As eCommerce sales rise worldwide year by year, businesses are looking for more avenues to reach consumers in a crowded field. Listing inventory on multiple platforms is a viable strategy for businesses, which in turn makes launching new multi-vendor marketplaces a profitable approach to the eCommerce industry. With the help of marketplace development services, any entrepreneur that sees the potential for their own marketplace store can create their own to provide a platform for sellers seeking to access a unique audience.
Marketplaces are growing in importance in comparison to direct eCommerce sites. Sales from marketplace sites such as Amazon, Alibaba, and eBay made up 57% of global web sales in 2019, and sales reached $2.03 trillion among the top online marketplaces, according to a report from Digital Commerce 360.
They saw gross merchandise sales rise 18% from the previous year, and recorded that 53 of the 100 marketplaces surveyed launched in the last 7 years, demonstrating the continuing rapid growth of the sector. Retailers such as Walmart and Target are entering the field as well, enabling marketplace functionality in their widely-trafficked eCommerce stores.
How A Multi-Vendor Marketplace Operates
Online marketplaces provide a unified platform where customers can search for products sold by different brands or resellers, compare products and prices, and make purchases. In exchange for hosting the marketplace, the owner may take various fees from vendors, including:
- Start-up fees to get a seller account on the marketplace
- Monthly subscription fees for continued use of a seller account
- Listing fees charged when a new product is added to the seller’s inventory
- Selling fees and commissions are taken from each sale, often including a fixed rate and a percentage of the sale price.
Letting a third party handle the eCommerce infrastructure allows a lower barrier of entry for vendors, especially when it comes to complex aspects of online sales such as payment processing.
Many eCommerce platforms, such as Amazon and Walmart, sell directly to consumers as well as allowing third-party vendors on the platform. Hybrid marketplaces created by a retail brand but also serve as marketplaces are not as contradictory as they may sound. Price and service competition between the platform owner and vendors provides more options for consumers and keeps them browsing within the platform rather than searching elsewhere, maximizing the conversion rate of users. Large eCommerce platforms such as Amazon also sell paid advertising to their vendors.
Most marketplaces provide platforms for businesses to sell to consumers, but business to business marketplaces are growing in popularity as well. Amazon’s B2B platform Amazon Business was projected to grow to $31 billion by 2023, up from $10 billion in 2019, according to a report from RBC Capital Markets. While not suited for B2B contracts that require comprehensive procurement processes, vendors who sell through B2B marketplaces can reach wider audiences among businesses looking to fill the gaps when procuring necessary materials, parts, and software for businesses.
Vendors who utilize marketplaces gain access to a much wider audience, which translates to potential sales that far outweigh the marketplace’s fees. They have the opportunity to reach customers through the marketplace’s search results and recommendation engine, and can expand their visibility through keyword optimization and positive customer reviews. They can also manage their products, shipping, returns, and payments much more efficiently.
Read More: How to Improve the Conversion Rate for eCommerce Site?
Benefits of Marketplace Development SeHow to Choose Marketplace Development Servicesrvices
Entrepreneurs and brands that want to host their own marketplaces can turn to marketplace development services to create feature-rich platforms that vendors will find easy to use.
With so many marketplaces out there, you want to support features that make it worth vendors’ time to set up and list their products. The ability to set up an account quickly and import their inventory in bulk can help persuade vendors to get on board. Location-based selling is valuable so vendors can set areas where they are able to ship affordably and in a reasonable timeframe. Since customers may be purchasing from multiple sellers at once, supporting multi-vendor checkout with separate shipping options is a key feature.
Efficient and flexible administrative features are crucial to a successful marketplace. Being able to approve or reject prospective sellers and adjust sellers’ commissions and fees is extremely important, whether to customize multiple tiers of service or to change fee structures to appeal to vendors.
With so many brands vying for discovery online, marketplaces are a logical place to turn to, provided they are mutually beneficial to both vendors and administrators. The technology to create one is more available than ever. If you see an untapped market that could use an online marketplace, contacting a marketplace development service is a place to start.