Everything You Need To Know About a Multi Vendor Marketplace

Should you prefer to sell your products in your online shop or a digital marketplace? Both options have their advantages and disadvantages.

Therefore, we would like to briefly examine the advantages, disadvantages, and differences of online shops and digital marketplaces. So you can get a good overview and make an informed decision.

With the right knowledge and an experienced partner at your side, you will soon be able to start your online shop or digital marketplace and sell your products to customers worldwide.

What is an online eCommerce marketplace?

An online eCommerce marketplace is a platform on the Internet where buyers and sellers of products or services can meet and trade.

In the commercial variant, the platform provider receives money for the provision of the marketplace. This can be a sales commission, a subscription fee, or a one-off payment levied by the provider, the buyer, or both.

Non-commercial marketplaces can also be found on the Internet. These do not charge users whether they are providers or buyers. These are often social initiatives or platforms that serve the exchange: women exchange their clothes with each other, neighbors offer and receive mutual services, etc.

Difference between marketplace and eCommerce

Online shops are commonly referred to as eCommerce: A provider sells his goods or services to customers via the Internet. In contrast, on a marketplace, several retailers or suppliers bustle and customers, like in the real weekly market, roam past the stands, compare quality and offers and shop wherever they like. That would be the B2C variant. A B2B marketplace would be comparable to an industrial fair, a C2C marketplace with a flea market or an exchange.

How does a marketplace work?

Roughly speaking, an online marketplace consists of the supply side and the demand side. Most of the time, this is done by providers registering there and uploading or creating their products and services to the multi vendor marketplace software. You set up a shop, complete with a shopping cart, invoice processing, and everything that goes with it.

Since the marketplace is a sales channel for providers, they pay a small fee to the platform operator. Since payments are processed via the platform, it is often agreed that the operator retains a small sales commission from the purchase price. However, there are other monetization models.

Buyers can usually register for free. The purchase process is no different from any other online shop.

How do you set up your marketplace?

If you have an excellent idea for a marketplace, how do you do it without getting poor?

In principle, you have two options:

You reprogram the marketplace entirely or have it programmed by professionals.

You use a platform.

New development of a multi vendor marketplace

This is the most expensive, riskiest, but also the most flexible option. If you are a full-stack developer yourself or have access to much know-how for little money - for example, through your fellow students at the university, there is nothing to stop you from following this path.

If you want to sell your products via an existing platform tomorrow and reach a large number of people from day 1, then a digital marketplace could be the right solution. On Amazon and Co., your products are quickly integrated into an existing infrastructure, and sales can begin after a short time. However, you pay fees to the operator of the marketplace for each transaction.

With your online shop, you can take it a little slower and develop your shop design in peace. With your shop, the traffic - especially at the beginning - will be significantly lower than on an extensive marketplace. Still, you retain full design freedom, only pay fixed costs for the website, and do not have to share the shop with other people's products. In the end, you have to decide for yourself what type of distribution is available to you.

Income Generation

Taking the seller/sellers/dealers' commissions on their sales is the primary income generation model on which many marketplaces survive. The entire seller and dealer community follows this model. The only difference is how and how much sellers have to pay to sell in a marketplace. Here are some examples:

Amazon: Amazon charges professional sellers a fixed annual fee for listing their products on the marketplace. There is no per-item fee for these sellers.

eBay: eBay charges the listing fee for listing a product on its website. It also calculates the Final Fee as a commission on the sale of the product.

PrestaShop Marketplace: The PrestaShop Marketplace is a website where developers sell their PrestaShop modules. It calculates the commission for the sale per product.

Conclusion

The revenue commission model is not as simple as it seems. Different marketplaces use different approaches to earn the commission. You need to decide which commission model you want to use and then adjust your seller management panel to manage the commission according to your needs.

You also need to know that most multi-vendor marketplace extensions only support the per-product sales commission. If you want to use a different commission model, you may need to use an extension or have the requirements drawn up by an expert.