Online shopping of late is in a trend that lets people buy their daily needs from the comfort of their bedroom and get delivery at their doorstep. Thanks to the availability of various eCommerce websites that gives buyers choice for purchasing and thus, it prompts them to go for online shopping.

According to Statista, eCommerce sales are expected to reach up to $4.2 trillion by the end of the current year and it is expected to reach up to 6.5 trillion by the year 2023. This is an eye-opening figure for many eCommerce businesses.

This is also encouraging data for eCommerce business owners who are often desperate to implement the latest trends that can improve their sales and ROI. Therefore, they should focus on consumer behavior.

They should be aware of the fact that customers wish to access the Marketplace that lets them purchase everything under a single roof, no matter what types of products they seek to purchase. This increases the importance of the term ‘multi-vendor marketplace', which is something that every eCommerce business owner is expected to be aware of.

Multi-vendor marketplaces such as Amazon, eBay, and others nowadays have become a first choice for online buyers to shop quality products and get these delivered to their doorstep within the specified time-frame. Before we delve into benefits and challenges, we are going to focus on basics.

What is a Multi-Vendor Marketplace?

The credit goes to the continuous technology revolution that brought the term online marketplace for catering to specific requirements of consumers and lets them find easily whatever they are looking for.

The major benefit of developing a marketplace is that it allows customers to make a selection of different options before they finalize anything to shop. Apart from this, the multi-vendor marketplace is also able to cope with the fluctuation of consumers’ shopping tendency, demand fluctuation, etc.

Benefits of Multi-Vendor Marketplace

Let’s talk here about a myriad of advantages of having a multi-vendor marketplace for your eCommerce business.

Availability of Varieties of Products

As the name suggests, the multi-vendor marketplace is a group of a large number of sellers engaged in selling a wide variety of products. It helps customers go through the available products to make the selection of the right products that they are seeking to purchase. Customers also like to access the marketplace that lets them discover multiple sellers of the same products that they want to shop.

Boost Traffic

The availability of a number of vendors in a single marketplace lures customers. Rather than accessing different eCommerce websites for buying multiple products, customers prefer to access a single marketplace. It helps your multi-vendor marketplace generate higher traffic that brings great opportunities in terms of improved sales and revenue.

Prevent from Inventory Maintenance

Maintaining inventory to cater to the demand of customers is something that is quite necessary for the eCommerce business. It plays a vital role in making your business successful. But, in the case of a multi-vendor marketplace, one doesn’t need to bother about maintaining inventory since its group of multiple vendors.

And every vendor is concerned about maintaining its own inventory to match the growing demands and expectations of their customers. As an owner, you only need to focus on improving your website to scale up your business and grab multiple growth opportunities.

Reduce Operational Cost

An eCommerce business also requires a higher operational cost to run smoothly and successfully. But, operating a multi-vendor marketplace doesn’t need a higher cost. The case is completely different. It prevents you from investing your time and money for various essential works, be it maintaining inventory, product designing, logistic management, or others.

Vendors are responsible to perform all these tasks. The marketplace just needs to focus on improving its visibility, brand name, etc. They should leverage social media platforms to maximize its reach among target customers across the world.

All they need to do is to make sure that their website is running smoothly. They just need a small team to operate their marketplace and ensure its smooth function. This clearly indicates that it tends to bring down the overall operational cost.

Earn Higher Revenue

As mentioned, the multi-vendor marketplace lets buyers find everything to buy in one place because of the availability of a wide range of products. This brings a great possibility for buyers to get their desired products at the same time. And it brings good sales opportunities for businesses to earn higher revenue.

Challenges for Multi-Vendor Marketplace

Like other businesses, a multi-vendor marketplace also faces several challenges that are mentioned below.

Maintaining Product Quality

No matter how many products your offer, customers will buy them only if they find your products are quality based. In the multi-vendor marketplace, different vendors are involved in selling products. And they all don’t maintain the quality of the products. This comes as a great hurdle for the marketplace to maintain its strong brand name and also constantly lure customers to buy their products.

Managing Customers

If customers find any issues about the products that they purchase, they complain directly to the marketplace rather than the particular vendor. So, it’s the marketplace’s responsibility to resolve the issue.

Be it product returns, refund, or product replacement, its marketplace’s responsibility to do anything to resolve complaints while ensuring customer’s happiness. Resolving a complaint is indeed a time-consuming process, which makes it necessary for the marketplace to have a separate team to handle the case.

Competitive Prices

Since the marketplace accommodates a large number of vendors and enables them to sell their products. It’s a common objective for all vendors to get the maximum number of customers. Moreover, if two or multiple vendors offer the same products, all of them wish to be ahead in the race of getting maximum customers to maximize their sales and revenue generation.

This brings the price competition, which encourages vendors to keep the lowest price of their products. It affects the revenue of the marketplace, as if any products vendors sell at the lowest cost, then the marketplace also gets the lowest percentage of commission.

Conclusion

So, above are some greatest advantages and challenges of the marketplace. While developing your own marketplace, you should be aware of these details that will help you overcome the challenges and harness its maximum advantages to keep your business on the right track.