A Comprehensive Guide to Set up a Multi-Vendor ECommerce Website in 2022

What has been the most significant benefit of the eCommerce boom? ECommerce marketplaces allow several different businesses to connect with users and leverage the platform for higher growth. Take the example of Etsy, one of the most popular custom gifts and handmade item marketplaces with over 126.61M shares of ETSY outstanding. 

In 2005, a bookseller and construction worker, Rob Kalin, wanted to sell handcrafted items online and was excited to go virtual with other friends looking for such a platform. So it was when Etsy was born, which is now a multivendor eCommerce website enabling several such artists and artisans. 

Similarly, there are several use cases for which you can set up a multi-vendor eCommerce website and maximize revenues. First, it is an approach to building a platform for several vendors and suppliers to sell products. 

Here we will discuss some of the best ways to create a multivendor eCommerce platform for your business. Let’s start with the first step, which is identifying the niche.

Step-1 Identify Your Niche

When it comes to developing a multivendor eCommerce website, you need to know your niche or end up in a cash crunch that may not be sustainable. In addition, if you are to enter a new niche market, you will need about three years to grow an organic identity that customers associates, and sellers can rely on, making niche research essential.

Discovering a niche to set up a multi-vendor eCommerce website requires thorough market research. When you research the market, you will identify different customers’ pain points. For example, Leah Basque, the founder of TaskRabbit, got the idea of creating an auction-based marketplace for one-off tasks through personal experience. 

In 2008, Leah was short of dog food and was looking for someone to get it from the market on a cold night. The situation may look adverse, but it helped her create a multi-vendor eCommerce website where neighbors can help each other perform one-off tasks based on an auction model. 

It was a model that became popular, attracting Leah and several other entrepreneurs with startups like Thumbtack taking the handyman marketplace to a new level. Similarly, you can research the market thoroughly and find a niche with specific customer pain points to find a solution. 

Step-2 Building a business case

Building a business case is one of the essential aspects of creating a multivendor eCommerce platform. It involves formulating a business model defining the problem, solution, and revenue models. However, these factors will depend on the niche market, the type of customers, and the problem your product will solve.

There are several different types of models to follow for your eCommerce business. For example, you can leverage the vertical model for niche-based products. At the same time, the horizontal model allows you to include products across niches on your multi-vendor eCommerce website. 

However, before choosing either horizontal or vertical models, every business model has something in common. A business model involves not just the research on different solutions for a specific problem, but also includes finding, 

• Customer segments- What type of customers will use your product or service to solve their problems?
• Value proposition-What value will your product provide to the users and sellers on your platform?
• Channels of engagement- Which are the channels through which your customers will engage with your eCommerce platform? It can include your website, social media, and others. 
• Key Activities- One of the key activities will be to build a platform like a website apart from the 
• Key stakeholders-They can be customers, investors, vendors, and partners enabling your business operations. 

However, despite several common factors, there are several different types of multi-vendor eCommerce business models like, 

• D2C(Direct to Customer)- This business model allows you to maximize your multi-vendor eCommerce website by reducing the need for inventory and selling directly to customers. 
• P2P(Peer to Peer)- In such business models, customers act as vendors, and others buy from them. For example, Dogvacy allows pet owners to find people who can take up petsitting jobs. 
• B2B(Business to Business)- Businesses buy from other organizations that offer services and products for specific requirements. For example, Thomasnet is a manufacturing-based P2P eCommerce marketplace for suppliers and companies to sell industrial products.

However, without revenues sustaining a competitive market is complex, and this is why you need clearly defined revenue models. Here are some revenue models that you can use for multi-vendor eCommerce websites. 

• Listing-based- Vendors will pay you per the eCommerce website’s product listings. Amazon, eBay, and Alibaba are examples of this revenue model.
• Subscription-based-It allows your customers to subscribe to your products or services for a fixed monthly fee.
• Advertising- You can add advertisers from similar niches or related products for more revenue without being irrelevant. 
• Featured products- It is a revenue model to showcase products from vendors with a specific charge. 
• Commission-based-Your eCommerce website acts as a facilitator for transactions between vendors and customers with commission charges on every sale. 

Step-3 Wireframing, features & development

Once you have your business case ready and approved by all the stakeholders, the next step will be to identify essential features. These features will help you identify specific technical requirements. 

For example, your multi-vendor eCommerce website needs Payment Card Industry Data Security Standard (PCI DSS) compliance. It is a security standard that every eCommerce website needs to have if they store customers’ financial information. 

For such a high level of website security, you need to employ encryption-based solid solutions. SSL/TLS certificates are among the most popular security solutions for eCommerce websites. It protects the communication between the user’s device and browser to ensure no man-in-the-middle attacks.

There are several certification authorities and vendors that provide excellent SSL certificates. However, if you are looking to secure several level-one subdomains for your eCommerce website, a more reliable solution will be to choose a cost-effective and cheap wildcard SSL certificate. It allows you to protect several first-level subdomains along with the primary domain.

Similarly, there are several features like social login, guest user registration, product listing, cost estimations, shipping charge calculation, multiple online payment options, etc., which you need for an enhanced shopping experience. 

Developing such features for your multi-vendor eCommerce website will need a reliable web design and architecture. So, you will have to create a web design wireframe based on which your development process will be defined. 

Further, you can develop a multi-vendor website through an incremental, iterative approach where with each version, you integrate new features and user feedback. Then, once your website is ready, deploy it across platforms, monitor it, and maintain high performance. 

Signing Off

As you can see, the journey from an idea to setting up a multivendor eCommerce website can take several phases along with proper planning and reliable development solutions. Here, identifying features, creating a feasible business case, and pre-defined organizational goals are necessary for successfully executing multivendor platform development.

So, start brainstorming, planning, and aggregating resources to build the next Amazon or Thumbtack.