What is a marketplace?

A marketplace or a multi seller website is an ecommerce portal where multiple sellers come together on a single platform ( usually one umbrella brand name like Amazon, eBay, Flipkart etc.) to display and sell goods and services to the end buyers. On an online marketplace, there could be multiple sellers selling the same product or services. These sellers might have their products or services listed at different or the same prices.

Based on the business model and the type of products and services sold marketplace can be of the following types:

Horizontal Multi-seller portal where a wide range of products or services is sold. For example, Amazon, and Flipkart.

Vertical Online Marketplace where products and services from one particular industry are sold. For example, Myntra, Firstcry.

Service Aggregator Marketplace where a variety of service providers sell their services to individuals or other businesses. Like Urban Company, GoMechanic etc.

Rental Marketplace where sellers offer their products or services for rent. For example, Car rentals like Uber, and furniture rentals Furlenco

Hybrid Marketplace targets both B2B and B2C audiences to sell the products listed by its sellers. For example, Amazon has both B2B and B2C models to serve end customers and other businesses.

Hyperlocal Marketplace, in this type of multi-seller website multiple local vendors, caters to audiences in a hyperlocal market. For example, BigBasket, Ferns N Petals.

Custom Marketplace can combine different business models to create a unique hybrid business model.

How does a marketplace work?

A multi seller marketplace usually works on the commission model but can also have other revenue sources. Here is how the set-up operates:

• The brand owner(s) set up the IT infrastructure and the ecommerce website to onboard sellers
• Sellers come with their products and upload their inventory to be sold through the multi-vendor website
• Sellers get their separate login to manage their products, orders etc.
• Marketplace brand owners get a commission per order from sellers for orders sold on the multi-seller platform
• Marketplace brand may or may not provide logistics support to the sellers
• Marketplace brand also does the marketing and might charge sellers for prime placement or ads within the portal
• The marketplace brand might also levy charges for onboarding sellers as an additional source of its revenue 
• Buyers can come to the support team of the marketplace brand for grievance redressal

What are the benefits of building a marketplace?

Building a multi vendor marketplace has many benefits for the brand owners. While the zero inventory model makes it easy to get started it also helps in business expansion. Here are the benefits of building a marketplace website:

• Get started without investing in inventory
• Onboard the best sellers across product/industry verticals to create a rich catalog 
• Gain a loyal pool of customers by offering them a variety of products at competitive pricing
• Scale easily to new markets by onboarding local vendors
• Easily scale to new product lines or verticals
• Cost-effective solution as saves on CapEx for warehousing, staffing etc.
• Build multiple revenue sources through marketplace advertising, prime placement of products, subscriptions etc.
• Pivot to hybrid business models to expand the business and build disruptive business models
• Get rich customer data insights for strategic, data-driven business growth

Additionally, the online marketplace model is a win-win formula for the sellers and the buyers as well. While the sellers benefit from the vast traffic and ready-to-use IT infrastructure, the buyers get a vast range of products and the assurance of quality and the customer-centric approach of the marketplace brand.

What are the challenges of building an online marketplace?

While the marketplace model has many benefits for all parties involved, it also has its unique set of challenges like any other business. Here are the key challenges enterprise brands can face while rolling out their marketplace:

• Finding the right multi vendor solution to build their marketplace website
• Managing vendors and their products
• Building comprehensive solutions to enable each vendor to operate independently and yet have complete control over vendors’ activities
• Managing vendor payouts and commissions seamlessly
• Ability to make changes quickly and easily to keep the business in tune with market and customer demands
• Ensuring scalability without compromising on speed and site performance
• Building omnichannel brand presence by adding multiple phygital channels like multi vendor marketplace website, marketplace apps, PWA stores, social media stores etc.
• Offering personalized buying experiences to buyers
• Customizing and localizing the marketplace for different buyer segments by offering different pricing, language, discount and deals, payment options, shipping options etc.
• Seamlessly integrating with the software and service providers used by your marketplace brand as well as your vendors

Most of these challenges can be easily met by powering your online marketplace with a next-gen marketplace builder that comes with built-in tools to handle all of the above challenges.

What is the future of the marketplace model?

Multi-vendor is one of the most successful ecommerce business models in recent times. More than half of online buyers begin their online product search on a marketplace website. The Multi seller model is also referred to as a virtual goldmine for all parties involved namely the sellers, customers and business owners. Also, it is easy for businesses to scale up by adding new vendors and not having to invest in any inventory or warehousing expenses.

By choosing a powerful, feature-rich and plug and play marketplace builder enterprise brands can build an advanced marketplace website to grow their business. StoreHippo offers an advanced multi vendor solution using which brands can build their B2B, B2C, B2B2C, hyperlocal or any other custom marketplaces. Using the decoupled headless architecture, brands can build personalized buyer journeys on multiple digital touchpoints. With its MACH (Microservices, API-first, Cloud-native, Headless) architecture, StoreHippo gives brands the agility, flexibility and creative control to build innovative marketplace websites.