your developers will need rights to customize the platform itself. Code access is usually provided through purchased Software Licensing or through free open source licensing.

SOME QUESTIONS TO ASK?

• How different is your marketplace idea than a normal one like eBay or Etsy?

• Which parts of store management should be done by you and what can be done by suppliers?

• Do you use legacy software that has to be connected to your marketplace?

• Do you want code and customizations that you create to be proprietary and owned by you?

• Do you want vendors to upload their own products, or do you want to upload products and have vendors select what to sell?

• Do you want to be able to approve or disapprove vendor products?

• Do you want to charge a different fee for listing different product types?

Ease of Use

This is one of the most important features to consider when selecting a multi vendor marketplace solution. It has to be easy to use for the marketplace owner, vendors, and customers. Managing a multi vendor store is a balance between vendor and owner tasks.

Do you Sell Digital Products?

Does your store offer digital goods or services such as e-books, videos, pictures, training courses, or event tickets? Then your marketplace software should offer the right method of delivering that medium. There should be a seamless way for paying customers to get their digital good or service instantly, whether that be super-fast downloads of documents, or quick signups for watching user videos.

The sales funnel for digital goods is usually longer than for physical products. The software you choose must have good marketing and sales tools to reach and retain customers.

Do You Need a Mobile App?

Most multi vendor marketplace platforms are web-apps, where users can access the store through any web browser. They are usually responsive, meaning the user interface appears different on mobile devices for better usability through small touch screens. This works great for most use cases and can be enough for lots of traffic and sales.

But you may want to offer an app for your marketplace through the Apple or Google Play stores for mobile phones and tablets. You would need this app to be branded and designed for your marketplace. Apps downloaded and installed offer better retention and sales with native notifications and other marketing tools.

Most out-of-the-box platforms do not offer a way to build an app, because the software was designed to be used through a web browser. Building a true iOS or Android app requires extra development work and expenditures. When selecting your multi vendor marketplace software, be sure to check if there is a possibility for app development further down the road.

Cost and Budget

When selecting a multi vendor marketplace software platform, there are more costs to consider than just the platform price. Associated costs can often be much more expensive than the software subscription or licensing price. The biggest costs associated with building a multi vendor marketplace are customization/development of your solution, integrations to legacy software, and marketing your store. The more features already built into the software that match your marketplace requirements, the less customization that will be needed, the less it should cost.

Complex and innovative marketplace may require months of development work before launch. It is important to choose a development team that understands your marketplace requirements and that you can work closely with to get everything exactly right. Development can also continue for months or even years after it is up and running, as customer demands and technology improvements require new features to be constantly added to the store.

If your business model is simple enough, your marketplace requirements may already fulfilled by an out-of-the-box marketplace platform. In this case, you can usually quickly launch your store for just a few hundred dollars for the price of the subscription and any addons you may need. More complex Enterprise Projects often run in the tens of thousands of dollars for development and integrations before launch.

Charging Vendors Commissions and Fees

Multi vendor marketplace owners make money from charging vendors a commission fee for each product sold. This is one of the most important features of a multi vendor solution and should be easy to control and automate. Pricing for vendors needs to be straight forward for them to understand, and they need to be paid quickly and consistently. Your marketplace software should be able to automatically distribute funds to your vendors, so you don’t have to spend time with accounting.

The fee is usually a percentage of a vendor’s sales. The software should automatically calculate this amount and distribute it to each separate vendor. But you may have a very complex commission structure that needs to be handled by the software logic. You may want to charge different prices for different product categories or values. These special features may need to be custom developed for your solution or configured through the Payment Gateway used to handle payments.

Payment Gateways such as Stripe and Paypal can already handle this well with some configuration of their built-in features. Remember to match your commission structure to your multi vendor software features or to allocate development expenditure to customize your payment system.

Simple Vendor Registration and Product Listing

To attract vendors and get more signups, you need to have a super-easy onboarding process. This means vendors can easily find your marketplace, signup, and begin listing products without help from support. Your registration form can often be just a couple fields like email address and password.

Once vendors sign up, they should be able to easily navigate their admin panel or dashboard and have guides and documentation to get them started. Getting started includes customizing their own shop page, uploading and editing products, and managing orders, shipping, and commissions.

Simple Ratings of Products and Vendors

Customer reviews not only help other customers find the right product, but also make your marketplace look active and alive. Encouraging customer ratings starts from providing an easy method for reviewing products and vendors. This can be as simple as a form on the website or a link to a form in a customer order email or receipt.

Not only do ratings improve your store, they also help keep vendors in check. Vendors must maintain their store and efficiently serve customers to avoid poor reviews.