Summary: The shopping habits of customers have altered towards a stress-free purchase in which they can have all they want at one point. As such, most traders are turning to established platforms like Shopify to set up their market. But is creating a multi-vendor marketplace in Shopify a good idea?

A multi-vendor marketplace is what we refer to as a certain kind of e-commerce shop that has more than one seller offering their products through a common platform.

However, Shopify is not a proper multi-vendor marketplace software. Its primary purpose is to facilitate single-vendor online stores, so small enterprises can easily use them.

Nevertheless, alterations aimed at supporting a multi-vendor model can be made through third-party applications, add-ons, and customizations through Shopify. With their features such as vendor management, commission structures, and storefronts specific to vendors these apps enable the creation of a marketplace on Shopify. Thus predominantly, it is dependent on third-party integrations along with plugins. Also, this makes it essential to work with an expert Shopify marketplace development agency.

How to build a multi-vendor marketplace with Shopify?

It is not possible to build a multi-vendor marketplace with just  Shopify. Shopify should be augmented with custom-developed solutions or third-party software for the purpose. The primary ways to set up the multi-vendor marketplace are as follows,

Manual Approach:

This is the quickest & lowest cost way to build a multi-vendor marketplace on Shopify and it is the best way to start selling products in the shortest amount of time. In this, there is no need to install Shopify’s multi-vendor plugins. However, this should only be considered for a very basic proof of concept (MVP) solution.

Suite of 3rd party technologies:

The 3rd party tools can be used in automating the manual steps and improving the approach. A Product Information Management (PIM) system such as Akeneo or Pimberly. These solutions provide an interface for sellers to log in & perform their required listing management without needing to rely on an admin. You can connect up the ERP system to keep stock levels automatically in sync. You could also enable shipping & tax rules to be integrated into the seller’s interface using platforms such as ShipperHQ & Zonos respectively.

Suite of custom-coded solutions:

Next, you can create your custom-coded solutions that you plugin to Shopify. You can even build your own PIM system. This will give you the ability to create your custom seller interface.

Shopify multi-vendor plugin:

This is a quick & easy option but, with limited flexibility or reliability at scale. These plugins are developed by 3rd parties & give you an integration from a Shopify store to an interface outside of Shopify for sellers to manage their products & orders.

Now, let’s explore the key benefits of using Shopify to build a multi-vendor marketplace,

Shopify Multi-Vendor Marketplace: Pros

Unparalleled Product Variety

A major advantage associated with having a multi-vendor marketplace in Shopify is that it enables you to provide your customers with more types of products. On multi-vendor platforms containing different sellers, there are numerous product choices available compared to single-seller sites. Thus, a larger variety acts as a magnet for many potential buyers, resulting in a rise in sales across all vendors.

Enhanced Credibility and Trust

A multi-vendor marketplace such as Shopify is a platform that fosters customer trust and credibility. Customers project more confidence in that platform which provides products from numerous sellers because it means that the platform has vetted such vendors and availed them to the market as credible. With this, there are increased sales and repeat buyers.

Cost-effective for Sellers/Vendors

In case you are a small vendor with low financial capability and struggling to establish an e-commerce site, then consider opting for Shopify marketplace developmentthat can save much on costs. Whenever running the platform, the different vendors will share its costs thereby saving their amounts of money through borrowing or collaborating. Additionally, an increased level of exposure to more clients always equates to higher amounts spent on goods by customers which finally results in higher profit margins for sellers.

More Cost-effective than Custom Code

The majority of a multi-vendor marketplace that is constructed from scratch costs between $50,000 and $100,000. This is an enormous sum to pay for establishing a brand-new marketplace. Furthermore, it becomes quite difficult to come by a high-quality development team that can partner with you in developing your marketplace.

On the other hand, building a multi-vendor store using Shopify would take less time and cost less than building your store from scratch. This is because you can take advantage of some basic features in Shopify’s platform to create your own online shop. However, it must be remembered that Shopify is not built as a marketplace solution. You would be required to hire an experienced Shopify marketplace development company that would help you to work with various plugins and third-party integrations to ensure a smooth multi-vendor store development on Shopify.  

Increased Scalability Options

Scalability is yet another advantage offered by multi-vendor marketplaces such as Shopify. The platform’s increasing number of vendors leads to an increase in product diversity that can lure more customers. Moreover, there are several tools and integrations available on Shopify that make it easier for vendors to operate their eCommerce stores while expanding their businesses.

Now,  it’s time to know the challenges associated with a multi-vendor marketplace using Shopify,

Shopify Multi-Vendor Marketplace: Cons

 Vendor Management 

Handling a multitude of suppliers in one space is no easy task on the Shopify platform. To some extent, Shopify provides several tools for such vendors to manage their stores, however, questions arise in terms of stock control systems, costs, and addressing different supplier-related matters. Additionally, suppliers might have varying levels of eCommerce proficiency which poses more challenges.

Transactional Fee

Shopify applies a transactional cost to every single sale that takes place on its website and this might become an extremely high burden for merchants. Besides this charge, there is also a monthly subscription payment made by sellers using the site. Even though the costs levied by Shopify are better than those imposed by other online shops, they can still affect one’s earnings negatively.

Marketplace Marketing

In a multi-vendor marketplace such as Shopify, merchants can struggle to stand out from other sellers. This leads to difficulties for sellers in growing their business and driving traffic to their individual shops. The sellers may need to spend more on promotion and brand building so that they can become unique on the site.

Shipping Origins

Modern marketplaces are expected to impose a single shipping fee, a feature that has attracted customers who shop from different vendors within the same marketplace for cheaper shipping rates. Hence, marketplace owners have built relationships with shipping service providers to ensure that they can always send a package for several items bought from various vendors.

Nevertheless, there is no option to merge multiple vendor orders on any of the Shopify marketplace applications when considering website viability. Many of these applications allow combining shipping costs from different vendors into one checkout page. However, we doubt that clients may take lightly paying multiple shipping fees or finding out that their total cost of shipment far exceeds what they had anticipated.

Product Quality Control

Ensuring quality control can be a daunting task for an online marketplace such as Shopify which has many vendors. This is because the vendors may have diverse specifications on product quality, delivery services, and customer service. Although there are some tools that Shopify provides for quality monitoring, it remains the responsibility of each vendor to uphold their standards.

Conclusion

In case you are determined to set up an authentic kind of competitive marketplace on Shopify, working with a company that offers Shopify development services would be the best way to go. Only through collaboration with an experienced Shopify marketplace development agency one can ensure a smooth function for their Shopify marketplace free from any inconveniences for the vendors or customers. If you have any questions about marketplace development and want a professional team to handle the project, CartCoders tends to be your able and trusted partner. Feel free to contact us for a consultation!

Categorized in:

Shopify Marketplace