How to Build a Multi-Vendor Marketplace Website
This article was originally published on Codica Blog.
E-commerce platforms are a very profitable business. Therefore, it comes as no surprise that many people inspired by the success stories of Amazon or eBay want to get their part of this pie.
In this article, we discuss the key points you need to know when you want to build a popular and thriving multi-vendor marketplace.
What is a multi-vendor marketplace
In a nutshell, a multi-vendor platform is a website where multiple sellers create online stores and offer different products for sale.
There’s a platform administrator, usually a marketplace owner, who provides a single roof for multiple vendors to sell their goods to the customers globally.
The most famous examples of multi-vendor marketplaces are:
- eBay
- Amazon
- AliExpress
- Alibaba
- Etsy
- Airbnb
Successful marketplaces are highly profitable. The report from Statista showing us the increasing revenue of Amazon only proves that fact.
Now it’s high time to discuss steps you should take to build a successful multi-vendor online marketplace.
Find the niche for your marketplace
First things first, decide what products or services will be available on the platform.
Up to the present day, offline shops prevented consumers from direct communication with suppliers. As a result, they sometimes had to pay extra money for the desired item.
Today, the multi-vendor marketplace owners can help customers find a more cost-effective solution by allowing them to buy directly from sellers or suppliers.
So, narrow your focus, specify the type and category of your products, the target audience, and location.
At the very beginning try to define your unique consumers and cater to their wants and needs. When the platform grows, you can add new items and extend your target audience.
Benefit from competitors’ weaknesses
Let’s discuss the competitor’s weaknesses which are most effective to use:
- A unique inventory
- Much better products or services provided
- A lower commission rate for vendors
- Advanced loyalty programs for buyers
Choose a monetization strategy
A monetization strategy defines how you will make money off the platform. It should allow you to get a stable income and, at the same time, provide potential vendors with favourable conditions.
The list of the most popular revenue models looks the following way:
Subscription fee
For instance: Vendors purchase subscription that costs $15 per month
Transaction fee
For instance: Vendors pay 4% of the transaction value.
Listing fee
For instance: Vendors pay $10 per one item to list their products on your marketplace.
Premium listings
For instance: Vendors pay $5 for a premium listing to take up higher position in the feed for a week.
Advertising
Featured ads help vendors promote their products and get more visibility within your platform.
The best way to check the effectiveness of these strategies is to see what brands adopt them. Let’s take a look at some names.
Define the required features for your online marketplace
The marketplace functionality is crucial. When both parties (merchants and buyers) find your platform simple and convenient, they will use it regularly.
We recommend you to start with the following list of the initially required features:
Authorization and Security
Users must sign up and specify their personal details including name, email and phone number. Make the registration process easy and fast. Ask users to fill in only the most important data. Let them add other information later.
Registration for both vendors and buyers
Both sellers and buyers should be able to create a personal account. Registration allows the first party to create their online stores and start trading. At the same time, shoppers can personally chat with the vendors, add stores and items to favourites.
Make sure that users can keep the same account for selling and buying goods and services.
Managing user profile and personal details update
Vendors should be able to display and manage the information about their stores effortlessly.
Managing items listing
Sellers publish and manage their items’ listing at your website. This feature allows them to update item information, including specifications, descriptions, prices, etc.
Search & filters
Provide buyers with an easy-to-use and efficient search option. With its help, they will find the required product/service in a snap.
Statistics
Enable sellers to track their activities. Leads, views, sold, not sold etc.
Ratings/reviews
Buyers often make the final purchase decision after reading reviews left by other customers. Therefore, the marketplace sellers are interested in providing exceptional service and keeping their store rating high.
Payment functionality
For online marketplaces, multiple payment gateways: credit card acceptance, online payment services like PayPal or Stripe, billing and invoice operations have become a must-have feature.
After implementing the basic functionality, you can add the following functions:
- Notifications
- Landing pages
- Customer service
- Shipping options
- Localization
- “Request a quote” option (for service-oriented platforms)
- Substitute/ complementary goods
- Products/ services comparison
Create and launch an MVP first
Once you have chosen the basic functionality for your platform, it would be a good idea to launch an MVP instead of a full-scale product. Thus, you will be able to save both time and money.
Take another look at the primary features and select those ones without which the platform will not work properly. Then, implement them. When you get positive feedback from the community, you will know what options you need to add.
MVP approach offers you multiple benefits including:
Fast release
You have an opportunity to launch the product within the shortest possible time.
Saving time and money
The development of the most basic features requires less money.
Knowing the customers’ needs as soon as possible
You collect the community’s feedback to improve your product.
Finding the early adopters
An MVP gives a chance to create a potential client base and get the so-called trendsetters.
Additional improvements
Receiving feedback on the customer’s demands you need to bring new ideas and exclusive offerings to make your product more attractive. That means more chances to drum up your business.
Considering the ways of creating an MVP, you have two relevant and effective options:
- Choose ready-made solutions
There are dozens of turn-key platform solutions on the Internet. They will take into account your business requirements and allow you to launch the marketplace quickly and effortlessly.
- Build your marketplace from scratch
When it comes to custom software development, you need to implement the most advanced technologies that will provide you with extended features and tools and support from the community. We would recommend using Vue.js and React for front-end and Ruby, Node.js for the back-end.
Considering the software development providers, we recommend hiring a reliable and solid software development company. The main benefit of this choice is that such agencies have profound experience in MVP creation that allows you to be sure of getting exactly what you need.
Take care of the design
The design of your e-commerce website has a great impact on the customers’ emotions, feelings, and purchase decisions. In this regard, the main task of UI and UX designers is to create an easy-to-use, comprehensive, and visually appealing web solution.
Below you can see the most important design concepts and principles you should adhere to to gain more customers and make them purchase your products and services.
Make navigation easy
The rule is: the easier it is to buy products, the more profit you will get. Therefore, your task is to make the whole marketplace navigation clearly visible. Build the easy-to-understand user flow that allows buyers to find and purchase the desired products in a few steps.
Establish credibility
Try not to overload pages with tons of information not to make the users overwhelmed. Upload trustworthy photos of products, write full product description and system of ratings and reviews instead. Don’t forget about the secure purchase and refund policy to make the user confident while working with your marketplace.
Increase user engagement
Your marketplace should have a clear idea. Users need to understand what products and services available on the platform. Also, highlight the main features that distinguish your multi-vendor marketplace from the competitors.
Acquire vendors and buyers
Now, let’s discuss the sellers’ acquisition and the tactics you can use to get the supply and demand and solve the “chicken & egg” problem.
Attract Vendors
- Build your first supply.
In the early days, one of the smartest things may be producing your own inventory on the platform. It provides you with a good start, attracting first buyers and, subsequently, sellers.
- Get your supply from someone else.
There are tons of products and services available on other marketplaces. List them on your platform to generate the initial user acquisition.
- Provide monetary subsidies.
You can encourage this platform side via monetary subsidies. Such well-known giants as Facebook or Uber in their very beginning were ready to pay cash to make users join their platform.
Attract Buyers
- Have your supply bring your demand.
Surely, there will be world-famous sellers on your platform. Stimulate them with different premium features and then you will promote your marketplace back.
- Motivate potential customers.
Apart from providing monetary subsidies to vendors, you can offer buyers a certain reward for early signup. For example, you can provide a discount on the first order or offer $5 off the first purchase.
Draw both sides simultaneously
- Leverage channel partners.
Over time, you need to collaborate with other marketplaces. It is a good way of getting more platform users.
- Targeting buyers and vendors from the same community.
If consumers and sellers have common interests on similar goods and services, they can feel motivated in such trading on your platform.
Promote and grow
The work on your online marketplace doesn’t stop after its launch. You need to find ways to grow your platform. To ease this task we have prepared several efficient promotion techniques.
Socials
Social media networks are no longer used for personal communication only. For many brands, Instagram, Twitter, Facebook, YouTube, and Medium are efficient tools for interacting with the audience and promoting new products.
SEO optimization
Potential buyers are looking for the desired items on the Internet. You need to be on the top of Google, Yahoo, and Bing, otherwise, your target audience will not spot your e-commerce website. That’s when SEO optimization comes to the rescue.
Email Marketing
It is more important to retain existing customers than to attract new ones. Building email lists is a good way of keeping in touch with your current clients. Effectiveness of this strategy can be easily explained: if they have already bought a certain item from you, they are more likely to return for repeat purchases as there is a high credit of trust.
Paid Ads
The power of paid-for advertisements should not be underestimated. It is an effective strategy for getting additional users from search engines.
Conclusion
As you can see, building a multi-vendor marketplace requires much time and money. There are so many things that deserve your special attention. I hope that we managed to cover most of them in this article.
Are you looking for a team that can help you create a high-quality and attractive multi-vendor marketplace? Codica team has built multiple marketplace websites, and we will gladly help create yours. Check our ready works or contact us to discuss your project.
Originally published at https://www.codica.com.
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