What is multi-vendor eCommerce and which businesses it suits?
Multi-vendor is a standalone eCommerce store that allows you to create an online marketplace with multiple sellers or merchants. In multi-vendor, independent vendors can sell their products through a single storefront.
Multi-vendor is the most suitable solution for online malls in the world. In multi-vendor sites when customers visit, they can choose one product from Levis and another from different brand and its all processed in one shopping cart. Its payment processing system automatically divides the payments between two vendors. Many businesses have already invested in multi-vendor store as it’s a better and far easier platform to sell the products than regular online stores. Over 1300 marketplaces are built with multi-vendor worldwide.
In a multi-vendor system, every merchant and seller have a separate shop which they are free to manage. The multi-vendor system is also known as eCommerce marketplace. Its a fully functional marketplace that simplifies the process of adding sellers. The owner of a multi-vendor system only has to deal with order processing, tracking, and set commissions rates on a flexible interface. payments. Majority of the task like maintaining inventories, logistics, and product updates are done by individual sellers.
Some of the popular eCommerce brands using a multi-vendor system
Amazon is a well-known and largest online marketplace in the world using a multi-vendor system that enables third-party sellers to sell their products. The Amazon marketplace continues to grow as being the most matured selling channel.
Flipkart is an eCommerce marketplace that was established in 2007. Flipkart started with just selling books online and later realized the potential in eCommerce marketplaces. So, Flipkart gradually expanded itself to become one of the biggest eCommerce marketplaces in India with over 80 million products and thousands of sellers.
eBay is an American multinational e-commerce corporation which was founded in 1995. eBay is an online marketplace for buying and selling new and used products. In addition to eBay’s original auction-style sales, the website has evolved and expanded to include instant “Buy It Now” shopping. This online marketplace deals in both B2C and C2C sales through its website. eBay is available in 180 countries for buying and selling of a wide variety of goods.
Reasons for the demand of online marketplace software
- Huge range of products
There are many vendors and merchants available on a multi-vendor store. Having a large number of different vendors also leads to accumulating a huge number of products in an online marketplace. As there is a large number of products available in an eCommerce marketplace it is bound to easily generate traffic and sales. Customers are more likely to use an app with a broad range of options so they can choose exactly what they want without limiting their choice to a single provider.
- Ease of management
A marketplace’s primary source of revenue is usually commission based that it receives from sales. This requires a high degree of business process automation and outsourcing. Most of the tasks are automatically taken care of within the platform. Logistics, inventories, product additions & upgrades, pricing and various other tasks that require running an online store are managed by individual merchants. Sellers and merchants have to take care of their own store only. So, this makes multi-vendor shopping cart a reliable business model.
- A scalable business model
A marketplace has a less financial risk as the owner doesn’t need to invest in inventory. It’s the sole responsibility of vendors and merchants. The only challenge before a marketplace owner is to balance supply and demand. High-quality vendors attract more customers, while a growing customer base attracts more vendors.
Marketplace owners can choose a revenue stream that best fits their market niche and aligns with their business goals. The success of the marketplace depends on how the owners derive revenue. The primary source of revenue are mainly commissions, listing fees, subscriptions, lead generation fees, advertising, and providing additional services.
Why merchants favor multi-vendor eCommerce stores?
There is not much difference in the cost of building a regular eCommerce store and the cost of setting-up a multi-vendor store; however, the latter offers more prospects to earn. By spending almost equal on a multi-vendor system, one can launch a site that can cater to a wider audience, sell more products and offer manifold reasons to earn.
- Ready-made traffic
Established marketplaces like Amazon, Flipkart, etc, have acquired a huge amount of customer base whereas starting a new online store will require time as well as investment in marketing to gain such a huge audience and still it isn’t sure that they will be able to attract that much traffic. Going with multi-vendor websites, a vendor can easily reach to a larger audience with less investment.
- Target many locations
A multi-vendor store has a bigger network than a regular online store. A vendor’s products will get exposure to several locations altogether and can even go worldwide.
In multi-vendor eCommerce platforms, merchants have a separate online shop that they can manage as per their convenience.
Benefits of multi-vendor marketplace for customers
- Variety of Product from multiple merchants
In a multi-vendor marketplace, huge variety of products is easily available. If a customer does not like the product from one vendor, he/she may have the option to choose the same product from different vendor. The multi-vendor eCommerce provides more convenience to the customer as a customer can find variety of products from multiple vendors at the same place.
- Healthy eCommerce competition
Due to presence of multiple merchants of the same niche on a single platform. There is a price competition between the merchants and as a result they have to keep the product price within minimum profit margin. This leads to low product price which directly benefits the customers.
- Better Experience
Because of the collaboration between the eCommerce marketplace and third-party merchants. They make sure that customer gets better returns and exceptional experience.
Multi-vendor marketplaces require lots of different features than an eCommerce store. An eCommerce entrepreneur must invest in the right technology for building an effective eCommerce marketplace. If you are too looking forward to starting your own multi-vendor store, then you are in the right place. At Technophile, we specialize in developing a user-friendly eCommerce marketplace.
Get in touch with us to know more.