Home Business How to Start a Multi-Vendor Marketplace: Main Steps

How to Start a Multi-Vendor Marketplace: Main Steps

by Tracy Finke

As the e-commerce market continues to grow rapidly with increasing online purchasing trends due to its convenience and speed, Codica specializes in marketplace development, recognizing the profitability and value such platforms offer stakeholders, now let’s delve into the main steps for building a successful multi-vendor platform.

The e-commerce market is growing and expanding day by day. People tend to buy online more and more, as it is convenient and swift. We, at Codica, specialize in marketplace development, and we know that such online platforms stand for profitable, valuable, and fast-moving business, beneficial for all stakeholders. Let’s cover the main steps that you need to build a successful multi-vendor platform.

What is a multi-vendor marketplace?

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Such a marketplace is an online store where many vendors sell their products and services. A prominent example of a multi-vendor marketplace is Amazon. The platform boasts a large-scale catalog of products ranging from everyday items to electronics.

What makes a marketplace different from other businesses is that the owner links the sellers and buyers. The marketplace is a win-win for all parties involved. It gives a brand with scalable revenue to the marketplace owner. Buyers get different products on one platform, and sellers gain a greater customer base, thus, more business.

That’s it for the basics. Let’s grasp how you can make your own multi-vendor marketplace.

Find the for your multi-vendor marketplace

To make your marketplace successful, you don’t need to sell everything to everyone, like Amazon. A large marketplace may focus on particular products. Take Etsy or Uber as examples.

If you sell products and services of various categories, the buyers are likely to stay with those who they already know. But when you specialize in a narrow offer, the customers will trust you more, as you suggest tailored products and services that appeal to them. Thus, your marketplace provides better customer service, exclusive items, and lower prices.

Suggesting specific articles to niche buyers means less competition and advertising cost. But note that your target audience should be wide enough, and there should not be many companies that offer such products too.

So, I recommend you narrow your focus, select a particular category of items and your target audience. Also, decide on your location, as your customers from a certain area will form the community of your buyers and sellers.

Research the market rivals

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Once you have chosen a niche, research your competitors. One of the effective techniques is to find out their weaknesses and provide a better experience to customers. Here are the main means that help you jut from other platforms:

  • Unique inventory
  • High-quality products or services provided
  • A lower commission rate for vendors
  • Advanced loyalty programs for buyers.

Choose the right monetization strategy

The next step is to pick the relevant business model. A profitable and sustainable business strategy is vital to make your start-up successful. It should meet your interests and be satisfying for sellers and buyers.

Let’s take a look at the most widespread monetization strategies for a multi-vendor marketplace

  • Subscription fee that allows access to the platform for buyers. This model best suits for suppliers to present their services or search for clients on the marketplace.
  • Commission that the users of a marketplace pay to the platform owner for each transaction. This fee can be charged if you give both sides of your marketplace enough value, so the users are ready to pay the commission.
  • Listing fee when the sellers post ads on your platform. This approach is better for them than a subscription fee or commission, as listing fees are usually cheaper.
  • Lead fees that suppliers pay the marketplace to bid for the customer who posts a request. Lead fees are similar to the listing fees, but in this case, providers will know if they are connected with probable customers.
  • Premium listings that keep offers higher in the feed for a set period of time. The featured listings help sellers or service providers be on top of other postings or in a particular category.
  • Advertising that helps sellers to stand out from other suggestions. This makes a seller’s offer more noticeable for customers compared to other providers.

Define the required features

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You need to create a list of the required functionality that you will implement on the platform. The features should make your multi-vendor marketplace user-friendly and secure. Let’s take a look at the most crucial ones:

  • Payment options. They should be designed for multiple payment operations. And, of course, they must be secure.
  • Authorization and security. They make the transactions between buyers and sellers safe and secure.
  • Registration for both sellers and buyers. It should be easy and include the main details, such as name, email, phone number, and password.
  • Controlling items listing. This feature allows sellers to keep information on their products up-to-date.
  • Product pages. They should include high-quality images of the products and detailed descriptions, so your buyers can make the best choice.
  • Search and filters. These functions help the buyers to decide on what they want or help them with a fast transaction if they already know that. They also should assist sellers in the right organizing of their articles.
  • Statistics. This allows sellers to see their transactions and information on their sales.
  • Ratings and reviews. They enable sellers to track feedback from the buyers. This encourages sellers to make their products and services better. Also, it allows buyers to decide which seller to choose.

But keep in mind that your platform should load quickly with all chosen features. You don’t want the users to quickly leave your marketplace, right? Most users wait less than three seconds for the website to load, and then they leave it. Thus, quick loading brings more conversions to your website and additional revenue.

Create and launch a Minimum Viable Product

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To save time and funds, you should build an MVP version for your multi-vendor marketplace first. Minimum viable product, or MVP, is a version of a website that includes basic features and shows the core value of your marketplace.

Choose the main problem that your website will solve and create an MVP based on it. As MVP includes only the basic features, it will take you less time and cost to develop it. Early adopters of your MVP will give their feedback, and you will know if your idea appeals to them or not.

The MVP approach gives you more flexibility on what features to include in your product later. With earlier feedback from the customers, you can choose what suits their interests best.

Take care of the design


Pay attention to your marketplace web design. It influences the customers’ feelings, emotions, and decisions. If your customers are satisfied with the functionality, it will boost sales in your multi-vendor marketplace.

Make navigation of your platform easy and clear for the user. Let them get a clear idea of how to use functionality and move through categories. An intuitive and eye-catching design will give your users a positive experience.

The photos and descriptions of the products should be detailed but not overwhelming for your users. Let your platform design be balanced and concise.

Solve the chicken and egg problem

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Attracting both sellers and buyers has always been challenging for start-ups. In the beginning, you don’t have many products and services, so buyers hesitate to join your multi-vendor platform. On the other hand, sellers are not interested in your platform either, as there are no buyers on your website. You need to attract both of them, but how to decide which side to choose first? This is the chicken and egg problem.

However, there are numerous ways to overcome it:

  • Draw the hardest side. Decide on which side is the hardest for you and focus on attracting it. When you build partnership relations with one group of users, the other one will see the value of joining your platform.
  • Organize live events. Live events help to build a community of users that become your customers. Invite a prominent speaker or influencers in your industry, spread the word about your event through social media. Thus, people will know about your platform.
  • Become a problem-solver. Promote custom products that solve the problems of your potential buyers. This will encourage them to connect to your platform. As soon as your customer community is big enough, sellers will join it too.
  • Promote your platform with ads. Choose the target customers who you’d like to test your platform first and spark their interest in your website. For example, attract them with free credits or other bonuses for first use.


Multi-vendor marketplace development is quite a challenging task. The core idea is to carefully study the needs of your clients and satisfy them properly following the above steps. You need to take care of all the issues from a convenient product/service page to a secure payment process. With all that done, your marketplace will be successful and attractive to many users.