In this modern hyper-digitized era, one can buy and sell anything online. Products, services, consultations, and God knows what not are available with a click of a button. On top of this, the digital commerce landscape is changing rapidly. Single-store vendors are not enough. People want everything under one roof. Customers are more driven toward convenience. Amazon, eBay, and Etsy are perfect examples of the superpowers of digitization, where these platforms sell everything from physical goods to digital products online.
There are more than 2.14 billion active online shoppers in the world. So, how to tap into this enormous market? How to address the pain points of this vast consumer base? How to offer superior CX and online shopping experiences to hold on to your customers for the long haul?
But what do these customers prefer?
The leading marketplaces worldwide sold $3.21 trillion worth of goods and services in 2021. Just last year, Amazon recorded $469.8 billion in sales, and Etsy was worth $21 billion in market value. Currently, 90% of the top US retailers are online marketplaces. Moreover, these digital selling shops accounted for 58% of the total global digital sales just before the pandemic’s digital commerce boom.
If this doesn’t clear the air for consumer preferences, nothing will.
With a promising future for online marketplaces on the cards, tech-savvy entrepreneurs and innovative tech and eCommerce enterprises are turning to digital marketplace business models. The question is, where do you start?
Let us now understand the meaning of an online marketplace before we go further into imagination and realization.
What is an Online Multi-Vendor Marketplace?
Typically a multi-vendor marketplace is an eCommerce store that brings together multiple vendors to its platform to sell various products and services to the customers from the same digital platform. It does not manufacture or own the inventory but acts as an aggregator connecting the buyers and the sellers.
eBay, AliExpress, Alibaba, Etsy, Walmart, and Airbnb are some of the key players in this segment of commerce. However, the online marketplace has massive growth potential once in the public eye. According to Statista, Amazon went from $6.92 billion in 2004 to $469.82 billion in 2021 in annual net sales revenue.
So, what is so distinctive about online marketplaces?
Difference between Multi Vendor Marketplaces and Traditional eCommerce Websites
The difference between a marketplace and a traditional digital commerce store starts with the capability to set a precedent for a future of technological advancements, fast-changing consumer behavior, and the ability to scale.
Traditional eCommerce platforms enable one-way transactions between a single customer and a seller. Fintechs and logistics are involved to some extent but not extensively compared to a multi-vendor marketplace. A multi vendor marketplace can accommodate virtually any number of vendors and products. But due to an extensive catalog, these marketplaces are on edge to endure seamless logistical standards across all fronts. On the other hand, marketplaces have to validate and verify their vendors, ensure regular payments, and comply with their fintech provider. None of these are on the cards for a traditional eCommerce store.
Once we have established the uniqueness of a marketplace business model, we should move on to why you or anyone should invest here. What are the implications and benefits of a marketplace for the vendors and the buyers?
Benefits of a Marketplace for Vendors and Buyers
Marketplaces are gaining popularity amongst both buyers and sellers.
The vendors have access to an easy and fast store and catalog creation. They do not have to look for third-party service providers to launch a separate eCommerce site. It is all pre-configured on the multi-vendor platform. The platform allows sellers to pitch their products to a broader audience base. For instance, AliExpress welcomes over 450 million visitors every month. On the other hand, the buyers can be guided by other people’s reviews and ratings to finalize a purchase while choosing a wider pool of products with better choices and options.
The Niche for your Multi Vendor Marketplace
This is the very first step to building a thriving online marketplace. You need to be decisive over the products, services, and types of sellers you would be accommodating in your marketplace platform. Also, while determining the target audience, your focus should be narrow while you categorize your deliverables, segment your audience and finalize the geographies you will cover.
Also, learn from your competitors’ weaknesses. While coming onto a niche for your marketplace, be farsighted and analyze your market rivals. Take actionable insights and draw meaningful conclusions to run a booming marketplace.
Some common considerations for marketplace owners are unique inventory, better products and services, lower commission rates for vendors, advanced loyalty programs for current customers, and more. Once you are clear about the approach, start working on your marketplace.
How to Start Building a Multi Vendor Marketplace?
Amazon was initially a bookstore out of the garage of Jeff Bezos. Then, the founder of Etsy, Rob Kalin, joined hands with other amateur woodworkers like him and started selling their handmade wares online.
The point is that your online marketplace’s first version will not be the last. You must develop a vision to realize your MVM, a minimum viable marketplace. Analogous to the MVP, a minimum viable product, the MVM is like an atom to your marketplace ecosystem performing the most basic functioning. The goal here is to reach the market in no time. The sooner you start selling on your marketplace, the sooner you will garner feedback and start acting on real-life insights.
If you are in doubt of your idea not being unique or original, it is time to understand that existing marketplaces have a habit of making way for newer competition.
Choose a Monetizing Plan
A monetization strategy determines the way you earn money from the marketplace. Thus, you must define a revenue model to generate profitable revenue for your vendors and yourself. Remember that this monetization can help your marketplace to keep functioning sustainably.
- Subscription Fees
- Transaction Fees
- Listing Fees
- Premium listing
- Advert and Marketing Fees
Certain renowned brands have implemented these strategies and created benchmarks.
Embed the Key Features for your Online Marketplace
The functionalities of an online marketplace are significant in determining vendor and customer experience. These features should impart simplicity and intuitively allow both parties to stay continually.
Security and Authorization
Users must be able to sign up and provide basic details such as name, contact number, email, and password. The registration process must be easy and quick. Also, there should be provisions for the users to fill in the basic details first, specifying detailed information later. These bits of information must be verified, and proper authorization must be delegated to the users to keep data security intact.
Registrations
A multi-vendor marketplace should have provisions for both vendors and buyers to register on the website and create personal accounts. For the vendor, the primary function should be making an online account and starting trading. For customers, the accounts can be leveraged to deliver customized user experiences and functions like chatting with vendors and leaving reviews and ratings.
Account Management
This feature is more important for the vendors rather than the costumes. The vendors must be able to edit and update their profile details and manage their accounts in inventory management, product listings management, and order management, among other things.
Search and Filter
Effortless navigation and product discovery are essential prerequisites to running an online marketplace. To create a superior navigation experience to boost the CX, as an owner, you are responsible for providing the visitors with an intuitive navigation menu with a search bar and appropriate categorized filters. Easy product discovery directly translates to a reasonable conversion rate. Conversely, bad navigation and search options can lead to customer churn.
Detailed Report Generation
Again, this one is for the vendors. This feature allows the vendors to track consumer behavior, generate leads, check product feedback, and manage returns and orders while keeping track of the inventory.
The Boost Option
A unique feature for the vendors to leverage monetizing opportunities. Similar to the social media boost option, vendors can promote their products and services by subscribing to the service for a period or on a pay-per-click basis.
User Generated Content
This functionality instills trust in the customers and elevates the credibility of the marketplace. Let the customers add relevant reviews and ratings on the products after the purchase. Ask them to review the purchase, the delivery, and the services. Of course, you can always moderate the comments to suit your preferences.
Payment Options
Every online multi vendor marketplace requires advanced payment functionalities. Customers should be given multiple payment options like credit/debit cards, PayPal, Stripe, regional payment options, net banking, and more. Also, there should be multi-currency and auto tax generation options if you are catering to multiple geographical locations.
Though these are the primary functionalities needed to jump-start your marketplace, once gained momentum, you can also incorporate the following features in your multi-vendor marketplace.
Push Notifications
- Dedicated Landing pages for clients and vendors
- Customer service via chatbots and messenger
- Multiple Shipping options
- Localization/Hyper-localization
- “Request a quote” option (if the marketplace is service-oriented)
- Loyalty programs
- Product comparisons
- And more…
Choosing a Multi Vendor Marketplace eCommerce Platform
While selecting the ideal eCommerce platform, you need to pen down your business objectives, types of market, products and catalog size, features and functionalities to add, and most importantly, the budget.
Custom-Built Marketplace Platform
The upside of this platform is that you will get every feature and functionality in your dream project. But remember, with every code, change and function, there will be longer build time, longer market time, and a larger budget.
Plug-Ins on an eCommerce Platform
Adding onto an existing traditional eCommerce store is a more conventional approach. You can take advantage of the current systems with more minor tweaks. But you will have limitations. You will have to ensure to fill in the gaps with custom integrations, custom coding, and custom functionalities to manage multiple sellers.
Multi Vendor Marketplace Platform
The third option is to get a purpose-built multi vendor marketplace Solution. The platform can come with a ready-to-use set of features that would need less coding and customization. This allows a faster time-to-market keeping the cost in check.
How can MageDelight Help with your Multi-Vendor Marketplace Development?
At MageDelight, you can leverage our certified developers’ years of experience and expertise to turn your vision into reality. Our best-in-class ready-to-use magento marketplace solution has many in-built features in sync with the current digital commerce landscape yet can be easily customized to suit your business requirements.
We understand the complex process of marketplace development and the time, effort, and money a client puts in. Hence, we strive to keep the shortest development path possible while maximizing results. So, if you are looking for a dynamic team to hold your hand while you successfully climb the ladders of the marketplace segment, then contact us. Talk to our eCommerce enablers to tap into a niche market and unlock massive growth opportunities.
