Online marketplaces generate almost 47% of total digital sales, making marketplace e-commerce one of the biggest shareholders in online revenue.
Successful marketplaces such as Etsy, Airbnb, and Fiverr, prove that the marketplace platform is highly scalable and flexible to any business industry and niche. One of the reasons behind the rapid growth of online marketplaces is that retailers do not need an inventory list. With a collaborative economy, retailers can develop a booming business without spending a lot of money to purchase initial inventory which involves many risks.
We will continue to see more innovation when it comes to building and running online marketplaces. With today’s technology, anyone can launch their marketplace in a matter of weeks. However, the launch is just a start and more factors need to be considered for marketplaces to be successful. Among those factors are platform functionalities that vendors and businesses look out for. Let’s have a closer look at the criteria you should consider when choosing the best marketplace platform provider for your business.
1. Seamless vendor onboarding
Wide assortment provides a competitive advantage to the marketplace and often becomes the main reason why customers prefer to shop from your multi-vendor e-commerce platform. That’s why the success of your marketplace largely depends on the number of high-quality vendors and products you manage to acquire.
However, the vendor acquisition process is often not as easy as it seems. Successful vendors with a good range of competitive products usually don’t have an urge to joining additional distribution channels, especially if getting on your marketplace requires a lot of time or resources.
To remove this entry barrier, it is highly recommended to make sure the vendor onboarding process is simple and fast. Integration with third-party e-commerce software allows your marketplace to seamlessly fit into the vendor’s existing business ecosystem. With such integration, the marketplace owner and vendors won’t have to spend hours or days manually uploading their list of products, updating pricing and inventory levels. Instead, they will be able to simply pull all the products from their existing online store (e.g. Shopify, BigCommerce, Magento). Such a seamless onboarding process is one of the key factors, if not the main one, for getting more vendors on the platform and allowing the marketplace to scale.
2. Vendor order management
We believe that a powerful marketplace platform must also be easy for Vendors to use. A good marketplace software should provide you with tools, to make vendor order management seamless and efficient.
For example, Omnyfy offers a comprehensive management interface for Vendors to receive and fulfil their orders with complete control over the pick-and-pack process. Vendors receive notifications via email or through the Omnyfy Closer Vendor app every time a new order comes through. They can print out pick-and-pack slips for individual items or the entire order. Meanwhile, customers receive notifications at every stage of the fulfilment, staying informed throughout the process.
On top of that, thanks to the integration capabilities, vendor-owned stores (e.g. Shopify) get automatically updated with the marketplace orders, pulling in the orders from the marketplace, automatically updating the fulfilment status and adjusting inventory levels.
3. Vendor payout management
Payout refers to disbursing or paying out of funds received from a customer to Vendors. The ability of the platform to accommodate multiple fee types (commissions, fixed disbursement fees, transaction fees, transaction fee surcharge, category commission) is key to organise an effective vendor payout process. The flexible fee structure at an individual vendor level is also an important factor, especially for the marketplaces that want to tailor the fees and charges for individual Vendors based on negotiated rates.
4. Multiple shipping options
When a vendor sells a product or service on a multi-vendor marketplace platform, the business will take part in its fulfillment.
When building a marketplace, owners must make sure platforms have the ability to integrate courier services to provide flexible fulfilment options. This ensures that vendors have a seamless experience when fulfilling orders for their customers. By identifying target vendors, the marketplace owner can come up with a list of necessary shipping options. The drop-shipping model and centralised delivery are the two most popular variations of the fulfilment model, however, if the marketplace platform can support a combination of both – that is the best scenario.
It’s also good to note what couriers the marketplace will support. Not all courier services will serve the user’s immediate vicinity of the proximity of the ideal customer base. Providing logistics services in the provider’s area or at least offering a way to inject a supported courier into the process is highly beneficial.
5. Comprehensive product management
Offering great product management features such as advanced search, should be a priority to help vendors and customers reach their goals with ease.
A sophisticated, multi-layered product catalogue is a must for any e-commerce store and marketplace. Advanced marketplace-specific catalogue features can help navigate site visitors through multiple vendors and hundreds or even thousands of products. For instance, Omnyfy’s marketplace catalogue allows a customer to compare products across different vendors based on defined product attributes and comparable values, which enables the marketplace to provide an excellent customer experience and help buyers find exactly what they are searching for.
Another thing to consider is product pages. Sellers on your marketplace should be able to quickly and easily create new product catalogues. Make sure that your sellers include descriptions, images, and details including availability, variations, delivery information, and more.
6. Multiple payment options
At the heart of e-commerce is commerce – and commerce cannot happen without an exchange of value. That puts a premium on payment gateways and payout terms, which is one of the main considerations when finding the right e-commerce software for vendors.
The preferred payment method of global online shoppers is eWallets, with 36% using this form of payment. Setting up a marketplace that supports multiple payment options, like a credit card, PayPal, or bank transfer, is a must.
In case the marketplace is in the business of selling subscription-based products and services, providing recurring payment systems can be a great solution. It enables automated payments so that the marketplace operator does not have to bill clients manually every month or so.
One of the biggest challenges in developing an online marketplace is figuring out which business model works best for a particular business. Hence, if a marketplace owner needs to spend more time learning and improving their business, they can start with a Minimum Viable Platform. A lot of marketplaces choose to start small, while refining their unique value proposition, designing their transaction flow and expanding their vendor network.
However, it is important to think long-term and not get trapped in this initial stage. Once the business passes through the Proof of Concept Stage, the growth stage begins. It is extremely important that technology doesn’t become a constraint. The platform should be flexible enough to allow the business to build on functionality, pivot, and even branch out into other markets or geographies.
To make it possible, a marketplace owner should consider the flexibility of the platform at the start to make sure the tech has enough features to support all the possible scenarios the business may adopt in the future.
8. Platform maintenance
There are a few other aspects of the platform that are hard to account for at the planning stage. However, such invisibility can sometimes make or break the marketplace.
One aspect is platform maintenance and sustainability. Before locking your business with a particular marketplace solution provider, it is important to explore how easy is it to operate and make changes to the marketplace after it is launched. You should ask yourself – how much can I do with the marketplace without involving the entire team of developers. This often comes to specific details on the platform. Can you do product-based marketing? How detailed can be SEO optimisation of vendor stores and product pages? Can you manage the content, e.g. update text or images on the marketplace by yourself, without engaging the tech team?
Here at Omnyfy, we see an increasing number of requests from businesses with already existing marketplaces. Only after the launch of a newly created marketplace, they discover that their marketplace platform has significant limitations or is difficult to manage. Sometimes, in this case, building a new platform with the right provider is easier and even cheaper than carrying monthly maintenance costs of a non-flexible marketplace technology. A lot of these businesses eventually decide to write off their marketplace as a sunk cost, while investing in a new one with more granular functionality.
To avoid such waste, spend more time upfront, going through all the possible scenarios of your business, learning about the technology you are planning to use, its capabilities, risks, and limitations.
Platform safety and privacy are important criteria, especially for larger companies and enterprises. This aspect depends on the technology provider’s internal policies, as well as the environment each marketplace uses. With SaaS marketplace software, all marketplaces are built on a shared environment. This means that any minor change to the platform may affect all clients and their marketplaces. While PaaS model provides each marketplace with its environment, ensuring the maximum level of security, privacy, and a lot of room for customisations.
There are a lot more criteria to consider when choosing between SaaS and PaaS model marketplace platforms. Read one of our articles to dive deeper and decide which one works best for your business.
10. Technical support
It’s always safe for us to assume that any technology will require technical support at some point. Therefore, the software you sign up for must have good customer support. Check reviews from other users to ascertain a marketplace platform’s level of responsiveness and level of technical support. Doing this small but significant task will help you avoid anxiety and save you a lot of time in the future.
Sometimes expensive does not equal quality. Quality of the platform versus the price point varies across the industry based on the business model and the strategy of the technology providers. Depending on what the marketplace provider’s go-to-market model is, your price might include huge markups passed from sales and marketing, while the platform itself might not satisfy your needs. To get the best value for money, look for product-focused companies that are constantly investing in their marketplace technology, adding new features and capabilities and, improving user experience. The right platform will provide you with a solid basis to build a successful and scalable marketplace.
If you have a marketplace project or would like to learn more about Omnyfy’s marketplace technology and its applications, reach out to have a chat.