How to Create a Winning Multi-Vendor Marketplace in 2022

With the increasing popularity of e-commerce, particularly in the wake of the pandemic, online multi-vendor marketplaces are becoming more and more popular. If you are looking to build one yourself, you are at the right place. Here are a few prerequisites to building a multi-store marketplace that you must know.

On the CXO front

To adopt the right development approach, your company has to ascertain a lot of variables in terms of product lines, functionalities, and features essential for the proposed multi-vendor marketplace. And before the development phase begins, you have to document key factors such as business goals and activities, target markets, competition, customer demographics, marketing strategies, design concepts, semantic kernels, and so on. 

On the developer front

While CXOs need to be aware of the IT side of things, developers must know the business-oriented features to enable. Nowadays, online marketplaces are coming up with socially engaging apps and features to facilitate seamless communication amongst the communities–vendors, customers, as well as across vendors and customers. In other words, online marketplaces are fast converting into social marketplaces.

A modern multi-vendor marketplace is typically a combination of a community portal and an online marketplace. It may feature separate user profiles, newsfeeds, activity updates, community or group chat, private messaging, friends, comments, sharing, and more. Many of these marketplaces also act as community support systems wherein the community users get answers to their common queries from other community members.

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An example of community forum – Etsy community forum chat support

A marketplace-driven social community can, thus, provide validated, insightful information and recommendations–often, in real-time. Such a multi-store social marketplace provides customers with their own identity, facilitates information sharing across communities, keeps the target audience updated with the latest news and products, and so on. The four key benefits of such a marketplace, among many, are:

• Better brand awareness and customer loyalty
• More engaging customer interactions
• Increased social media engagement
• Building strong relationships

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Enabling such community features can go a long way in spelling success to your proposed multi-vendor marketplace. A few other essential features to enable are:

For shoppers –

• Social media integration with a variety of notifications – push, vibration, mobile app, desktop, system bar, pop-up, etc.

• Customer reviews and product ratings;
• Gift certificates;
• Product comparisons;
• Wish lists and buy later options;
• Shopping cart;
• Multiple payment options; and
• Delivery timeline guidance, etc.

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For the marketplace –

• Advanced inventory control;
• Secure payment gateway;
• Customer behavior analysis;
• Landing page toolkit;
• Marketing campaigns;
• AI/ML-based recommendations; and
• Integrated supply chain and delivery logistics, etc.

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Building a killer multi-vendor marketplace

Once all the prerequisites to the development process are met, your next step will be to launch a minimum viable product (MVP) to enable testing of the marketplace functionalities in real user conditions. Next, adopt a suitable development approach to activate the right features that assure the portal’s high usability.

The development approaches

There are three popular approaches to creating a multi-vendor e-commerce marketplace with varying development costs, deployment speed, and availability of functionalities. 

i. Custom development

This refers to development from scratch–without any ready tools or templates. Although this approach offers you immense control and customizations, it is the most expensive and time-consuming one. The development stages under this approach are:

• Industry and business analysis 
• Technical documentation
• UI/UX development
• Platform development
• QA and tests
• Website launch
• Technical support

ii. Open-source software

This is, perhaps, the cheapest and fastest way to build a multi-vendor marketplace. Most of the open-source platforms offer ready-to-use templates to meet your expectations as the e-commerce platform player. Being open-source, they also offer you ample scope for customizations.

iii. Proprietary software

Several industry-standard CMS platforms such as Magento are popular today. Trying to strike a balance between maturity and flexibility, today’s proprietary software options also offer several customizations. This approach assures rapid deployment and innovations in building an online multi-vendor marketplace.

Choosing the right marketplace builder

With options galore, choosing the right multi-vendor marketplace software can be tough. So, evaluate the options based on their features. Some of the non-negotiable features to look for include: 

Essential for vendors –

• Easy vendor registration
• Fully functional micro-stores for individual vendors with separate admin panels
• Real-time and manual shipping methods/calculations
• Cart segregation – Each vendor’s products in separate carts
• Feedback and review system with interactive star ratings
• Loyalty or reward points system to lure customers into shopping and buying regularly
• Vendor performance statistics

Essential for the site managers –

• Manifold levels of administrative access
• Configurable vendor plans
• An agile product approval system
• Advanced vendor pay-out system

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Google Analytics, AV-tests, focus groups, and regular customer surveys constitute a few other vital tools to consider. The AI/ML tools can be the next thing to incorporate into the site. By analyzing shoppers’ buying patterns these tools help provide personalized product recommendations to them. Some of the popular tool options to consider can be Granify, Namogoo, PriSync, Seventh Sense, and TUP solution.

Five multi-vendor e-commerce platforms compared

Given below are five popular multi-vendor marketplace platforms to consider in 2021. Let us examine each of these options on parameters such as Popularity, Functionality, Customer Service, and Ease of Use.

• Shopify (www.shopify.com)
• WooCommerce (www.woocommerce.com)
• CS-Cart Multi-Vendor (www.cs-cart.com) 
• BigCommerce (www.bigcommerce.com)
• Magento (www.magento.com)

I. Popularity 

According to BuiltWith data on the distribution of e-commerce technology usage by the top one million websites, WooCommerce ranks Number 1 on the popularity leader board. WooCommerce commands 28 percent, Shopify 21 percent, Magento 8 percent, and others 43 percent. 

‘Google Trends’ data over the past 5 years indicates that in the “interest over time” metric, WooCommerce lags behind Shopify and is nearly at par with the 2014 leader Magento. Shopify moved ahead of Magento in 2014 and WooCommerce in 2017.

CS-Cart, most suitable for entrepreneurs looking to open an online marketplace from scratch or expand their business, scores high on popularity too. More than 1,500 multi-vendor marketplaces use this CMS. Right now, there are more live marketplaces based on CS-Cart than on any other marketplace software.

ii. Functionality 

Shopify’s POS (point of sale) system allows selling products on the go without additional e-commerce tools. This cuts the overall cost of operating an online store drastically.

For WooCommerce, there is an excellent WordPress plugin available for you. It adds e-commerce functionalities to a WordPress website providing you with endless customizations–of the marketplace design or functionalities. WooCommerce also connects an online store with other e-markets such as WooCommerce Etsy integration or WooCommerce eBay integration and oversees activities at a management hub.

Another good option is CS-Cart. A self-hosted platform, it packs essential features such as vendor payout system, advanced order management, multiple storefronts, and many more. Besides, several add-ons are available in its App Store, such as the Facebook conversions API, live currency converter, and Advanced Mailchimp.

iii. Support

For easy customer support, Shopify and BigCommerce are perhaps the two best platforms. They provide you with a detailed self-help knowledge base. Being a free, open-source tool, the core WooCommerce plugin has no single free support source. You can opt for the paid extensions though.

Shopify provides you with 24x7 support with live chat, email, phone, and Twitter. However, you have to be happy with some third-party Shopify apps and third-party Shopify themes as well. BigCommerce, too, extends 24x7 support via live chat, email, and phone. It claims to help with “anything related to selling on its platform and growing your business”. 

Magento’s Community Edition, which is a free, open-source option, does not come with free support. But the third-party paid support options are available. If you opt for Magento’s Enterprise Version, you will get the phone- and email-based support. CS-Cart features 30-day free support which assists you on very basic issues. After that, you can buy Standard or VIP Customer Care packs which currently cost $169 and $300 per month, respectively.

iv. Ease of use

Shopify scores high on this parameter. It is pretty easy to sign up and get started on Shopify. From the dashboard, Shopify walks you through everything from managing various activities to optimizing your e-store. In the case of WooCommerce, you may find the initial setup (finding host and WordPress installation) somewhat cumbersome. But once it is completed, WooCommerce will be as easy to use as Shopify.

Magento may come across to you as a difficult option to launch your online store from scratch. Of the two Magento versions, you might find the Community Edition (free) as similar to the WordPress-WooCommerce combination but the Enterprise Edition (paid) almost as smooth and easy as Shopify.

Despite its dashboard providing a neatly organized menu of main features, some users seem to find Magento’s look and feel technical, requiring a steeper learning curve than that of Shopify or WooCommerce.

BigCommerce offers a straightforward set-up and has a decent dashboard–though not as friendly as Shopify’s. The only downside you may perhaps find will be managing and adjusting the store design. CS-Cart, on the other hand, stands somewhere in between when it comes to the ease of use parameter. It is neither a simple learning software nor does it require a veteran coder’s skills. Overall, Shopify and BigCommerce appear to be the frontrunners today.