A marketplace is a multi-vendor marketplace platform that connects third-party merchants or retailers directly with customers. An online multi-vendor marketplace acts as a middleman between retailer and customers and usually takes a commission on each sale. There are literally multiple revenue sources for an internet marketplace.
The concept of the online marketplace is changing. The line of differentiation between traditional stores and online marketplace is lowest. The future of the online marketplace is in an exceedingly completely different direction.
The online multi-vendor marketplaces are building an ecosystem to seal the deal by not only offering the huge list of products to purchase but also by building an ecosystem to retain the client by giving every and everything client desires.
Hurdle 1: Attracting customers
In the beginning, every start-up faces the biggest challenge — necessity to attract users. It is vital to get both sellers of services/products and people who are ready to buy from them.
The task is to build strong trustworthy relations with sellers to make them use the platform again and again. Businesses also need to attract customers to create demand for the products offered by sellers. Here appears the classic problem — you won’t attract customers unless you’ve got sellers.
But how to attract sellers unless there are customers ready to buy the product? This is the ‘chicken and egg problem.’
Begin with sellers. It also makes sense to start with targeting a small city or area and find sellers first. Provide them with reasons to join your platform, and they might be interested in starting selling there. Just make sure that all sellers work in the same product niche as you.
Then start getting buyers, as you have what to propose to them and can show that your platform is trusted. At this stage, it’s better to continue focusing on the same area. Only after getting a stable base of sellers and customers you can start expanding. Making sure you’re fully mobile-optimized is also a major issue that needs to be addressed.
Hurdle 2: Defining customer’s problems
The online multi-vendor marketplace platform can be made successful in a long-term perspective only if it solves real problems of users. Without providing a useful and up-to-date service, the marketplace won’t last long. The only way to determine the real problems of customers is to understand people whose lives you are about to improve.
The success of the start-up directly depends on the organization’s knowledge of its customers. The closer to customers your organization is, the more chances for winning the market you have.
Define the larger target audience that has problems which you are solving. Identify potential customers out of the larger target audience. These are people with a particular problem that your marketplace solves.
Create an ideal customer profile (ICP). An ideal customer is a person whose problems you can solve and who is ready to buy your product. It’s even better if this person is already looking for a solution to the problem.
Hurdle 3: Adjusting user interface
The owner of the marketplace platform is responsible for the way the product is presented to customers. As a result, sellers have a little control over the way users see their product. In the e-commerce business, sellers have full control over the product presentation.
Online sellers don’t have such liberties. Though it’s crucial for them as it determines whether buyers will buy the product or not. On the other hand, marketplace companies need regulations to restrict formats, product description, quality of the photo and video content by making use of multi-vendor marketplace software. This helps to keep their platform working and to provide buyers with excellent user experience and interface.
You can implement an option that will allow sellers to adjust the interface of the shop up to their needs. Make your developers work a bit more and build an additional admin panel. Such panel will let sellers create the dashboard of their dream.
Think about making the process of building a customized platform easier for sellers. Do it by adding the educational guide that will lead them through all complicated processes. Also, you can offer an online tool to process full-sized photos and compress them without losing quality using the many multi-vendor marketplace softwares available. It will make your platform work faster.
Hurdle 4: Growing Revenue
It’s important to build a marketplace platform, make a connection with sellers and get a stable customer base. It will not work properly without a business model. There are different types of online multivendor marketplaces, and each of them needs to have an elaborated business model to earn revenue. It’s necessary to make the multivendor marketplace platform profitable for you and convenient and lucrative for buyers and sellers of your marketplace.
Make every transaction work for you. It means you should start charging a fee on every transaction that is conducted on your platform. This is a widespread way of getting profit from the marketplace. Sellers usually prefer working with the transaction fee model. It lets them avoid paying to the marketplace until they get the first profit. This business model is very convenient for owners of the platform too.
Think about the flow of transactions. You need to have a clear strategy on how to pay to your sellers and ensure them a profit. It’s quite popular to move money only when you are sure that buyers will receive the products they paid for. That’s why you need to discuss this issue with developers. They can implement the payment system that will guarantee the secure flow of money to every side of users.
Also be careful to monitor product reviews for fakes, or you’ll face issues with your reputation that can drive customers away, and ultimately the sellers will follow them away from your site.