Multi Vendor Stores- Analyzing their Benefits over eCommerce Shops

Multi Vendor Stores- Analyzing their Benefits over eCommerce Shops

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Last Updated: 15th September, 2022

The consumer industry over the past few years has ebbed and flowed to the tune of digitalization and eCommerce websites. If we look at the timeline before, during and after the pandemic, one couldn’t help but notice the hand played by serendipity to give eCommerce its due-boost. Almost 40% of customers started buying online after the outbreak and the global retail eCommerce sales have touched a record $4.9 trillion, which is further expected to grow by 50% and reach $7.5 trillion by 2025. The fact that more than 1 in 4 apparel searches now begins on Amazon underpins the fact that eCommerce has seeped deep into the fabric of consumerism.

What is a multi vendor ecommerce website?

Irrespective of their size, niche or operations, multi vendor eCommerce websites share a few core offerings, which are highlighted below:

  • Facilitate Transactions Among Multiple Sellers & Customers

eCommerce websites consist of multiple sellers and customers; these sellers could be (business to customers) or c2c(customer to customer); the scope of marketplaces could be broad(eg. eBay) or limited(Target). Finally, their operational scope could be either stand-alone(serving only sales) or end-to-end(combination of retail and eCommerce).

  • Access to Multiple Brands

Multi vendor eCommerce websites, by the virtue of multiple sellers, are able to host multiple brands. These brands could be under the same product line(eg. clothing) or particular category(premium or basic). Some marketplaces are a mix of everything, consisting of diverse products and a combination of all product categories.

  • Featured listings

Marketplaces can feature sellers referral fees. This effectively boosts sellers’ reach to their target audience.

  • Fee-based services
  • Optional services
  • Provision for product authentication

Popular Ecommerce Brands Operating On The Multi Vendor Ecommerce Marketplace Model

Amazon

Founded in 1994 by Jeff Bezos as an online book store, Amazon has evolved with customers’ needs to become the largest player in the eCommerce sector. It operates as a retail outlet where sellers can list items for sale and customers can browse, view prices and buy those listed items.

Product listings are from both Amazon’s own brands and third party sellers, the latter making up roughly 57% of the overall sales as per a recent finding. It’s a buyer-oriented marketplace that’s more keen on attracting large numbers of customers to its website.

Etsy

Another popular exponent of the C2C model is Etsy – a multi vendor eCommerce marketplace for independent artists or crafters to advertise and sell their items. The platform offerings range from jewelry, bags, home decor, furniture, toys, clothing under diverse categories as handmade, vintage or craft supplies.

Etsy has a seller-aligned business model wherein everything from production, collection, curation and sales is managed by sellers. Etsy takes a cut(6.5%) out of each successful sale. Additionally, it charges 20 cents as a listing fee for each item. However, its largest source of revenue is through support for services like promoted listings, payment processing and sale of shipping labels. Etsy has quickly grown into a marketplace of 7.5 millions sellers and some 96.2 million buyers. Notably, in a survey conducted in 2019, 87% of its sellers self-identified as women.

Alibaba.Com

Alibaba.com is an online B2B multi vendor eCommerce marketplace of the Alibaba Group, launched in 1999. It’s a wholesale marketplace of global manufacturers, trading companies and resellers who buy and sell goods in large quantities. Currently, Alibaba.com has buyers and suppliers from around 190 countries globally. Its major source of revenue is through advertising fee, commission and listing fees. Revenue from Alibaba.com in the fiscal year 2021-2022 stood at a whopping $1.22 billion.

eBay

eBay is an American multinational behemoth that was founded by Pierre Omidya in his San Jose living room way back in 1995. It was designed as a marketplace to facilitate B2C and C2C sales through its website. eBay remains one of the most notable success stories of the dot com bubble.

On the surface, it looks similar to Amazon, but in practice, eBay operates on a completely different business model. eBay is more of an auction house marketplace that allows sellers to list their items for sale and buyers to place bids on items of interest. All in all, eBay is a seller-oriented marketplace.

 United Rental – UR One

Moving on to B2B niche segments, we have the world’s largest equipment rental company United Rentals with around 1,000 branches across North America. In a bid to engage new markets and enhance the B2B eCommerce capabilities, the company has launched its digital rental management platform. It allows customers to place equipment rental requests, track and control equipment costs, cancel or extend rental contracts, review their rental history and pay their invoices.

RVShare

The next multi vendor eCommerce website in focus again emanates from the rental economy – RVShare. It operates on the C2C business model where RV owners can list their vehicle and prospective buyers can browse those listings, read reviews and place rental requests. RVShare allows owners to set their own rates and work out an arrangement with renters but it manages payments and screenings for a fee. The website is said to have over 60,000 and it claims that owners can make $30,000-$40,000 revenue per annum by listing their RV on the site.

TaskRabbit

Moving on to another popular segment, we have Taskrabbit, a home-service online marketplace that connects freelance labour with local demand. Clients can find help with day-to-day jobs like cleaning, delivery, handyman work, gardening, animal care etc. One presumption for this type of marketplace is that people are often in need of help and that help is mostly around but they simply lack the means to get to it. Another perspective maintains, if you’re short on time and need to get a task/chore done without fail, you can hire someone with the time and skill to do it for you. Whatever the need or motivation to do/get the job, TaskRabbit has certainly revolutionized the home-services segment in a major way.

Uber Eats

Coming to the popular online food delivery segment, we have UberEats, an extension of Uber – the ride hailing service. As the largest online food delivery service, it currently has 66 million users and controls 29% of the global food delivery market. Much like its parent company, UberEats operates on the three-sided marketplace model i.e. it connects restaurant owners, riders and customers all on the same platform. The customer places their food item request with the restaurant owner, the owner accepts the order, a rider is assigned to pick up and deliver the food to the customer’s location. All parties stay in touch with each other through several notifications generated by UberEats service.

Instacart

Moving on, we have Instacart from the online grocery delivery segment. Instacart operates on the sharing economy and hyper-local on demand delivery business model. It got the right impetus with the pandemic, which took the company’s total eCommerce share from 8.9% in January 2020 to 17.2%  by July 2020. Instacart doesn’t have its own grocery storefront but it offers a digital platform for grocery retailers to sell their products to everyday customers. Customers simply view, select and place their groceries delivery request at a given slot. Once their payment is received, an independent contractor or shopper picks up the order and delivers it at the requested address.

Discuss Your eCommerce Marketplace Requirements With Our Experts

What is fueling the demand for online marketplace software?

Ecommerce enthusiasts have become more interested in eCommerce marketplaces in contrast to individual webstores. Below are the reasons for the marketplace shift;

1. Vast range of products

The products sold on a multi vendor eCommerce website are featured by a number of vendors. Any ecommerce website that provides a huge variety of products is bound to easily generate traffic and sales.

2. It takes away the hassle

Taking care of logistics, inventories, product additions and upgrades, pricing and various other details that come with running an online store are all time-consuming. Multi vendor ecommerce websites shift these requirements to individual merchants. Because sellers have to take care of their own store only, much of the hassle is taken out of running an online website.

3. Lesser expenses

Because every seller will be managing his shop on their own, you don’t need to hire people to do it. Your team can spend more time on answering critical questions related to scaling and marketing. With an experienced development team by your side, you can drastically bring down website maintenance related expenses.

4. No need to maintain inventory

Warehousing and human resource related costs can break the back of any ecommerce startup. Starting a multi vendor eCommerce website will not let that happen as sellers will take care of inventory related complications.

Why sellers favor multi vendor ecommerce websites?

Sellers and small businesses find online marketplaces a better deal when it comes to sales and revenue generation. Below points are making online sellers favor virtual ecommerce systems;

1. Benefit From Established Business Presence/Reach

Established multi vendor eCommerce websites attract a huge amount of traffic and sales opportunities. Creating an online store and investing in marketing will consume tens of thousands of dollars but you still wouldn’t be able to attract as much traffic. This way, setting up a shop on an eCommerce marketplace is a better deal.

2. Suitable for sales oriented sellers

Product manufacturers and sellers who are more concerned about making profits rather than creating a brand go for multi vendor ecommerce websites.

3. Reasonable setup costs

Creating a website to sell your products and then investing in advertising means spending thousands of dollars. Online marketplace leaders get you started with just a few dollars per month and a small selling fee. Check out Sell on Amazon page.

Also Read: How to Choose from the Various Ecommerce solutions

4. Flexibility

Merchants on multi vendor ecommerce websites can manage product details, prices, and areas of delivery, make additions, and updates as per their convenience. This flexibility comes along with no requirement of technical knowledge.

Ecommerce entrepreneurs are more interested in starting virtual marketplaces because of added operational efficiencies and better margins. This justifies the growing online search for online marketplace scripts.

FATbit’s Dedicated Software To Launch Diverse eCommerce Marketplaces

Whatever your domain may be, there’s certainly an eCommerce marketplace model for it out there already. At FATbit Technologies, we’ve helped numerous startups through consultation and technology assistance to launch their eCommerce platform. We offer tailored white-label solutions for popular eCommerce domains. Some of them are highlighted below.

  • Yo!Kart – For B2C Multi vendor Websites
  • Yo!Kart B2B – For B2B Multi vendor Websites
  • Yo!Rent – For B2B, B2C Multi vendor Rental Websites
  • Yo!Yumm – For Multi Restaurant Food Delivery Website
  • Growcer – For Hyperlocal Grocery Marketplaces
  • Yo!Gigs – For Multi vendor Home Service Marketplaces

Major Benefits of FATbit eCommerce Software

  • Self-Hosted & White Label Solutions
  • 1 Year Free Technical Support Post Launch
  • Fully Customizable & Scalable
  • Comprehensive feature list out-of-the-box, reducing time to market
  • Lifetime License For One-Time Payment

Eager to get your eCommerce marketplace up and running?

Final Thoughts

In the eCommerce economy, as in traditional retail, the success of a business depends on understanding the chief pain points of the target audience. With that knowledge, value-offerings can be identified and formulated for maximum impact. The global economy is well and truly transformed by the introduction of the multi vendor eCommerce marketplaces across diverse industries and markets. The outbreak of COVID-19 further accelerated the acceptance and adoption of eCommerce businesses. It’s an exciting team for anyone to be involved in eCommerce, chiefly for entrepreneurs, who can stake big claims in their choice of the market.

Disclaimer: The Blog has been created with consideration and care. We strive to ensure that all information is as complete, correct, comprehensible, accurate and up-to-date as possible. Despite our continuing efforts, we cannot guarantee that the information made available is complete, correct, accurate or up-to-date. We advise - the readers should not take decisions completely based on the information and views shared by FATbit on its blog, readers should do their own research to further assure themselves before taking any commercial decision. The 3rd party trademarks, logos and screenshots of the websites and mobile applications are property of their respective owners, we are not directly associated with most of them.


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Comments (5)
Clara

Hi,
That was a great stuff. I’m a newbie to multivendor shopping cart. This content is quite helpful for me.
Thanks
Clara

Rochelle George

Great Post! Thanx for sharing such an amazing blog.It is a transformation age of online shopping, which is changing day-by-day as eCommerce entrepreneurs realise that investing in multi-vendor eCommerce store is a better deal.