What is Multi-Vendor Ecommerce?
The multi-vendor(seller) model of ecommerce is a setup where multiple vendors of similar or diverse products come on a common storefront to sell their products or services. They are managed by a common admin who takes care of the complete technical setup. The vendors manage the inventory and pay a fixed or floating commission to the admin on each sale. This ecommerce setup is also known as an online marketplace.
This ecommerce setup is just like a mall in real life where you can shop for various products sold by different shopkeepers under the same roof. Amazon, Alibaba, eBay, Flipkart, Nykaa, Firstcry etc. are some popular examples of multi-vendor ecommerce. The top online marketplaces grew their sales by 20% and sold $1.66 trillion in 2018. (Source)
Advantages of an Online Marketplace
An online marketplace is considered to be a “Goldmine” for the sellers, the admin as well as the customers. It has obvious advantages for all the involved parties. The main advantages of multi-vendor ecommerce are;
- Frees the admin from managing inventory, product upgrade, logistics etc.
- Gives the admin commission on each sale
- Helps the vendors focus on business by freeing them from the effort of brand building
- Vendors do not need to worry about the technical setup and upgrades of the platform
- Cuts down expenses for the sellers as well as the Admin
- Brings more traffic as it offers a wide range of products
- Customers get competitive pricing as many vendors sell the same products
Types of Multi-Seller Online Marketplaces
There are various types of B2C and B2B online marketplace models. The most popular among these are;
Here multiple sellers sell the same kind of products or services. For example, Nykaa.com sells only makeup and cosmetics items. This type of marketplace helps the sellers get the undivided attention of customers who come looking for a niche product.
In this setup, a variety of products or services are sold by multiple sellers on the same storefront. For example, Amazon, Alibaba type of multi-vendor ecommerce marketplaces that sell almost everything. Horizontal marketplaces usually get good traffic as they have something for every buyer.
- Service Aggregation Marketplaces (B2C)
This is a unique marketplace setup where various products/ services are sold from a single platform under their brand name. Vendors selling on the platform provide the product or services under their own name. For example, Zomato aggregates services of various food outlets and restaurants.
Along with these a variety of different combinations and use cases of multi-seller ecommerce can be created to sell products and services online.
The growth of online marketplaces in recent years has compelled many large retailers and established brands to start selling on marketplaces. Entrepreneurs planning to build their own marketplace can work with a comprehensive multi-seller ecommerce platform that offers a well-rounded solution for this complex setup.