Multivendor Marketplace: Meaning, Software benefits and More

By the end of 2020, there will be 2.05 billion global digital buyers across the globe. This is reason enough to explain why businesses and entrepreneurs are so keen to launch online stores. However, the wise ones are realizing that a simple online store won’t do and what they need is an online store that can support hundreds of vendors and thousands of products. This is where multi-vendor marketplace platform builders come in!

Since business owners have limited understanding of the multi-vendor platform complexities, Techosquare decided to create this informative piece to document everything about multivendor business model. But before talking about the business model, software features, and recommended multi-seller platform, let’s discuss what exactly a multi-vendor marketplace is.

What is a multivendor marketplace?

A multivendor marketplace is an e-commerce platform that empowers multiple vendors to sell their products from one storefront. Multivendor store gives shoppers a huge catalog to choose from and provides sellers with a bigger base of ready-to-buy customers.

Think of multivendor platforms as shopping malls. A lot of sellers dealing in the same set of products under one roof.

The biggest difference between multi-vendor marketplace and regular online store is that prior has the technical capabilities to support multiple sellers but latter doesn't.

Think Amazon and Ebay when you think of multivendor. Think Forever21’s website when you think of a regular online store.

Now that we have made the biggest difference between regular online store and multi-vendor marketplace clear, let’s put the spotlight on how multi-seller marketplaces work.

Multi-vendor marketplace business model

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. The multivendor 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 multivendor marketplace platforms is going up.

Here's how multivendor business model works:
  • Vendor registers with multivendor store
  • Vendor has a dashboard to list and manage his product listings
  • Whenever a sale happens, store processes the payment and assists vendor with packaging as well as shipment
  • Store owner keeps a small commission from the product sold and credits the rest to the vendor
  • Store owner focuses on growing his base of vendors to grow product catalog
  • Vendor focuses on growing sales to increase profits.

Having understood how multivendor businesses function, let's understand the major aspects of multivendor business model:

Packaging and shipping

While the multivendor store mostly handles payment, there are two popular ways to approach packaging and shipment:

  • Seller handles both packaging and shipping
  • Vendor handles the packaging and store owner handles with shipping.

Multi-seller store owners mostly provide the packaging material (some for free, some for a fee) to maintain their brand identity.

Payment processing

Multivendor stores pack sturdy payment processing capabilities to help vendors capture shoppers with unique payment preferences. Modern ecommerce platforms support payments through credit cards, debit cards, mobile wallets, gift cards, COD, and net banking.

Multivendor store owners process all the payments and credit the amount due to the respective vendors after some days of successful delivery. The time taken by store owners to pay their vendors varies from store to store.

Profit generation

The scope of monetization is huge with multi-seller e-commerce platforms that attract huge traffic. Below are the ways to generate revenue from a multivendor store:

Commission on every product sold: This is the biggest source of revenue for store owners. Store owners charge a small commission on every product sold and after deducting the same credit the rest to the vendor.

In-store advertising: Multi-seller platforms that attract millions of visitors every day offer in-store advertising to vendors who don’t mind paying a fee for putting the spotlight on their products. Flipkart makes big money from this.

Exclusive seller: Online stores that have a huge base of customers become an exclusive seller of new products launched by reputed brands. Smartphone companies often make stores like Amazon their official sellers to push initial sales without bearing supply chain expenses.

Flagship products: A lot of big online stores launch their flagship products by directly partnering with manufacturers. By eliminating the middlemen, multivendor stores manage to make bigger profits. Sometimes, ecommerce firms also disrupt the market by introducing a product that didn’t exist till now. Amazon Kindle is the perfect example for this.

Memberships: Most online stores sell store memberships that give shopper benefits like free shipping, easier returns, added discounts, and better support. Such memberships are quite popular amongst customers who are frequent shoppers.

While above are some of the biggest monetization options in front of multivendor store owners, there are many small ideas that can be experimented with to boost profitability. That said, only a powerful multivendor store software can guarantee the flexibility to integrate all the above monetization options. So, don’t forget to confirm this while investing in a multivendor store builder!

70 ecommerce store features that will help
you create a remarkable online marketplace

Why the multi-vendor marketplace rush?

The interest around multivendor platforms is quite new. That’s because ecommerce entrepreneurs didn’t know the benefits of launching a multi-vendor online store and becoming part of them. Here are advantages of launching an online store with multi-seller capabilities:

For multi-vendor platform owners, the benefits are huge and have been explained in detail in the business model section. In case you skipped it, scroll above and go through it!

Here’s why wholesalers, brands, and entrepreneurs are either launching multi-vendor stores or joining them:

  • Small vendors who don’t want to invest money in creating their own online store but want to sell more join multi-vendor platforms. 
  • Sellers with dreams to sell nationwide or globally without making a huge investment join multi-seller platforms.
  • Speeding up sales and growth is easier for ecommerce entrepreneurs by joining marketplaces with a huge audience base.

For consumers, the value is generated mainly in the form of:

  1. Limitless choice of products
  2. Competitive pricing
  3. Better support
  4. Deep discounts
  5. Simplified decision making through reviews.

While the benefits of launching a multi-vendor online store are certainly huge, building one can be slightly tricky for someone who isn’t familiar with the right options. This brings us to the last question we will answer in this blog.

How to start a multi-vendor marketplace?

Starting a multi-vendor marketplace isn’t as complex as it was some years ago. It can be started by:

Building it from scratch: Building a multi-seller marketplace from the ground up requires custom e-commerce development. This means you will have to engage a team of designers, developers, and analysts to build your platform from scratch.

This process is not only time-consuming but costly as well. Established brands prefer this model to get everything just the way they want.

Using marketplace software: Since custom development is not everyone's cup of tea, entrepreneurs use multivendor store builders to launch their venture. These solutions promise quick turnaround, cost savings, and everything else you need to launch a powerful multi-seller store. 

To make your search easy, we have prepared the list of best multi-vendor marketplace software for 2020.

Best multi-vendor marketplace software of 2020-21

Many multi-seller platform builders have emerged in recent years but most of them are simply old SaaS based online store launchers that support third-party plugins and integrations to enable multiple sellers. Since the e-commerce market deserves better, we decided to build Swiftkart.

SwiftKart: The Ultimate multi-seller ecommerce solution

SwiftKart has been developed after analyzing the biggest online store builders out there and focuses on growth-critical features. Built by a team of experienced designers, developers, and analysts, this multi-vendor ecommerce platform software promises the best of:

  • User experience
  • Responsive design
  • Multivendor capabilities
  • Customization
  • User interface
  • Product comparison
  • SEO
  • Security
  • Scalability
  • Much more

Swiftkart is being favored by entrepreneurs and organizations that value scalability, security, and user experience over everything else. Developed by Techosquare, the multi-seller software is available for sale at $499 under a special discount announced on July 6. The limited period discount is valid for the first 50 copies purchased.

Learn more about
SwiftKart, the best multi-vendor marketplace platform to appear in recent years.

Last words on multi-seller store

Above is everything you need to know to launch a multi-vendor platform in the digital realm. Having proper knowledge about the multi-vendor dynamics, its benefits, and possibilities is essential to make the right investment in your ecommerce project. Hence, pick your solution after careful thought!

Want to figure out whether multivendor is right for you or you should invest in a regular online store? Send a mail to info@techosquare.com and get answers from experienced tech business consultants.