Multi-Vendor Marketplace – A Guide for Businesses

Your website can be so much more than just a shop window. Your website can be the shop as well. 

But your website can be even more than just a shop for you – your website can be a shop and shop window for countless other businesses, and you could earn from every single sale they make. 

eCommerce is an exciting prospect and since the dawn of the internet, selling from your website has been the dream for business owners who can literally make money while they sleep. 

There’s so much more to eCommerce though – welcome to the Multi-Vendor Marketplace

Table of Contents:

What’s a multi-vendor marketplace?

A multi-vendor marketplace (also known as an eCommerce marketing or eCommerce marketplace) is more common than you might think. 

There are some really well-known examples of multi-vendor marketplaces (MVM). Think Amazon, Not on the High Street, eBay, and Esty. These are all household names and all of them are Multi-vendor marketplace. 

They have a well-known platform that has the ability to sell products that smaller makers can list and sell via their website. They provide the site and the traffic, and they take a cut of the profits. Sellers have to stick to their rules and support their brand and business model. 

Done well, these are a win win for both sides. 

How do multi-vendor marketplaces work? 

A site like Amazon does all the leg work to give the seller a platform and audience to sell products. Amazon allows you to become a market seller and list your products in their system. The system is completely searchable, and of course Amazon then run ads and other marketing to push more and more people to their site. 

The more people they attract, the more eyes the sellers get, and the more sales both make. 

A multi-vendor marketplace gives opportunities to smaller retailers who don’t have the audience or funds to run an online shop, and gives them access to an online retail solution that can reach millions and more. 

It might be more cost-effective in the long run to set up and market their own shop, but most will opt for the return now, rather than in the long run. 

The owner of the Multi-vendor marketplace takes a long-term approach and invests and builds a system that they will manage and market for the retailers (vendors) who pay a fee to use it (usually a percentage per payment).

What are the pitfalls or complexities with running your own marketplace website?

Like any business, there are pros and cons of setting up your own Multi-vendor marketplace. These can range from not planning and executing the project well, to a collapse within an industry or rising prices. 

Here are just some of the main reason an MVM could fail:

  • The market size falls or isn’t large enough to start with.
  • The MVM isn’t niche enough or is indistinct from others.
  • The marketing falls short and visitors are low, leading to fewer sales and commissions.
  • Poor software and build quality leads to an unstable platform and poor customer experience. 

Clearly, you’ll need some upfront investment to get an Multi-vendor marketplace off the ground and you’ll need to provide continual improvement and updates as the platform grows. 

With success always follows more challenges and a site like Amazon requires a huge team just to manage the online side of the marketplace, let alone the shipping of their own goods. 

Get the right idea, the right software, the right team, and the right continual process and you’ll have a great chance of success though. 

What are the advantages of Multi-Vendor Marketplaces?

Let’s spin that around now with the positives, of which there are many! 

Here are just some advantages of owning your own MVM:

  • An MVM reduces and simplifies the workload to profit ratio.
  • Unlike when selling your own products, there’s no need for inventory maintenance.
  • They’re very cost-effective once you recover the initial investment. 
  • And because you can offer a wide range of products, you’ll attract a wide array of buyers and sales‍.

The advantages are on both sides too. For the marketplace owner and the vendor. 

As the owner you’ll benefit from a commission for every sale and the busier your customers get, the more profits you’ll make for very little extra effort. 

The vendor gets a great platform and a simple and effective way to sell their products without having to invest in eCommerce themselves. 

How to create a multi-vendor marketplace

Multi-vendor eCommerce Software! You’ll need many things to start from a brand to a website, but you’ll need a portal for your vendors to sign-up to and of course a shop from to buy from. 

To get started with an MVM you’ll need to basics:

  • A domain name
  • A brand
  • A website

Then you’ll need either an integration to your website or a bespoke build that does exactly what you need it to do. There will always more than one way to do these things and with Multi-vendor marketplace we often talk about the big three that we cover: 

  • Custom build
  • Dokan Plugin for WordPress
  • And Sharetribe for the smaller budgets. 

Sharetribe is the best tool we know for creating your own marketplace without a deep knowledge in coding and website. You are of course limited to what the platform will allow you to do and if you need anything more complex then bespoke is the way to go.

Before you do anything with a build though, you need to get your research, brand, marketing, and business model in place.

What to consider before launching your own Multi-Vendor Marketplace

The end result of an MVM (like Amazon) might look delightful but there are many steps to that type of success and it’s worth getting the right foundations in place before you even begin talking to a Multi-Vendor Marketplace developer like ourselves. 

Here’s a quick MVM cheat sheet for you:

Research – What does your industry look like? Who are your potential competition? What does their brand and marketing look like and how good is it? How are they doing it? What’s their model? Why will you be different or better?

Customers – Who are they? How do you fix their problem? How will you reach them? How will you onboard them? Who will do it? How will you manage them? What will your working relationships look like? How will you stay in contact with them? How will you retain them? How will you gain referrals from them?

Budget – What will you invest? How long can you wait for the return on that investment? How much extra budget can you find to fund the growth? What will you charge? How will you charge it?

Payments – Which payment solution will you use? How often does it pay you? How will you manage the funds and commissions? How can you automate the accounting side to make it easier to manage?

Working together – How will you decide how much control your vendors have with their store? How will you protect your brand and platform? How will you deal with complaints and questions and returns? Who will you need on your team and who easily can that expand as your marketplace does? How will you measure this?

Shipping – How will you get your vendors to ship? How will their customers track their orders? Will you offer delivery options? Will you offer a suggested (approved) list of shipping options?

What’s your niche? 

Launching a new Amazon is clearly a big task, so go niche. Not on the High Street did this very well. eBay is an auction site, Facebook Marketplace is a local market for mostly second hand goods. What’s your niche? 

How do I manage payments on my Multi-Vendor Marketplace?

Taking payments will be one of the areas that you need to get right. No payments, big problem. 

Thankfully this isn’t an emerging market and there are some bespoke marketplace software solutions out there for you to hook up to your MVM. These payment processors will link to your site and then to your accounting software to keep the entire process digital and trackable. 

The most popular marketplace payment processors are:

  • Stripe Connect
  • PayPal for Marketplaces / PayPal Adaptive

All of these payment options are great, but you may find that certain platforms prefer to work with specific payment processors. 

Some areas to consider with your payment processor:

  • Does it integrate with your bank? 
  • Is it easy to use at your end and the customer facing end?
  • Does your website have https? It will need to.
  • Does it support the target country languages?
  • Does it accept all the payment cards you want it to?
  • Can you work with the fee structure they have in place?

The big question you need to ask of your payment processor and the MVM builder is how simple it is to use and how seamless it is. Not many online shoppers will put up with a poorly performing cart. People hate faffing around with payments online! Your marketplace vendors will be quick to ask questions of you if problems arise. 

How do I launch my marketplace successfully?

And then you’ll need to launch your marketplace. With a good brand and niche you’ll have a great start but you’ll then need to head out to market and get your product into the world. 

This is a big part of your investment as the best MVM in the world is useless without traffic. There are some proven ways to do this, but you’ll need some good investment for it. 

Google Ads and Google Shopping – A proven way to drive traffic and often a place you’ll stay to continue to drive in more shoppers. Google Shopping will need a more specific approach and you’ll need to help your vendors onto the platform at first, but you’ll soon have their images on Google for the searchers. 

Facebook and Instagram Ads – Social media offers more awareness marketing, but also targeted ads based on internet activity and behaviour. Facebook has a very in-depth ads platform that you may well want to use to launch your MVM. 

Referral partners – Building joint ventures is a good place to start. Who do you know that could promote your service? Who are the perfect referral partners that could give you a boost?

PR and exhibitions – Gettingout to the press and the vendors could be as simple and setting up stalls in the real world. Exhibiting at specific expos and events could find vendors and press that could support you. Again look at niches when you’re considering expos.

Press launches and influencers – And then get your news right out there with people who have the audience you need to get to. Build a marketing and PR campaign to attract the right people and consider using influencers (online and off line) to promote your exciting new marketplace. 

Still need help? That’s where we come in

At Code23 we design, build, and host multi-vendor marketplaces.

You’ll find some examples of our work here:

  • Jo & Gym: Independent brands for active lifestyles – built in WordPress with Dokan Plugin: https://joandgym.co.uk Starting from around £20,000.
  • WowThankYou – Handmade & Personalised Gifts – Custom marketplace built from the ground up: https://www.wowthankyou.co.uk – Starting from £35,000. 

Anything below £20,000 budget and we’d recommend Sharetribe which is excellent as a starter MVM. Feel free to chat to us about it. 

Want to talk through your idea? Contact us at Code23 now and we’ll see how we can build your dream into a reality. 

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