Rajiv Kumar, Founder & CEO, StoreHippo

Mr. Rajiv Kumar, a qualified Software Engineer, who has a 20+ years of experience, has offered his service to the Companies like Tata Infotech, ST Microelectronics, HCL Technologies, E-Trade Financial, Oracle, Waterfall Mobile, Tavant Technologies. With vast experience and deep knowledge of handling Technical Architecture and Technical Design Projects, he has started his own Operation of providing E-Commerce Solutions to the Small Medium Entrepreneurs and Individual Entrepreneurs.


Online shopping has witnessed a huge shift driven by changing customer behaviour. Instead of hopping different websites customers prefer to buy from an online store that offers a variety of products in one place. With over 95% of online buyers saying that they have shopped from an online marketplace and would come back for more in the future, a marketplace website is a favourite destination for online buyers.

Changing customer preferences has also made businesses take note and opt for the multi vendor marketplace model. The ZERO inventory online marketplace model is a rather cost-effective option when compared to setting up a traditional brick-and-mortar store. No wonder the model is being quickly adopted by fast-growing brands that want to make the most of the ecommerce boom.

An online marketplace, also known as a multi-vendor marketplace, acts as a mediator between the different vendors and buyers. It helps to enhance the customer shopping experience by providing a variety of products on a single platform.

The online marketplace has a number of sellers coming together on a single website, selling under one brand name. For example, when we buy a dress, a smartphone, or any home appliances from Amazon, we do not say the vendor’s name from whom we made the purchase. Instead, we tend to say we bought the products from Amazon.

What Makes E-Marketplace So Popular?

An online marketplace can be likened to an assortment of all shopping malls where users go. As per recent market surveys, globally top online marketplaces sold $2.67 trillion in 2020. Sales on famous marketplace sites, like those operated by Alibaba, Amazon, etc., accounted for nearly 62% of global online sales in 2020. While gross merchandise sales grew by 29% last year. Hence, these numbers evidence the rising popularity of online marketplaces.

E-commerce companies are adopting new solutions to simplify their supply chain. Online buyers can find all kinds of products from different vendors at competitive pricing on a single platform. An online marketplace is a win-all model for the customers, the vendors (as they get lots of traffic) and the owners of the marketplace who earn easy commissions on every sale. Some popular areas where online marketplaces have already made their mark include fashion, food, apparel and electronics.

Benefits of Online Marketplace

Having an online marketplace gives you an edge over your competitors. The inherent competitive pricing and a vast product catalogue bring higher traffic and repeat customers. Along with these, there are other inherent benefits of the model :

  • ZERO inventory cost

The business owner(s) do not need to invest in setting up an inventory. The vendors bring their own inventory and create a variety of catalogues to attract customers. With no need to invest in inventory brands can easily invest the resources in growing a better market presence for the brand.

  • Easy To Scale To New Markets

The multi vendor marketplace model makes it easy to scale up to new markets or product lines just by on-boarding new vendors. This makes it easier for online marketplace brands to grow horizontally and vertically without doing any heavy lifting.

  • Complete Control To The Owner

Despite having multiple vendors on the online marketplace, the complete control of what is sold on the marketplace, what are the discounts given, how the payment and shipping are done lies with the admin(s) of the marketplace. This enables the owners to decide on the most profitable product mixes and marketing strategies with the highest ROI.

  • Easy Commissions On Every Order

Marketplace owners get a commission on every order sold on their platform. the admin/owner can set up fixed or percentage-wise commission rates and get a constant revenue without having to worry about the margins etc. As the popularity of the marketplace grows, the commissions can grow manifold quickly.

  • Customer Trust

With the credibility and trust of a marketplace brand customers feel more confident in buying. They do not have to deal with the individual vendors rather they feel secure and taken care of by the marketplace brand which in turn brings in more repeat orders and higher revenue.

  • Multiple Revenue Stream

Online marketplaces offer multiple revenue streams to earn more from one’s marketplace. Business owners can earn either on a commission basis or by charging membership fees or setting up a subscription plan. Commission basis offers easier to operate and a sustained model of earning while many earn well through premium subscription plans.

Steps for Building an Online Marketplace

Launching a successful market is all about understanding your target market and analysing the demand-supply gap. Once you have the business plan ready, launching an online marketplace with a turnkey marketplace builder is an easy process. Follow these simple steps to get started:

  • Choose a Domain Name– Keep it small, relevant and easy-to-remember so it is easy to search and find.
  • Pick the Relevant E-commerce Platform – Choose a marketplace builder that comes with a host of native features, security compliance and offers a fully hosted and managed solution. 
  • Selecta Beautiful Theme – Choose a beautiful theme from the theme templates available and tweak using drag and drop tools or mix- match to create an altogether new theme.
  • Ensure Site Security – Obtain a FREE SSL from your admin panel and provide a secure site to your customers and vendors.
  • Prepare For M-Commerce – Build your Android and iOS apps from the inbuilt mobile apps builder and turn on the PWA setting to make your website accessible on mobile phones.
  • Enable Multiple Payment Gateways – Add a full range of payment channels to accept payments from your customers and for sending payouts to your vendors.
  • Add Vendors – Register vendors on your marketplace who can then upload products to be sold on the platform. Set up tax, payment, commission and other rules for them.
  • SEO Optimization – Start SEO optimization as soon as you create your multi-vendor website. This will help with SERP ranking and bringing in organic traffic.
  • Marketing Activities – Create a marketing plan to promote your business. Start registering customers and sending out coupons and discounts before the actual launch.
  • Test & Go Live – Test your flows and go live as soon as your website is set-up.

Summing Up

The success of popular marketplaces and the way they create a shopping frenzy among buyers has proved beyond doubt that this business model is a virtual goldmine for business owners. The marketplace model is profitable for owners, vendors, as well as customers as each, get the best out of this set-up.

Having an online marketplace also empowers offline sellers that never had an online presence. A well-researched approach and detailed planning along with the right tech solution that enhances the buying experience is the best recipe for an ecommerce marketplace success.

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