Avoid These Mistakes While Launching A Multi-Vendor Marketplace

Multivendor Marketplace Mistakes

Multi-vendor marketplaces (also termed two-sided, peer-to-peer or simply online marketplaces) comprise online eCommerce platforms where:

Third-party vendors (or sellers) present their products for sale

Buyers purchase products from multiple vendors

The marketplace manages payments and creates revenue via fees

This makes marketplaces separate from regular online stores where the buyer buys products from the store owner directly.

Numerous online entrepreneurs are launching their ecommerce businesses to achieve customer satisfaction to grow their business profit. But many of them are encountering struggles with their online marketplace software.

The causes are either they observe the incorrect marketplace strategy or they stepped into an unsuitable platform. So, by exploring deep about these reasons, these are some of the mistakes that you come across in marketplaces.

# 1 Business Plan

business planPrior to your starting to think about the technology to have in place to build your marketplace, you require to possess a business plan. Following this will keep you on the right track and provide you metrics to measure. Skipping straight to a platform without considering the way they will build their business will lead to failure. You will lose your way without a road map.

In simple terms a business plan is a document that highlights the different aspects of your business. This should comprise the following:

  • Set out your mission in clear terms
  • The way it will be funded
  • Financial projections of 18-24 months, comprising needed funding, profit and loss projections
  • Technical upkeep of the marketplace
  • Clearly earmark the target users (customers/vendors)
  • Advertising and marketing plans
  • Declare your commission rates
  • Analysis of your rivals including commission structures, price ranges, affiliate systems besides more
  • Onboarding systems for customers & vendors

Your business plan will aid you focus in tough times and also know where things may or may not be functioning. Plenty of online resources exist to aid you with developing a business plan. You plan should mature with your business as you discover what works and what doesn’t.

#2 Revenue Models

revenue planThere are numerous multi-vendor marketplace revenue models existing. You will also require to evaluate your competition and view their rates which will work for you. Two of the most popular models are:

  1. Commission-based
  2. Membership-based

Subscription Or Membership Model

Subscription-based revenue generation is among the oldest models, and is still thriving today.

A marketplace site has innumerable ways to leverage this model to create some additional revenue from the business:

Membership for sellers: Asking vendors/sellers/merchants to subscribe to a membership for registering a merchant/seller account on your marketplace.

Membership for customers: Asking customers to subscribe to a membership for obtaining benefits like free shipping, Shipping package insurance, same-day delivery, early access to flash sales, etc.

Membership for customers part-2: There is another type of membership for customers that marketplaces selling virtual products like Videos, MP3s, Software, etc can utilize. Here, basically, your primary revenue generation would be through the premium members only.

For instance, Netflix videos library permits only the subscribed users to view the videos. It mainly follows a subscription-based revenue model.

Sales Commission Revenue Model

Acquiring commission from the vendors/seller/merchants on their sales is the leading revenue generation model on which a considerable number of marketplaces are existing.

The whole community of retailers and sellers practise this model. There are different online marketplaces that permit the e-merchants to sell their products to a bigger chunk of customers. The sole difference is how and how much commission sellers are required to pay for selling on a marketplace. Previously the complications of coping with the inventory management and order processing of the 2 stores scared the e-sellers to opt for multi-channel selling. However, the work has become simpler now. Knowband presents a line of feature-laden marketplaces integrators to the eCommerce sites that are oriented on the CMS platforms like Magento, Prestashop, Magento 2, OpenCart, and others. With the aid of these intuitive integration solutions, you can retain your marketplace shop in sync with your online shopping sites.

Examples of online marketplaces that permit multi-channel selling include eBay, Etsy and Walmart.

The sales commission revenue model is not that easy as it seems. Various marketplaces use different approaches to earn the commission. You are required to initially decide the commission model that you wish to use and then customize your seller management panel to manage the commissions according to your requirement.

You must also know that the majority of the multi-vendor marketplace extensions back only the per-product-sale commission. If you desire to utilize any other commission model, then you might require to employ an extension or obtain the requirements developed by a professional eCommerce development company. 

#3 Legal Requirements

legal requirementsConducting business involves setting up your legal structures, agreements and documents. This is no separate when beginning your multi-vendor marketplace. These are simply usual tips and you should consult a lawyer and accountant concerning these various legal aspects.

  • Do you need insurance?
  • Do you need a business license?
  • Privacy policy
  • Vendor agreement
  • User agreement
  • Policies
  • Refund policies
  • Vendor agreement
  • Support policies
  • DMCA requirements
  • Copyright notices
  • Jurisdiction requirements

Taxes: Managing marketplaces taxes and your business taxes can become hard when coping with your taxes. If you belong to the United States new Marketplace Facilitator laws will require to be considered when you create your marketplace.

Platform: The aspects of the platform of your multi-vendor marketplace are described as the technology that fuels your business. Following the business plan, this is the most crucial aspect of your daily operations. The following aspects of your platform are where we view the most popular mistakes.


  1. Payment solutions
  2. Market expectations
  3. Payout solutions

Selecting your platform is extremely important and should be analyzed in detail. You can employ a hosted solution or you can build your individual marketplace activated by WooCommerce and WordPress.

# 4 Outline The Essential Marketplace Features

The simplest way to fritter away time, effort and budget when developing an online marketplace is to design features not needed by your users.

Marketplace entrepreneurs should begin with the essentials and launch a minimum viable product (MVP) early, then better the platform as the business evolves and the requirements become more clear.

The essential marketplace features can be grouped into features for sellers, buyers and the platform itself:

Essential Seller Features

Your sellers wish to sell their items and receive payment. This means listing, selling and dispatching products effectively.

To make it simple for your sellers to begin on your platform, highlight on streamlining the onboarding process. The easier the onboarding, the more probable new sellers will be to join you.

A splendid onboarding process involves clear seller terms and useful landing pages, plain seller signup and a simple way to import and manage their product catalog.

To render selling and marketing simpler, present your sellers at least the elementary sales and marketing tools – like discount code management and product promotions.

Finally, ensure your sellers can openly interact with you and the buyers. Public product questions and a private messaging system will be a nice start.

Essential Buyer Features

What’s your aim when shopping on Amazon? To discover, buy and receive the products you’re searching for rapidly and easily.

So, make it extremely simple for your buyers to search for products and browse categories. A search bar that works (really a low bar), faceted product filters and information-filled product pages make a good start.

Easy checkout is the next step. The simpler placing an order is on your platform, the more probable the buyer is to pass through. A modern checkout process is mandatory – ideally one that renders it possible to buy from multiple sellers with one payment.

Your payment methods should make sense for your users. Stripe is excellent and complete, but it’s of no use if the shoppers in your area favor cash on delivery. In most cases, you will require a split payment gateway and/or a manual processor like cash on delivery.

Also, make it easy for your buyers to see and tack their orders, and get notified when the status alters.

Communication is vital, also. Permit your customers to ask sellers pre-sales questions, contact them if they have order-related questions and leave feedback. This will assure your platform offers a great buyer experience and aids retention.

#5 Market Expectations

expectationYou would have done your competitor and market analysis during your initial business plan to discover what features and systems are being used by your rivals. Don’t attempt and contest against the biggest players in the markets

Don’t attempt to compete with the bigger marketplaces

Locate a nice niche and instill it

The absence of noise is your strength for your customers as well as vendors

# 6 Payment Processing

payment processingMarketplace payment processing is always more complicated as against processing payments in a normal online store.

Initially, you will required specialized marketplace payment gateways to permit customers to buy from many sellers simultaneously and split payments at checkout.

There are more payment solutions providing support for marketplace payments currently, though the implementation may be tricky.

Different aspects of the payment gateway include:

  1. Fees and charges
  2. Chargeback fees
  3. Payout schedules
  4. Refund processes

These are some types of payments on a typical marketplace platform:

  1. Payouts from your platform to the sellers
  2. Subscription and fee payments from the sellers to your platform
  3. Order payments from customers to sellers
  4. Separate payment flows have separate implementation needs.

WC Vendors Marketplace backs any payment gateway built for WooCommerce to process payments from customers. This is entirely different from paying vendors their commission dues.

Lack of a suitable gateway and failure to make it work with your marketplace software will cause your trouble.

# 7 Payment To Vendors

paymentDetermine a time interval at which you will be paying each seller. You can remit them for their orders after 3 days or 7 days or whatever best fits your process. You can also chip in incentives over time to attract new sellers.

A few common vendor capable payment gateways comprise:

  1. PayPal
  2. Stripe
  3. Square
  4. MangoPay
  5. Escrow

Multi-vendor marketplace operations involve ongoing systems and processes that require to be planned and cultivated over time. You can install your standard operating procedures though you need to also test and review them as your business evolves.

A few of the running operations that belong to the common mistakes comprise:

  1. Customer support
  2. Refund management
  3. Platform maintenance
  4. Vendor support

#8 Platform Maintenance

Platform Maintenance

While picking your new marketplace software, figure out the type you wish to go with – standalone, cloud  or CMS.

Understand the features your platform requires. Ensure that the solution suits your business requirements – not simply in terms of the basics, but even logistics, payment processing and other vital features.

Frequently we notice the following aspects either badly managed or entirely forgotten.

Staging Server

A staging server enables you to test your themes and plugin updates securely. Its absence makes introduction and testing of new features difficult. A staging site makes it simple for you to have a planned update and maintenance schedule.

Request For Feedback

Prior to investing time and money in some features, request feedback from your customers and vendors. Only include the feature when it is absolutely essential. You often log in to a marketplace to do support and notice more than 70 plugins activated. Avoid this as it is a sure recipe for disaster.

#9 Refund Management

WooCommerce RMA or Return Merchandize Authorization draws out every business from the murk of refund and exchange. It aids WooCommerce product vendors from the problem and functions as a governing body to streamline ways to attain a cost-effective financial system.

Refund and Exchange with the ease of RMA offers with total refund and exchange system that fetches happiness to customers.

A few of the benefits it provides are:

  1. Extends simple refund features
  2. Admin/in-charge can enter refund reason for any customer refund
  3. Admin/in-charge can request for a partial refund amount of order
  4. Offer ultimate functionality of multi-vendor RMA plugin
  5. Admin can enter refund reason for customer refund
  6. WooCommerce with simple and safe Refund and Exchange Partnership
  7. WooCommerce RMA for Dokan

Ensure that your payment processor has nice fraud identification systems and refund processing or your operations may get congested.

#10 Customer Support

customer supportA few of the largest brands in the industry are encountering competition from small-time companies that are offering some of the best customer support and experience out there. Dollar Shave Club should have never occurred despite Gillette’s presence in the market. To the extent that Gillette had to plan a separate business model to compete with the startup.

Dokan, a multivendor marketplace for WordPress converts any WooCommerce store into a multivendor marketplace and extends much of its features. The pre/post sale support that the vendors or you offer to your customers can be a major deciding factor for your e-commerce site to grow. Since it will develop trust and brand awareness, better the public persona that your business contains.

The list appears something like this:

  1. Customer service counts more than price
  2. Existing contended customers are more prone to buy from you that fresh customers
  3. Word-of-mouth advertising is the finest kind of advertising that money can’t purchase
  4. Great customer service open doors for new partnerships and different opportunities.

The best part is excellent customer support will imply more customer retention. Providing customer support through a simple contact form and email is a mistake and it should be managed via a ticket-based system. The worst could be when a customer emails you and it goes to junk while you never respond.

The most popular ticket-based solutions include:


  1. Awesome Support (WordPress plugin alternative)
  2. FreshDesk
  3. HelpScout (used at WC Vendors)

#11 Vendor Support

Vendor support also comprises an important element of a multivendor marketplace. You cannot take for granted that your vendors will simply work it out. After building your platform you should design user guides on the different features you possess for your vendors. Offering a self-help support system will lessen the frustrations of your vendors and raise the probability of onboarding more.

By combining with the customer support mentioned in the earlier section you can effectively manage the queries of your vendors. A good idea would be to set up a seller forum for vendors to interact and assist one another. This will lessen your overall support load and raise the sense of community.


Summarily, multi-vendor marketplaces are a great option for you to start your large scale venture. You must research this option if you do not want to sell something specific necessarily. Contact companies that present multi-vendor website options and start setting up your store today.

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