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Benefits and challenges of implementing multi-vendor marketplace

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Do you know that Amazon reached the record number of net sale revenue $74.45 billion in 2013? So amazing and dream number for any business owners! Morningstar Analysts even called Amazon by one of the most disruptive forces in the retail world.

Amazon is just a very typical example, you also can see NewEgg, Etsy, and eBay, they have also achieved massive success when deciding to run marketplace eCommerce, business model. If you study carefully and take full advantages of this multichannel model, you will find that it is one of the most profitable models for investing. One special point of a marketplace is facilitating sales for third-party vendors. The entire marketplace will run on the same software infrastructure, it means that all sellers will distribute their distinct goods under a common environment, an umbrella of just one website.


 The benefits for each party who take part in the marketplace:

  • Business operator: Besides profits from selling their own products and services, the business operator can earn more money by taking a commission from other third-party sellers on the market. Kill two birds with one stone! You can attract more customers to your site due to the variety of products and sellers can sell more, you can gain more commission.
  • Vendor: A lot of small store owners do not have enough budgets to invest for their own website because it will require a significant amount of money for building and maintaining a website, marketing strategies and many other kinds of stuff. Instead of that, they can join a marketplace, sell their products and services and align themselves with a larger, well-known business. Besides profits from selling, they can gain some things for their long-term development such as visibility or utilize the marketplace’s fulfillment options.
  • Consumer: Due to the crowded of sellers available in the marketplace, there will be more choice for a product for consumers to choose and compare. The high competition of this model will reject the weaker products and only the most reasonably priced and highest quality product will remain.

A perfect online shopping site theme that I would recommend is: Marketplace WP Theme support Dokan Multi Vendors. There are various unique homepage layouts on this theme that adapt all your customers demand. Everything is very convenient to find and shop for. Even you are a new developer or a shop owner; you can install this theme on your site easily.

The challenges of e-commerce marketplace

Along with the benefits and opportunities, there will be the challenges of e-commerce marketplace you have to cope with when applying this model. As I mentioned above, the price will be one of the benefits for consumers; however, it also becomes complex challenges. Vendors may choose to compete with their rivals for the lowest price, customers will be really happy but this strategy will lower the profits of both the marketplace and the vendor.

If we mention the pricing problem, it always comes along with quality issue. The high competition will reject weaker products but the marketplace is quite large and business operators cannot have control over the quality of products all the time. There will be some exception. An ideal solution for this situation is establishing a review system; it means that consumers will be able to give feedback on specific third-party sellers or products they provide.

Even if you see how eBay work, they will move a seller due to negative reviews. Amazon is even far more aggressive by penalizing a vendor based on poor reviews. So it is so important to choose the right enterprise software platform which can support you manage these aspects of quality assurance. You can refer those Magento extensions if you want to run a marketplace:

Magento Multi-Vendor



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