This blog post is also available as a podcast

The eCommerce business has successfully emerged as a significant business scope in recent years. 

Entrepreneurs worldwide are trying their best to jump right into this market segment to make a huge profit. However, most of them struggle hard to come up with a business idea.

The majority of entrepreneurs or businesses don’t produce their own products to sell in the market. At the same time, dropshipping and reselling segments are crowded, with multiple websites fighting for a single sale. 

For this reason, the dynamics of online shopping have changed to a great extent as many entrepreneurs have discovered a multi-vendor marketplace business model as their perfect solution to make their place in the competitive market.

It has become a favorable deal for many business owners to consolidate the market and collaborate with multiple sellers instead of competing with them and being the top-of-mind industry leader.

Quick jump to the interesting section

Multi-vendor marketplace is a platform for sellers all across the globe to sell in one place. It is basically one big store providing the environment for merchants/marketplace vendors to sell their products or services.

Suppose a big mall is owned by you that delivers various products to people’s homes. The mall contains many small shops offering a wide variety of products. The responsibility to run each store is of different vendors, but storing the products, delivering them successfully to the people’s homes, and accepting payments is yours.

Setting up a marketplace business is a cost-efficient option for eCommerce entrepreneurs as it allows them to sell their products efficiently to a larger audience. The multi-vendor eCommerce marketplace platform operations go hand in hand as sellers sell their products to more customers. A growing number of customers demand more sellers on the platform. 

It is a complete win-win for the platform owner as they can focus on accelerating the growth of their business without worrying about losing the profit at any time. Before discovering the strongest sides of the multi-vendor marketplace and why it could be an excellent choice, let us explain an eCommerce marketplace. Without the proper understanding of the eCommerce marketplace, it is impossible to understand how the multi-vendor marketplace system works.

What is a multi-vendor eCommerce website, and how does it work?

An eCommerce marketplace is an app or website that facilitates shopping from various sources. These online marketplaces act as a digital middleman between the buyers and the vendors to conduct transactions efficiently. As a result, buyers get to choose from various items, and sellers get a large audience for their products.

Consumers nowadays trust these online marketplaces more as they provide a massive choice of products from both small and large retailers worldwide. Moreover, due to these virtual marketplaces’ convenience, they have become drivers of internet economics worldwide. 

How does an eCommerce multi-vendor marketplace work?

The best part of the multi-vendor eCommerce website is that the owner does not have to maintain inventories, product descriptions, or logistics; instead, it is the sellers’ responsibility. But, on the other hand, sellers get a dedicated space to sell their products and make a huge profit.

Buyers access the supplier’s inventory online, with real-time information access about the products available on the eCommerce website or platform.

Top differences between eCommerce and marketplace

A multi-vendor marketplace may be an eCommerce store, but not all eCommerce stores are marketplaces. Instead, most eCommerce websites are single-vendor websites where one store owner or a company operates the website to sell its goods.

However, many businesses have shifted to multi-vendor eCommerce websites in recent years as they draw large amounts of traffic. 

Some of the significant differences between eCommerce and marketplaces are listed below.

Marketing approach and targeting 

While in the eCommerce business, the only focus of the owner is targeting buyers, in a marketplace, sellers also need to be targeted as they will later become the beating heart of the platform. In a single-vendor eCommerce website, the owner has to put a lot of effort and time into driving traffic to his website.

On the other hand, multivendor marketplaces usually drive more traffic as they offer a huge choice to their customers. The important thing also is to provide a good customer experience.

Scalability

Marketplace owners do not buy or sell items, which means fewer financial risks are involved. On the other hand, owners of eCommerce websites have to constantly invest in a stock that may take a lot of time to sell or never sell at all. Marketplaces can expand much faster than eCommerce websites.

Time to launch

From the vendor’s perspective, marketplaces are usually quick to set up as it will take a day or less to register, list, and sell your products. 

The situation is different if you are the marketplace owner. Marketplace business models may differ from another, so the functionalities should reflect the business vision and be implemented individually. The conclusion is that implementation of marketplaces can be time-consuming as you may have to set the entire logic from scratch.

The time of building your eCommerce depends on the chosen solution. You may decide on boxed solutions or choose the one which will be your base and then expand it to fit your needs.  

How do Multi-vendor marketplaces work?

The main aim of the multi-vendor marketplace is to keep the customers updated about various exciting offers and ensure the products are delivered right on time. Therefore, the multi-vendor marketplace should communicate efficiently with the buyers and store owners to achieve the best results. 

So what is the flow of the multi-vendor marketplace? Let’s try to present it in a few steps:

  • First, the vendor registers in the marketplace through paid or free registration.
  • Once the vendor has registered and uploaded all his products (listings), the customers can start purchasing them through the eCommerce marketplace.
  • Marketplace owners can even charge a small commission on each order. (It will depend on the type of marketplace’s business model.)
  • Customers transfer the payment to the marketplace administrator, which is then transferred to the seller.
  • The marketplace administrator or vendor handles the product delivery.
  • Any complaints about faulty products can be conveyed to the vendor or the marketplace administrator, and the seller replaces the product.

Benefits of Multi-vendor marketplace 

A multi-vendor marketplace serves a greater purpose in general. For example, a person looking for favorite pair of jeans can also click on a menu on the same site to look for a branded wristwatch or any other accessory.

Due to the many benefits offered by the multi-vendor marketplace, many vendors are moving from eCommerce websites to multi-vendor marketplace platforms. 

Take a look at some of these benefits.

Huge variety of products

The products sold on a multi-vendor marketplace come (as the name suggests) from multiple vendors from all across the globe, which easily targets more audiences and boosts sales. If popular multi-vendor marketplace platforms imported products from just a single vendor, they wouldn’t be able to engage as many sales as they do.

Cost-effective

As every vendor will be managing their store independently, the marketplace administrator doesn’t need to hire resources to manage the stores. Therefore, it is a super convenient and cost-effective option for small businesses. 

Scalable profit model based on each order value

Since many vendors are involved in a multi-vendor marketplace, a marketplace administrator can earn money by taking a commission fee on each successful transaction between the customers and the vendors (it still depends on the marketplace’s model).

radoslaw-zurawski
Planning to set up your own Multi-Vendor Marketplace solution? Let’s talk about opportunities!

Distinguishing features of the multi-vendor marketplace platform

A multi-vendor marketplace business websites offer different features for vendors, admins, or owners.

General features of marketplace software: 

  • Possibilities of communication: vendor-customer, vendor-owner, customer-owner
  • Extensive analytics 
  • Defined payments and different commission rates
  • Support for distributed sales and logistics (e.g. breaking one basket into many orders)
  • Reviews – the client can check the vendor, and the most prospering ones are displayed higher
  • Location-dependent matching algorithms – different countries, different logistics, ratings, prices

Features for marketplace owners:

  • The owner can easily register, manage and monitor all the vendors.
  • The owner has the authority to charge a commission from the vendors.
  • The owner can keep track of all the transactions from the back interface of the platform.
  • The owner can either approve or disapprove the products listed by the vendors.

Features for the vendors

  • Vendors manage their listings and orders
  • Vendors can keep track of their earnings easily.
  • Vendors can add coupons to their stores to give exciting offers to their customers to boost their sales.
  • Vendors can also link their social media accounts to their marketplace profiles.

How does a Multi-vendor marketplace make money?

A multi-vendor marketplace solution is undoubtedly the best earning opportunity for people all across the globe. By putting in a little effort and time, you can regularly earn a good amount of money by being the owner or admin of the Multi-vendor marketplace. 

To find out how these marketplaces make money, some of the ways through which they earn a good amount of money are:

Sign-up fees

Many popular multi-vendor marketplaces earn a good amount of money by charging minimal sign-up or registration fees. However, vendors have to make a small payment when applying to sell their products through your marketplace platform.

Charging a commission

The owner of the multi-vendor marketplace platform can charge the vendor a fixed fee or a percentage as their commission whenever they make a sale. 

Product listing fees

The marketplace administrator can charge the vendors a product listing fee when they list more products than the limit provided by the owner. However, it should be quite minimal to encourage the vendors to list more products.

Subscription or Membership fee

The marketplace owner can charge all the users a subscription fee to access the marketplace. All the marketplace subscribers will get special offers and free coupons by paying a minimum subscription fee monthly or annually. 

Why is the Multi-vendor marketplace the best solution for many customers and sellers?

A multi-vendor marketplace will be the perfect solution for busy people who want to avoid the hassle of shopping physically. It will be a one-stop shop for shopping for their everyday necessities. Moreover, it will save their time while shopping online and still offer them a large variety of products.

From the seller’s perspective, it will be a profitable option because the marketplace gives them a larger audience to sell their products and eliminates the need to develop and maintain a web solution from scratch. 

It is a great option for small businesses or eCommerce newcomers to get acquainted with the industry and successfully trade in the international market. 

What are the limitations/challenges of having a multi-vendor marketplace solution?

  • Appropriate business plan; awareness of what, how, and when
  • Understanding of needs; the approach “I want a solution like Amazon” will not work
  • Awareness of the differences between running a business in the multi-vendor marketplace model and “classic eCommerce”
  • The properly qualified team – the technology is one of the crucial parts of each MVM, so it is important to choose the team wisely
  • Promotion of the solution (the marketplace platform will earn only when it has vendors), so starting with MVM requires either a strong market position or a good strategy on vendors and customers acquisition

Popular eCommerce multi-vendor marketplaces 

The most distinguished and globally known eCommerce multi-vendor marketplaces are:

Amazon

It is the largest multi-vendor marketplace that does not need any introduction. It started as an online bookstore but now has many different products.

Alibaba

The China-based multi-vendor marketplace is quite popular all across the globe. It helps customers buy products in bulk at a discounted price. 

eBay

One of the first digital marketplaces offering bid systems and customer-to-customer experience.

OpenSea

A digital marketplace selling NFTs representing digital goods, which could be purchased using cryptocurrencies. Its model is fully virtual and therefore is highly scalable.

How to create your multi-vendor marketplace on top of Sylius?

As we mentioned before, a “one fits all” solution doesn’t exist, but it will be easy to develop with the right tools. One of these “tools” is Sylius.

What is Sylius?

Sylius is an open-source eCommerce platform for upper SMB and Enterprise eCommerce businesses. Its flexibility allows you to map business needs in the eCommerce functionalities. Furthermore, it is easy to maintain a multi-vendor marketplace with this solution compared to other mainstream platforms. 

Why can Sylius be great for multi-vendor marketplaces?

When it comes to multi-vendor marketplace development, top of mind is Mirakl which is a large and expensive cloud-based Enterprise-oriented solution. On the one hand, it has a lot of advanced functionalities, but the other side of the coin is that you have to pay for something that you may not even use. 

Considering the above, Sylius comes with a slightly different approach with on-premise solutions with a great possibility of customizations and personalization. So, why Sylius?

  • Open-source, developed under the MIT license (the possible Sylius Plus license is much cheaper than the Mirakl mentioned above)
  • The plug-in architecture of Sylius makes it easy to implement custom functionalities 
  • Lots of plugins developed by the community
  • A state machine for custom process implementations
  • Easy CRUD implementation
  • Easily plug into every phase of the event-based ordering process
  • It has integration with Elasticsearch – filtering, listing, and large amounts of data
  • Lots of eCommerce features that can be easily added/changed/removed

What could the multi-vendor eCommerce marketplaces implementation on Sylius look like?


We decided to create the first open-source multi-vendor marketplace platform – OpenMarketplace by BitBag.


Which features should your eCommerce store cover?

Vendor panel:

  • Dashboard – sales statistics, advanced and extensive analytics
  • List of products, variants, attributes,
  • Adding products, editing products
  • Handling of order and customer lists
  • Sales reports
  • Support for settlements with Admin
  • Configuration of payment and delivery methods
  • Providing Vendor-Client and Vendor-Administrator communication
  • Structure and design of e-mail notification templates
  • Company data configuration
  • Creating and managing wishlists, promotions, and discount coupons

Store:

  • Registration as a vendor
  • Displaying company data on product details
  • Converting a customer account to a vendor account

Administrator panel:

  • Multiple vendors management
  • Communication with vendors
  • Filtering products by vendor
  • Vendor information in product details
  • Filtering orders by vendor
  • Information about the vendor in the order details
  • Settlement panel with the vendor

Become a part of the community on Slack!

Like the idea of marketplace business models? Would you like to try something different? We can adapt the solution to your business ideas and needs, map with existing tech possibilities and deliver the solution with a qualified team of consultants, engineers, designers, and managers. Send us a project pitch.

What is the cost of implementing a multi-vendor marketplace platform?

The cost of implementation will be different on a case-by-case basis. However, because Sylius covers the multi-vendor marketplace requirements, it will be easier to implement the solution faster than other platforms. From our experience, the most basic Multi-vendor Marketplaces could be developed starting with 1000 man-hours.

We have designed many vendor-friendly solutions for local businesses to help them attract more customers.

We have designed many vendor-friendly solutions for local businesses to help them attract more customers.

Suppose you already have an established brand and don’t want to share your gains with a marketplace or require a tailored solution according to your needs. Creating a multi-vendor market all by yourself can be quite tricky, especially when you don’t have a dedicated IT team. In that case, contact usto create your own vendor-friendly solution.