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Why Scaling to Multivendor Marketplace is the Right Choice in 2024


Amongst all eCommerce websites, Alibaba alone commands a significant global market share: a fifth of all e-retail in the world. Just add Amazon, and this figure rises to 33%!

One of the major reasons for this popularity is the collectivist advantage such businesses have over solitary players like the Apple store. The sheer benefit of having multiple sellers on a single platform (multivendor marketplaces for short), makes them the “Swiss army knife” of eCommerce.

And that is something you might be aware of as well. Each time you log onto a website like Amazon, or read about the success it has achieved, you might be thinking to yourself: This is an engine for rapid growth.

And that is true – while a common school of thought would make you believe that if you have an inventory to sell, you need an e-store, else launch an e-marketplace. A more prudent advice would be to explore the why and how of starting with a marketplace model – and then decide keeping in mind the vision for your business.

For this reason, we share with you the advantages you have with multivendor marketplaces. And with that, discover how you can migrate to a multivendor marketplace.

Table Of Contents

Let’s dive in.

Why do Users Prefer Multivendor Marketplaces?

Think about what you would do as a consumer. What are your shopping preferences i.e. how many of your go-to eCommerce sites are multivendor marketplaces, and how many are eCommerce stores?

And now think about the reasons for the same.

The following compelling reasons make consumers prefer multivendor marketplaces:

  • More variety of products on a single website.
  • Multiple sellers to choose from.
  • Comparison of products is easier.
  • Likewise, prices of products can also be compared.
  • The shopping experience is more engaging.

In the same way, consider why third-party sellers want to sell their products on multivendor platforms. This is an important question as well, since they play an equal role in the success of such marketplaces. The following are the reasons for sellers:

  • No need to invest in eCommerce operations, or website infrastructure-related costs.
  • Access to a bigger consumer base.
  • Increased visibility with relatively larger-scale operations.
  • Symbiotic leverage with other sellers/competitors.
  • Sellers that are smaller businesses/startups also have a good opportunity to build their brand with a presence on multi-seller eCommerce sites.

So, What more do eCommerce Marketplaces Offer?

For any business undertaking, the first thing that entrepreneurs ask themselves is – will the users like my idea? Some part of the answer to this question is in the reasons discussed above – which means that users are more likely to prefer a multivendor marketplace over single-seller stores. However, there are other reasons as well, that have been pivotal to the success of multivendor eCommerce. Let’s discuss those.

More Revenue Generation Options

Ecommerce marketplace brings in multiple direct revenue streams. Commissions can be charged on the sale of products. There is an option to offer subscription plans for users (generally in lieu of better services, for instance, Amazon’s Prime services). And marketplaces also have the opportunity to monetize their website assets for advertisements. Moreover, secondary revenue streams are also available, especially once the marketplace scales. For instance, eCommerce businesses like Lazada (also known as the Amazon of South East Asia) leverage their infrastructural ecosystem for higher revenue.

Suggested Read: An in-depth guide on Lazada

Opportunity to Scale

E-marketplaces are economies of scale. Hinging on greater user traction, they bring in more traffic, while also resulting in higher revenue.  Moreover, this scale can be cyclic, causing a ripple effect, and catalyzing more traffic generation for the platform.  Also, with higher revenue, they have a higher working capital, hence a larger resource allocation for marketing and brand building – further enhancing capabilities to extend the reach of the business.

Launch an eCommerce Marketplace Ready for Scalability

Transcend Geographical Boundaries

With greater abilities to enhance reach, a multi-seller e-business can serve bigger geographical regions as well. eCommerce businesses like Newegg or Alibaba have pioneered this very advantage, and connected supply chains across national boundaries.

Niche Products Marketplace

The success of Etsy – like specialized eCommerce marketplaces over the years has introduced the viability of niche-specific platforms. Or in other words, eCommerce platforms that focus on a specific category of products only, or for a specific target audience only. This is possible because of multi-seller platforms, as even with a specific target audience, an e-marketplace can still attract a sizable number of users.

Easier to Execute Business Innovation

If you observe the disruptions in the eCommerce industry, they are often the result of innovative business practices. Take for instance: Airbnb with its concept, Alibaba giving the world access to an efficient manufacturing base, Newegg with its hybrid business, or a marketplace like StockX that pioneers a unique business model (i.e. how business is conducted on the platform). These are some examples of versatility in a multiseller business.

Brighter Future

Just like Lazada, eCommerce businesses that develop their backend services over time can leverage these independently within their larger spectrum of offerings. This gives businesses more flexibility, and opportunities to attract sellers on the platform. Additionally, they can add a completely new dimension to the business. An example of the latter is Amazon’s AWS or Amazon Web Service. It is a cloud-based infrastructure service which was developed when the company scaled operations internally. Gradually it became an additional service that is mutually exclusive to their core business.

Mergers and Acquisitions

Possible complexities in online multivendor eCommerce marketplaces allow them to stay open to expanding their portfolio to scale. This can be achieved internally and by partnering with or acquiring other eCommerce ventures.

These were some of the compelling reasons why multi-seller marketplaces have been gaining traction, transforming the face of retail as we know it.

How To Convert Your Online Store Into A Multi-Vendor E-Commerce Marketplace?

Something that you would have noticed by now, both an online store and an eCommerce marketplace are mutually exclusive businesses. Since you see the benefits of a multivendor business, you would want to go through the following steps to transition from an online eCommerce platform to a multivendor business.

Ideate for a Multivendor Strategy

Plan to Onboard Sellers

As an eCommerce store owner, your energies must have been focused on getting consumers for your products uptill now. With multiple sellers, that perspective will need a change. As discussed above, an eCommerce business with multiple sellers needs to have a strategy to onboard third-party sellers.

Replan Backend Operations

With a greater scale of operations, you might need to enhance the scope of your eCommerce operations like logistics. Your existing operations may need rethinking. Moreover, the sellers will also want some flexibility. This may include considering additional tools. And some of these tools will need integration via APIs to your multivendor platform.

Evolve your Business Model

An ecommerce store has a simple business model, a company sells products on the platform. The core offering here is the products on offer and that takes centrestage. The brand of the website is then defined by those products. For instance, a consumer logging onto the Apple’s e-store would do so with the intent to browse or buy Apple’s products.

While consumers on a multivendor marketplace will either be sourcing a full category of products from multiple sellers. For instance, a consumer on Etsy, a multivendor marketplace will source a variety of products from multiple sellers.

For owners of eCommerce stores, this transition can even be more smooth. From a business perspective, they add sellers, in line with what they have to offer. Many popular eCommerce marketplaces like Amazon have taken this route. While some scale with similar products, others add more category of products.

Redefine Revenue Strategy

Again, a multiseller marketplace brings in a different set of overheads, but also come with more revenue streams. Moreover, marketplace commissions may be lesser than profit margins per product. Hence you can recalculate and hence recalibrate your revenue strategy.

Replatform to a Multivendor Website

With a reconfigured business strategy in place, you will need to platform that supports multivendor operations. There are a few ways in which you can go about this, and each of those would have a use case for specific scenarios. However, cutting straight to the chase, we highlight the benefits of using YoKart a readymade turnkey software, a purpose-built solution for this specific need.

  • Essential multi-vendor features for efficient operations for the operator and the sellers, intuitive shopping experience for buyers.
  • Versatile solution that allows eCommerce entrepreneurs to cover multiple use cases
  • Self-hosted solution for flexibility.
  • Essential business API and payment gateways pre-integrated.
  • Low platform overheads, a critical differentiator for eCommerce businesses – as there are no recurring or hidden charges that come with the solution.

Start Your Own Amazon Now!

Wrapping Up

Multivendor eCommerce has been redefining how consumers and sellers interact online. The decisive shopping experiences that it delivers are pivotal to consumer expectations and the progressive selling environment it offers is key for sellers’ online sales strategy. While these virtues attract users to multivendor platforms, aspiring entrepreneurs also have another advantage i.e. enhanced capabilities to scale with this business.

Summing up, multivendor eCommerce offers more for each participant. It is truly an engine for growth. Businesses that operate on an online store business model can tap greater opportunities to scale by migrating to a multivendor eCommerce marketplace.

So if you want to migrate your online store to an eCommerce marketplace, one easy yet effective way to do it is using YoKart. Our leading turnkey solution is distinctly positioned in the market to offer holistic benefits that are unique to itself. Build a modern eCommerce platform and script your success story in a domain that promises more and more business ingenuity, coupled with technology-driven digital experiences.

Book a YoKart Demo now and get a glimpse of how you can leverage the right tools for the operator and the sellers to meet buyers at every stage of their shopping journey.

Start with a Readymade Multivendor Marketplace Solution

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