How Multivendor Business Model Works: Step by Step Guide

Note: This blog on multivendor business model has been updated for 2022. New multi-seller business data and insights have been added as well. Happy reading!

Multi-vendor ecommerce stores work very differently from regular online stores. For those who don't know, multi-seller stores allow a lot of vendors to:

  • Set up their virtual shop
  • Sell their products
  • Grow their customer base
  • Build their brand
  • Accept payments locally and globally

While above are the benefits for vendors, entrepreneurs who start and manage multi-seller platforms also generate huge revenue every month from product sales, and services rendered to shoppers.

It is pretty simple to understand the benefits but figuring out how multi-seller stores make it all happen is complex in comparison. This is the reason why we decided to write this blog post.

In this step by step guide, Team Techosquare will explain how the multivendor business model works. Let's start with the basics and workflow.

Note: If you have just started building your online store, we highly recommend checking out this ecommerce features list

Multi-vendor marketplace basics

Multivendor e-commerce website is pretty much like your neighborhood market or shopping center (Walmart, Target, etc.) where you shop products and store owners sell products. The only difference is that everything happens virtually.

How Multivendor Business Model Works?

Product delivered to customer
  • Logistics
  • Vendor gets order details
  • Order Confirmed
  • Customer
  • Visits Store
  • Searches and Views Products
  • Add to Cart
  • Make Payment
  • Multiple vendors offering competitive pricing and discounts
  • Owner gets payment and keeps small percentage as commission

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Multi-vendor stores have the technical infrastructure to support the listing and sale of thousands of products across a vast range of categories through a huge number of sellers with the power to manage their virtual storefronts.

The multi-seller business model is also known as the 'zero inventory model' since platform owners mostly don't hold any product inventory of their own. This is another major reason why the demand for online marketplace platforms is going up.

Multivendor stores bring huge opportunities for manufacturers, wholesalers, brands, and retailers to grow sales as well as profits. That's why it makes perfect sense to launch niche multi-seller platforms in 2022.

While the demand of online stores is increasing globally, it is important to understand what ecommerce platforms cost right now. Read our blog on ecommerce website development cost to get familiar with latest ecommerce pricing trends and industry insights.

How multivendor model works for vendors?

Multi seller e-commerce platforms are quickly becoming the easiest way for small stores and sellers to reach a bigger audience without major spending. Here's how it all works for vendors:

  • Vendor registers with a multivendor store
  • The vendor has a dashboard to list and manage his product listings
  • Whenever a sale happens, store processes the payment and assists the vendor with packaging and delivery
  • Store owner keeps a small commission from the product sold and credits the rest to the vendor
  • Store owner focuses on growing her base of vendors to grow product catalog
  • The vendor focuses on growing sales to increase profits.

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How multi-seller model works for store owners?

Entrepreneurs and organizations that start the multi-vendor store and pocket whatever is left after forwarding the revenue due to respective vendors are the store owners. Here's how the multi vendor model works for them:

  • Store owners build the multivendor ecommerce platform from scratch or using solutions like Swiftkart.
  • They onboard vendors to grow their product catalog
  • Investment is made on advertising and marketing to bring shoppers
  • They facilitate packaging, shipping, and payment processing
  • Store owners keep an eye on vendor performance and enhance site performance consistently.
  • They keep a small commission for every product sold and credits the rest to the vendor.
  • Store owners focus on growing the base of vendors to further grow the product catalog.

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For store owners, the profits are exponential since they don't only earn from commissions. There are many other sources of income generation such as subscriptions, special sale, and in-store advertising. In upcoming years, niche focused multi-seller shops will become mainstream and lead the ecommerce revolution.

Starting and running a multi-seller shop - Critical elements

While there is N number of elements involved in starting and running an online marketplace, some are more critical than others. We tried to document the most important aspects of starting and growing a multivendor platform:

Need identification: In the past decade, a lot of multi-vendor platforms have emerged and solidified their position in the market. Hence, it is important to look at the need element before launching a new multi-seller store. Answering below questions will definitely help:

  • Do you want to compete with existing market leaders or want to focus on a niche with less competition?
  • Who are target customers and what are their spending habits, behavior patterns, demographics, etc.?
  • How do vendors feel about becoming part of a new multivendor platform?

Search and visibility: Both are crucial to making an online store successful. While internal site search will be crucial for product discovery, visibility on search engines and social platforms will help push sales as well as profits.

If your goal is to sell a multi-seller platform that can host and sell thousands of products, take the time to get search and flexibility right.

Comparison and reviews: While the product comparison feature is crucial for every online marketplace, it is of utmost importance for ecommerce platforms dealing in gadgets, appliances, and hardware products. Therefore, pick an online store builder that guarantees powerful comparison functionality.

Similarly, we rarely complete a purchase without reading reviews. A strong reviews management module is a must-have to help buyers with decision making and boosting sales of deserving products.

Vendor management: Multi-seller stores host hundreds of vendors that sell thousands of products. This can't be done smoothly without a powerful vendor management module. Features like vendor search, verification, listing management, quality control, and bulk actions should be present in your multi vendor platform.

For better results, use an automated commission module that helps to track down the profitable categories and will outline the categories that are not performing well.

Payment processing: Payments for online shopping are majorly processed online. This is why secure payment gateways and multiple options to pay greatly help in improving the prospects of multi-seller store.

Once the order is placed and payment made by the shopper, the money is transferred to the store owner's account. After this begins the process of order fulfillment.

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Order fulfillment: There are many ways to handle the logistics and fulfillment of the orders. Two popular ways to approach packaging and shipment are:

  • Store owner handles both packaging and shipping - Major e-commerce marketplaces handle both packaging and shipping. This helps them in building brand credibility in terms of timely delivery and also helps maintain brand authority.
  • Vendors handle packaging and store owner handles shipping: Since timely shipping and delivery is crucial to marketplace reputation, store owners keep it in their hands while delegating the packaging to vendors. Multi-seller store owners mostly provide the packaging material (some for free, some for a fee) to maintain their brand identity.

From meaning to benefits, learn everything you need to know
about a multivendor marketplace

Invest in branding and marketing

An ace multi seller marketplace won't attract traffic and sales unless supported by a modern branding and marketing strategy. That's why you must focus on marketing your multi-vendor e-commerce platform on the right channels.

The biggest multi-vendor websites out there invest in SEO, content, social media, and paid campaigns to attract and retain customers. Get in touch with experienced branding and online marketing experts to make your multi-vendor store shine.

Don't make the mistake of spending all your budget on design and development! Save some for business growth as well.

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Start a multivendor store at $999

Launching and managing an online marketplace is very different from operating an e-commerce website. While there are huge profits involved, multi-seller platforms require dedicated efforts to scale. If you are ready to jump into the multi-vendor bandwagon, we have a special offer for you.

SwiftKart is the easiest way to launch powerful and scalable multi-vendor platforms. The responsive technology is fitted with features and capabilities that are highly success-critical. The good news is that Swiftkart is giving away 50 copies of its multi-vendor platform at $999 only under a limited period offer.

Check out the special offer that applies to the LAUNCH SWIFT package. Get in touch to request special discounts on other packages!

Got multi-seller queries to ask? Send them at and have them answered by our experts.

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