How to Build a Custom Multi-Vendor Online Marketplace Startup?
What is a multi-vendor marketplace platform, and how do you create one? In this article, we’re going to look at how to create a multi-vendor online marketplace startup that businesses want to use.
If you’re looking for a simple startup idea that will bring you profit, building a multi-vendor online marketplace platform is an excellent option.
In this blog post, we’re going to take a look at what a multi-vendor online marketplace platform is. We’ll also see why they’re so popular at the moment and how to create one that buyers and sellers want to use.
- What is a multi-vendor online marketplace startup?
- Why are multi-vendor marketplace platforms so popular?
- Examples of multi-vendor online marketplace startups
- How long does it take to build a multi-vendor marketplace startup platform?
- How much does it cost to build a multi-vendor marketplace startup?
- Is it best to build a bespoke marketplace or use an off-the-shelf solution?
- How to create a multi-vendor marketplace platform
- In summary: Creating a multi-vendor online marketplace doesn’t have to be hard
First, let’s look at what a multi-vendor online marketplace is…
What is a multi-vendor online marketplace startup?
A multi-vendor online marketplace is a website or mobile app where a variety of vendors can sell their products and services to shoppers.
Vendors create an account, build an online store, and sell their products to customers.
Think of a multi-vendor online marketplace as the equivalent of a shopping mall – lots of businesses selling under one roof!
Why are multi-vendor marketplace platforms so popular?
More and more people are buying over the internet, with over 2.14 billion people worldwide buying online in 2021. That’s a 62% increase since 2014.
The benefit of multi-vendor marketplace platforms for vendors is they can sell their products online without having to create their own eCommerce store. This is a great option for smaller businesses that might not have the budget to build their own website.
As marketplaces do all the promotional work on the vendor’s behalf, it also means they can spend less money on promoting their online shopfront.
Buyers have the advantage of purchasing a wide range of different products from one website, using one login and one payment platform. This saves them valuable time. Also, they can check out reviews on the multi-vendor marketplace platform to help them understand which product is the right one for them.
Nearly one in five American shoppers always check online reviews before buying a product. This means the more insight you can offer, the more likely buyers are to make a purchase from your marketplace.
Examples of multi-vendor online marketplace startups
There is a wide range of multi-vendor marketplace startups out there, selling a variety of different products.
Here are some marketplaces that you might have heard of.
While most multi-vendor online marketplaces sell products, some also sell services.
For example, Airbnb is a marketplace where sellers can come together to promote their rental properties.
How long does it take to build a multi-vendor marketplace platform?
It depends on the size of the marketplace, the functionality you want to have in place, and what products you want to sell.
Building a multi-vendor marketplace can take up to 1,000 hours. This includes development time, product management, and creating a solid business plan.
One way to reduce the time spent building your multi-vendor marketplace is to create a minimum viable product or MVP. This is a basic version of your marketplace that you can get to market faster.
Nearly half of all features in a piece of software aren’t used by customers, so by developing an MVP, you can save time and money.
How much does it cost to build a multi-vendor marketplace startup?
Again, it depends on the size of the built marketplace startup and the functionality you want to offer.
It can cost anything from $30,000 to $300,000 to build a multi-vendor marketplace startup, with the majority of your spending going on development.
You’ll also need to consider any plugins that you want to use, like payment portals and review platforms. If you want a corresponding app for your marketplace, this will also increase the price.
Is it best to build a bespoke marketplace or use an off-the-shelf solution?
There are advantages and disadvantages to both. While the benefit of creating your own bespoke marketplace startup solution is that you can tailor it to your specific requirements, it is typically a more expensive option.
An off-the-shelf solution will be more cost-effective and take less time to launch, but the functionality may be more limited. Some of the off-the-shelf solutions currently available include Arcadier, Marketplacer, Sharetribe, and CS-Cart.
If you’re not sure whether a bespoke or off-the-shelf marketplace is right for you, think about the features you want to include – we’ll go into more detail about this later. It might be that you start with an off-the-shelf marketplace solution and move to something more tailored to your needs as you grow and develop.
How to build a multi-vendor marketplace startup platform
So, do you want to build a high-quality multi-vendor marketplace startup platform? That’s great!
If you’ve decided that building a multi-vendor marketplace startup solution is the right solution for you, there are a couple of things you need to consider. Here are four of our top tips to get you started.
1. Find your niche
There are currently over 155 marketplaces that have over one million visits a month. This means you could potentially have a lot of competition.
It’s crucial to find the right niche for your multi-vendor marketplace startup. This means determining what products and services will be available on your platform.
We recommend focusing on a vertical rather than a horizontal niche. While a horizontal marketplace startup sells a wide range of products, a vertical marketplace startup focuses on a specific type of product.
For example, Amazon would be seen as a horizontal niche as it sells everything from food to office furniture. Etsy would be seen as a vertical niche as it focuses on craft and artisanal items.
By concentrating on a vertical marketplace startup, you’re more likely to find buyers and sellers. You can always expand your product offering later as you grow.
2. Work out how you’ll monetize your platform
It’s important to determine how you’ll make money from your built multi-vendor marketplace startup platform. There are different ways you can make a profit, including:
- Charging a subscription fee
- Charging a fee per transaction
- Bill a fee per listing
- Charging extra money for premium or sponsored listings
- Charging for advertising
As well as identifying the right monetization model, you’ll need to consider what rate to charge. While you want to make a profit, you also want to entice vendors to use your marketplace, especially in the early days when you’re just starting out.
3. Think about the features you’ll offer
Earlier on, we mentioned creating a minimum viable product to ensure you can launch your marketplace startup sooner rather than later. You need to think about the features you’ll launch to encourage buyers and sellers to come on board with you.
Here are some of the features you’ll need to bear in mind when building your multi-vendor marketplace startup.
- How buyers and sellers will sign up and log in. It’s important to make sure that the process is secure but easy. Avoid asking for data that isn’t relevant and consider social signup or two-factor authentication. You might also want to consider a verification system for sellers – this will prove who they are and help provide peace of mind for buyers
- How you’ll secure people’s data on your platform. It’s essential to ensure any data on your platform is protected. Marketplaces are tempting targets for cybercriminals as they contain a lot of personal and payment data. Only recently, NFT marketplace OpenSea warned users that buyer and seller email addresses had been leaked
- How sellers can customize and update their store. The easier it is to make updates and add new listings, the more likely sellers are to keep coming back. A high-quality analytics system can also help sellers see what products prospective customers are looking at and if the seller needs to improve their listings
- How buyers can find the right products. Did you know there are over one billion active listings on eBay? This means that it’s important for customers to be able to search for the right product and filter down to find the right item for their needs
- How buyers can make a purchase. You need to consider the payment processing functionality that will be available for buyers to use on your built multi-vendor online marketplace startup. Will you use a system like PayPal or Stripe? Would you let vendors accept BACs payments or invoices? Will you offer ‘Buy Now, Pay Later’ as an option?
- How buyers can review products. Reviews are essential to the sales process. Offering a review section means buyers can provide feedback that can potentially help other shoppers make an informed decision
4. Encourage buyers and sellers to come on board
You need to have a plan in place to entice vendors to sign up for your built marketplace startup and encourage people to buy. Here are some of our top tips.
- Know who your target audience is and how they prefer to be marketed to
- Understand what your unique selling point is compared to your competitors and use this to promote your marketplace
- Dedicate part of your startup budget to marketing your platform. A solid social media presence, a focus on SEO, or a high-quality pay-per-click campaign can help make people aware of your marketplace
- Look at influencer marketing. This is when you partner up with someone that can help drive traffic to your marketplace and encourage others to sign up. You don’t have to work with celebrities or social media accounts with millions of fans – as long as they have an engaged and loyal following
- Consider reducing your listing or subscription fees to encourage early adopters. A referral scheme can encourage buyers and sellers that are already signed up to your platform to promote it to other prospective customers
- Look at using other marketplaces to attract signups. Airbnb famously sent emails to people posting rentals on Craigslist, asking them to consider signing up for their new marketplace
It’s important to dedicate your time equally towards finding sellers and finding buyers as you need both to build a healthy multi-vendor marketplace startup.
In summary: Building a multi-vendor online marketplace startup platform doesn’t have to be hard
Customers spent over 3 trillion dollars on online marketplaces like Amazon and Etsy in 2021. This makes building a multi-vendor marketplace startup a very lucrative startup idea.
The key to a successful online marketplace startup is to offer something that nobody else does. This means it’s essential to do your market research, identify your target audience and focus on a vertical rather than a horizontal niche.
Creating an MVP means you can launch your built marketplace startup quicker and focus on the features that buyers and sellers want to use.
Don’t forget, if you’d like to know more about building a multi-vendor online marketplace startup, these blog articles will provide you with additional information.
- Evolving from an eCommerce to a marketplace business model
- How to build a marketplace startup
- The different types of digital marketplaces
- How to create a B2B marketplace platform startup
- How to develop a SaaS marketplace software
- The top ten online marketplace business ideas
- What is a web 3.0 marketplace and how do you build an NFT website?
Need help creating a multi-vendor marketplace platform? You are launched can help
We’ve been working with startups since 2014, helping them to create high-quality business plans, get investment and develop MVPs that mean they can launch faster.
If you’re looking to build a multi-vendor marketplace startup but aren’t sure where to begin, our team of experts is here to support you. Contact us today to find out how we can help get your marketplace on the right track.