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Multi-vendor Marketplace: Meaning, Software benefits and More

By Priyanka 19th May 2021

We live in a digital world today where almost every other person is an online buyer of various goods or services. And no, we are not even exaggerating. The previous year saw more than two billion people buying goods/services online, as per Statista reports.

The same study also recorded e-retail sales of over 4.2 trillion USD across the world. Fascinating, isn’t it? 

These figures are a testament to why more and more entrepreneurs are eager to take their business online. Especially the kind where they can offer multiple products/services in one place. To achieve this, all one needs to do is, set up a robust multi-vendor marketplace

But before we tell you how to do that, let’s first understand what multivendor marketplaces mean in a broader sense. 

What is a Multivendor Marketplace? 

When you think of a multivendor marketplace, picture it as a large one-stop online store (eCommerce platform) with multiple shops selling a range of goods/services. These shops belong to various sellers that may be based at similar or different geographical locations. In simpler words, it is the digital version of your regular shopping mall, featuring all kinds of consumer products/services.

One of the best examples of such a marketplace is Amazon. The popular online shopping site boasts of an extensive product catalogue from diverse vendors, including everything from fashion to tech items to books. 

On the other hand, Nike’s website is an example of a typical, single vendor digital store that features only the products under their brand name.

The multivendor marketplaces are technologically rich. After all, they have to handle extensive traffic, safe payments and solid back-end management. 

Moreover, marketplaces prove to be a win-win for all the parties involved. It provides the customers with varied products on a single platform and the vendors with a broader customer base and more business. At the same time, it offers you, the marketplace owner or a merchant, a brand with sizeable revenue.   

Understood the basics? Now, let’s move on to grasping the business model of such marketplaces. 

Multivendor Marketplace Business Model 

Contrary to popular belief, the business operations of a multivendor marketplace is not that complex. The marketplace business model has clear, distinguished roles for the vendors and you, the merchant. Both work together towards a single goal, the growth of their business, in their own specific way.  

Multivendor Marketplace Business Model - Yelo

The focus area of the vendor would be to manage the inventory, sales, and shipping. You, as the merchant, would concentrate on creating and nurturing the brand, bringing in more consumers, and assisting the vendors with packaging and shipping. 

How would it all fall in place? Let’s figure it out step-by-step:

  • You create an e-commerce marketplace with your chosen niche. Let’s say food items, lifestyle products, or a wholesome platform like eBay or Amazon. 
  • The vendor/seller signs up with your marketplace either for free or for nominal charges. And lists and manages their product collection and customer orders through their own dashboard. 
  • Once the sellers’ products are up, customers can start buying the same.
  • The processing of payments is done through the marketplace storefront. And on every sale/transaction, you (as the merchant) keep a predetermined fee and pass on the remaining to the seller.
  • The vendor either manages the product packaging and delivery on their own or with the merchant partner’s help. 
  • The product queries/complaints received are generally forwarded to the concerned vendor. 

What’s worth noting is the fact that the control of the entire marketplace, along with the vendors, lies with you. You can manage it all through a single dashboard. 

Popularly known as a zero-inventory business model, it is safe to say that the multi-seller marketplace gives you more control with fewer responsibilities. Its components would help clarify the concept even further. 

Major Components of Multivendor Marketplace

What looks like a smooth process to an end-user involves more than one aspects, coupled with deep functions, on the back-end. All handled efficiently through powerful technologies and the right strategic execution.   

  • Packaging and Shipping

In a multi-seller marketplace setting, you have to not only create but also maintain a brand identity. Thus, it is common for the merchant to work with the sellers to fulfil their packaging demands. You can either offer the packages for free or include their rates in the pricing model. 

As far as the operations of packaging are concerned, it is the sellers who take care of it in most cases while the merchant steps in for swift shipping. However, there are some vendors who prefer to handle both these operations on their own. 

  • Payment Processing

A multi-seller storefront is responsible for providing a secure, efficient payment gateway to let the consumers shop with confidence. The payments made are transferred to the storefront account first and then credited to the respective sellers as per the predetermined policy. 

Since different shoppers prefer different payment methods, the multi-seller platform supports payments via multiple channels. That includes debit cards, credit cards, net banking, cash on delivery, gift cards, mobile wallets, and UPI. 

  • Profit Generation

As an owner of a multivendor storefront, you have plenty of channels to generate revenue:

  1. Register vendors for a set fee.
  2. Charge a fixed commission on the sale of each product. 
  3. Become an exclusive seller for new product launches by big-ticket brands.
  4. Offer paid memberships to customers for benefits, such as free delivery, same-day delivery, preview sale, and additional discounts.
  5. You can let vendors run ads on the marketplace for a fixed amount. 
  • Analytics 

Since your store is likely to receive huge user traffic and sales, it is critical to keep tabs on the shopping trends and user insights. That’s where analytics come into the picture. It highlights what is working and which aspect needs improvements for both you and your vendors; Be its inventory management, user behaviour, or sales projections. The analytics also enhances the decision-making process, helping your business reach new heights. 

Apart from that, inventory management, order management, proactive support, and quality assurance are vital factors. But are you wondering why the interest in launching an online marketplace is peaking of late? Let’s decode. 

Why the Multivendor Marketplace Rush? 

While a regular online store is a good option for business expansion in this digital world, it has some limitations, for instance, limited product range and customer base. A multivendor marketplace though not only eliminates such restrictions but also packs in a host of benefits.  

Benefits for Vendors

  • They can save cost as they don’t have to spend a penny in marketplace platform development, branding or marketing. All they have to do is register on the website, list products, and start selling. 
  • They enjoy hassle-free inventory and order management as the platform’s powerful technology notifies about inventory levels and orders in real-time. That prevents over/understocking and delayed orders. 
  • They can reach a wider audience worldwide through the marketplace’s immense traffic and brand value. 
Multivendor marketplace: Benefits for Vendors - Yelo

Benefits for Marketplace Owner

  • Access to multiple revenue generation channels via a single platform (we’ve already explored these above). 
  • They get to tap into a limitless customer base across borders with a large-scale product selection without having to worry about inventory management or its associated costs.  
  • They are free from handling the day-to-day business activities of vendors’ shops, and thus, can focus on increasing their presence. 

Benefits for Consumers 

  • Get an exhaustive list of products to shop from at any given time.  
  • Receive plenty of incentives while shopping, including personalised offers and discounts. 
  • Experience increased satisfaction through prompt services and support.

Now, let’s move further to decrypt the most important concern. 

How to Start a Multivendor Marketplace?

There are two ways to launch your own multivendor marketplace

  1. Custom development from scratch

It requires significant investments as you will need to hire expert designers and developers. That would turn out to be both expensive and time-consuming.

  1. Using a recognised marketplace software 

The marketplace software bundles up all the necessary functionality you require to give you a headstart, saving your money while reducing the turnaround time. 

But which marketplace software should you select?

Best Multivendor Marketplace Software of 2020-21

There is a pool of multivendor marketplace software out there. So, to spare you the confusion, here is one of the best you could choose. 

Yelo

Yelo is a software solution that enables you to develop a hyperlocal multivendor marketplace. Built by Jungleworks, the software comes in with all the essential functions you require to run a global marketplace. The best part? The system works across industry verticals and empowers you to go live in a day. 

Yelo’s rich feature set includes store management, secure checkout and payments, marketing, analytics, ordering dashboard, fulfilment and delivery, notifications and chats, support services, and much more. 

Since the solution is fully customizable with exceptional user experience, many organizations rely on it. Besides, it supports 50+ languages and over 100 payment gateways, taking convenience a notch higher for businesses. 

Summing up, we can say that investing in a multivendor marketplace is promising in today’s online age. You only need to have a unique, solid idea, for starters, and back it up with powerful technologies and a team. 

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