Marketplace

Single Vendor Vs. Multivendor: Which Marketplace To Opt For?

December 1, 2022
table of Content
Rashmi Mathur
Account Manager @AtomChat
5 min read

First things first! Let us understand what single-vendor multivendor marketplaces mean. 

An online store where only its owner sells products or services, typically of a specific niche to their buyers, is called a single vendor e-commerce store or website. In the single-vendor marketplace, no person other than its owner sells their products. The store owner usually targets a well-defined audience for the business. 

On the other hand, an online multivendor marketplace is an e-commerce website or platform where its owner or admin lets many sellers register themselves to sell their products (or services). In the multivendor marketplace, customers can buy products or services from various sellers or brands over a platform that resembles a physical mall. This means that different vendors run their shops under a single roof, and people from diverse demographics buy products. 

Some hyper-successful multivendor marketplaces include: 

  • Airbnb and Uber in the rental space
  • Amazon, Flipkart, Etsy, and Walmart in products
  • Fiverr and Upwork in services

  

The key differences 

There are five ways in which single vendor marketplaces differ from multi-vendor strategies. These are in terms of:

Participants: A single vendor e-commerce store involves only two entities—the store owner and customers. However, an online multivendor marketplace entails more parties. These are the marketplace owner or admin, vendors (or sellers or suppliers), and customers. 

Risk factors: A single-seller online store is financially risky, as it focuses on just niche or limited categories. In contrast, the risk of losses in a multiple-seller marketplace is far less because. Largely because this model is vastly diversified, with many sellers supplying different offerings. 

Traffic size: The traffic comes from a well-defined community of buyers in a single vendor store. On the other hand, there's unlimited traffic in multivendor marketplaces. This is possible since shoppers can buy countless products from many categories or brands on this single platform. 

Revenue growth: As the owner of an e-commerce store, you are likely to see slow revenue growth due to low sales volumes. But as the promoter of a multivendor online marketplace with a vast and consistent sales volume, you can earn substantially. 

Product upgrades: We live in an age of super-fast product upgrades. Multivendor marketplaces constantly work on system and product modifications to keep up with this trend, as small packages from many suppliers power them. However, given the limited nature of a single seller and their well-defined community of buyers, these stores are slower in terms of upgrades.

 

Advantages of Single Vendor Vs. multivendor Marketplaces

Owning a single-vendor or a multiple-vendor e-commerce marketplace has unique advantages and disadvantages. 

The single-vendor marketplace strategy's advantages are:

  • As the owner, you get valuable insights into your niche and become an expert. Thus, you benefit immensely from your business leader identity. 
  • Attract increased attention and build influence using a less common niche. This creates a broader customer base. 
  • Manage your e-commerce store easily, as you need to promote just one category of products/services. 
  • Train your staff quickly and at a low cost, as you can do it yourself. 
  • Benefit from excellent user experience provided by your staff, trained by you. 

The multivendor strategy offers several advantages for buyers like: 

  • More convenience from the marketplace. Customers can avoid hopping from store to store. Instead, from anywhere around the world, they can buy the products they want from a single platform quickly in one go and at prices driven by countless competing vendors. 
  • Detailed information to compare the quality differences in products before making a buying decision. 
  • Tracking of orders to get products on time. This enables powerful buyer-friendly features. 
  • Preview of products and modification of orders. Customers can add as many of them to their wish lists and shopping cart. 

For vendors, the multivendor marketplace strategy helps them to: 

  • Enjoy huge sales and consistent profits from this vibrant model. 
  • Get updates on customer behavior from marketplace analytics. 
  • Reward complimentary reviews or a high number of sales. 
  • Showcase products and build brands throughout the world. 

As the owner or admin of an online multivendor marketplace, you gain from the advantages that your platform gives sellers and buyers. You need to:  

  • Focus only on management. Set your own rules to fully control your vendors and buyers. This allows you to collect a percentage of each seller's earnings as cess, which ensures a consistent cashflow. 
  • Optimize your marketplace with powerful extensions and features to empower your sellers to handle all the responsibilities. These can include managing inventory, receiving orders, regulating payment methods, and shipping. 
  • Enable customer-friendly marketplace features to help buyers track orders and get products in time. This builds their trust in your marketplace. 
  • Get empowered with a massive user database derived from the presence of innumerable sellers and buyers from around the world. 
  • Enjoy rapid revenue growth versus very slim chances of making losses. The activity of countless vendors and customers creates awareness and trust in your marketplace on various digital platforms. 
  • Leverage customer trust to attract more vendors and buyers from diverse demographics. 
  • Increase your commission wisely to earn a higher ROI when the sales volumes on your platform swell further. 

With the overwhelming transformation from a single-vendor e-commerce store for selling books and offering small rooms, respectively, Amazon and Airbnb have proved that even you can earn millions with the idea of an online multivendor marketplace. 

Although both marketplaces hold excellent business potential, in this era of an online shopping binge that will only skyrocket over time, multivendor marketplaces have a clear edge over single-vendor e-commerce websites. Today's intelligent, finicky, and well-informed consumers are fascinated by the UX and the flood of personalized product choices that a multivendor marketplace typically offers them. 

Making the choice

When choosing between a single vendor and a multivendor marketplace as a business leader or entrepreneur, the key is to understand the fine print. Select the model that offers scalability and flexibility to accommodate your specific business growth needs. On this count, the multivendor marketplace strategy scores over a single-vendor tactic. 

To make an absolute fortune, business leaders and entrepreneurs are eyeing tremendous opportunities in multivendor marketplaces. This model offers consistent cashflows, which far outweigh the occasional hiccups. 

Rashmi Mathur

Rashmi is a sales and support expert with great enthusiasm for technology. Currently, at AtomChat she is helping clients discover possible chat solutions and help them scale new heights.

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