The Ultimate Guide To Shopify MultiVendor Marketplaces

September 22, 2021
table of Content
Sonakshi Agarwal
Marketing Specialist @ AtomChat
14 min read

Online marketplaces have seen impressive growth since the COVID-19 pandemic wreaked global havoc. Add to that, as more and more people worldwide gain access to the internet, the number of digital buyers keeps rising every year. The year 2020 saw the global retail e-commerce sales amounting to US$ 4.28 trillion with the revenue projected to reach US$ 5.4 trillion by 2022. Needless to say, online shopping has become one of the most popular activities in the digital space and it looks like things are not going to change anytime soon!

That brings us to the sheer importance of online marketplaces and how they have become a critical part of the global retail framework. Plus, the waves of technological innovation and digitalization continue adding fuel to take online marketplaces to staggering success. 

How does the online marketplace model work?

An online marketplace or multivendor marketplace is an e-commerce platform where multiple vendors or sellers sell their products from one storefront. The seller registers with the online marketplace store where the seller has a dashboard for listing and managing products. Every time a sale happens, the store processes the payment and also helps the seller with the packaging and the logistics. The owner or operator of the store keeps a small commission from every sale and credits the rest to the seller. In this way, the marketplace owner focuses on expanding the vendor base to grow the product catalog and the vendors focus on boosting sales to increase profits.

Thus, the owner owns, manages, and gains business value from the marketplace platform whereas the third-party sellers leverage the platform in exchange for a percentage of their sales.


Online marketplaces differ from regular online stores. In the latter, a seller directly sells products to many buyers and there is no involvement of any other party. However, online marketplaces have the technical infrastructure to allow the listing and sale of a vast range of products through many sellers. eBay and Amazon are multivendor marketplaces whereas H&M’s website would be a regular online store.

Thus, marketplace owners learn more about the customers’ needs and can sell more products with a higher profit margin. Such online marketplaces promote ecosystems where today’s empowered customers can meet their high expectations of personalization and appeal.

Advantages of an online marketplace over a physical store

The online marketplace is a great platform to build and grow your business. There are multiple benefit categories that an online marketplace provides. We’ll talk in brief about some of the plus points here:

The buying process becomes faster

Physical stores often do not provide what customers look for or the store may be inaccessible to the buyer. But an online marketplace offers a convenient platform where buyers can easily browse through an assortment of products and buy what they like.

Economical for sellers

Maintaining a physical store calls for a truckload of expenses including rent, store design, repairs, maintenance, etc. Despite all investments, sellers often don’t gain the desired ROI. But with an online marketplace, sellers can save a lot on extra expenses.

Cost-effective advertising and marketing

Online marketplaces offer several advertising tools in the form of high-resolution images, videos, and infographics. Thus, sellers can use these visual channels to display their products without going into cost-intensive and elaborate marketing.

Personalized product listing

A product listing is what buyers see on an online marketplace website when they search for a specific item. Sellers have an upper hand here since online marketplace platforms offer ample flexibility when listing items with all the necessary details such as product image, description, price, delivery date, and shipping fee.

Wider reach

Selling from a physical store means that your products and services only reach a limited number of buyers. Plus, doorstep delivery becomes an issue with distance limitations. Most online marketplaces have their logistics and delivery systems. So, sellers can expand their reach while saving on delivery costs.

Cart recovery

Quite often, a buyer reaches the checkout page but doesn’t make the purchase. In such a scenario, online marketplaces provide the option of sending notifications to buyers via texts/emails to complete the buying.

How to build an online multivendor marketplace?

Building an online multivendor marketplace can take two approaches. One, you can choose to build the marketplace from scratch which would require a team of developers, designers, and analysts. Naturally, it is a costly and time-consuming task. Plus, custom store development may not be one’s strong point.

The other way to start an online marketplace is to use a marketplace software like Shopify. Such online store builders offer the best solutions to launch a powerful multivendor store while you save on time and costs. 

So, let’s take a look at how Shopify can help you build your very own online marketplace.

Steps for building an online multivendor marketplace

Starting an online multivendor marketplace involves a series of decisions and steps that need to be executed at the right time. So, here is a blueprint of how to build an online multivendor marketplace and grow it into a profitable business.

Step 1: Choose, evaluate, and obtain products

Often, the most challenging part of starting an online business is to find the right products to sell. Hence, you need to put enough thought into finalizing the products you want to present to your buyers. Once you have decided on a product idea, validate your product idea to know if it will sell. When you are sure of the products you intend to sell, the next step is to figure out where and how you will obtain your products.

Step 2: Research and prepare

Conducting a competitive analysis is a must to know what you are up against in the market and how you can set your multivendor marketplace apart from the rest. Once your research is complete, the next phase is to draw up a business plan. A concrete business plan helps a great deal to see things that are a priority, avoid naive mistakes, and create a roadmap for the business’s future.

Step 3: Set up your multivendor marketplace

Choosing a name and logo for your online business is as important as deciding on the product inventory. Plus, you have to choose a suitable domain name since your marketplace is in the digital space. Also, acquaint yourself with the basics of Search Engine Optimization (SEO) so that you can structure your marketplace website and pages for search engines. Last but not least, build your multivendor marketplace using the best online store-builder, apps, and plugins.

Step 4: Launch your multivendor marketplace

Once your multivendor marketplace is ready to go public, it’s time to launch it. Before that, ensure that you are prepared with your shipping and fulfillment strategy

Step 5: Post-launch sustenance

The game just begins once you launch your store. Post-launch, you have to focus significant time and effort on marketing your store, driving up traffic, and boosting sales. For this, you have to adopt various marketing strategies such as email marketing, social media marketing, paid ads, and optimizations for higher conversions. Remember, communication and customer experience are crucial in an online marketplace and so, text chat and video calls can be great ways to personalize the platform. Lastly, pay attention to analytics to know how your business is performing and what your customers want. 

Building an online multivendor marketplace with Shopify

The Shopify app store offers the Multi Vendor Marketplace app, a great tool to transform your online store into a full-fledged multivendor marketplace. It is a robust module that helps to add multiple sellers or vendors and monitor their sales. With the app, sellers can have their profiles and product listings while the merchant or the admin can set individual and global commissions for all the sellers.

However, you need to have a Shopify store if you want to use the Multi Vendor Marketplace app. So, here’s a detailed guide on getting started with your Shopify store.

Create your Shopify account

Create a Shopify account to start setting up your online store. For this, you’ll need to enter a valid email address, password, and store name. The name of your store is your myshopify domain (primary domain) which you’ll need to log in to your store.

Add business settings for your store

Once you’ve created your Shopify account, you need to add essential business information for your store. It includes store name, legal business name and address, store time zone, default store currency, default weight unit, and password for online store protection. You can get them done from the Settings option on the Shopify admin page.

Start building your store

Add your first product

  • On your Shopify admin, click Products and go to the Products page
  • Click Add product on the Products page
  • Enter your product title along with additional details such as image, price, shipping details, etc.
  • Click Save product. You can add more products later following the same steps.

Choose a theme

  • Go to Online Store > Themes from your Shopify admin
  • Click Explore free themes in the Free Themes section
  • Once you’ve previewed the theme styles, click the Add button for the theme you’ve chosen. It will be added to the Themes page of your admin
  • Alternatively, you can visit the Shopify Theme Store to use paid themes

Set up a domain for your store

The store domain is the URL or website address where buyers will go to find your online store. 

Organize your store

  • Click Create collection from the Collections page
  • Enter a Title and Description for the collection
  • Choose from your active sales channels under Sales channels to make your collection available on select channels
  • Choose whether products will be added to the collections automatically or manually. Make sure you’ve gone through the details of automated and manual collections since you cannot change them later. 

Add “Contact Us” and “About Us” information

  • Go to Online Store > Pages from your Shopify admin
  • Click Add Page
  • In the webpage editor, enter the Title and Content in the given textboxes
  • Choose whether you want the webpage to be published or not in the Visibility field. You can select Hidden or Set a specific publish date.
  • Click Save to make your homepage visible by default.

Add a menu and links to your store

  • Go to Online Store > Navigation from your Shopify admin
  • Click the name of the menu you want to edit on the Navigation page
  • Click Add menu item and in the Name field, enter the name of the link that will be displayed in the menu.
  • Select a link type from the drop-down menu next to the link name
  • Click Save menu

Choose your store management settings

Add a package type

  • Go to Settings > Shipping and delivery from your Shopify admin
  • Click Add package in the Packages section
  • Enter the required information about the package type
  • Click Add package

Set up payment method and taxes

  • Go to Settings > Payments from your Shopify admin
  • Click Add a provider in the Accept Credit Cards section
  • Select Shopify Payments and click Continue
  • Click Complete account setup in the Shopify Payments section
  • Enter your banking information and the required details about your store
  • Click Complete account setup
  • Set up taxes for your Shopify store

Set up your store policies

  • Set your store policies
  • Add your store policies using a separate webpage
  • Copy each policy to your clipboard from your store checkout settings
  • Paste your clipboard contents on your new page
  • Click Save page
  • Add a link to your policies page

Launch your store

Before you launch your Shopify store, see how the checkout process works by placing some test orders. When you’re ready to launch your store, remove your online store password to open it to the public.

Install the Multi Vendor Marketplace app

  • Visit the Multi Vendor Landing Page
  • Enter your store URL and click on the Start Free Trial button
  • Once you’re redirected to the Shopify backend, choose a suitable marketplace plan and set it up to get started.

Must-have elements for optimum selling and user experience

Here’s a checklist of all the essential technologies/elements that must go into an online multivendor marketplace to optimize selling and user experience.

Admin panel

The admin panel allows marketplace sellers to manage their profile, manage products and offers, manage shipping details, fulfill orders, manage returns and refunds, and manage communication with end clients.


The e-commerce section is where the products and services on offer are visible to the end buyers. 


Marketplace communication is important to build connections, initiate conversations, build trust, and offer a platform for all users of the website to interact.

With AtomChat, you can integrate text chat and video calling to your online multivendor marketplace website and establish direct communication between buyers and sellers.

AtomChat being a popular plugin is highly compatible with more features such as:

1. Easy to Integrate

2. Interactive & Collaborative

3. Works with all plugins

4. Secured Admin Controls

5. Communication-centric with Real-time language translations

6. Unlimited groups

7. Easy to monetize your content

What’s more, you don’t have to be a coding ninja to embed the AtomChat software!

Here’s what AtomChat offers for online multivendor marketplace websites:

  • Group and private chat
  • Voice and video calling
  • Video broadcasting
  • File sharing
  • White label app
  • Track user engagement

AtomChat helps vendors build trust and maintain transparency while giving buyers ample options to communicate with the seller and fellow buyers through marketplace chat.

Payment options

You need to provide convenient payment options for merchants and users to make transactions on your multivendor marketplace. The Payment Service Provider (PSP) you choose should offer specific marketplace features.

Search bar

In an online marketplace, the search bar is the sales assistant that allows shoppers to browse through the product range and find what they’re looking for. The search bar should have filter options that make products easy to find.

Product feeds

A product feed generator increases the reach of your marketplace by sharing your products on external sites such as Google Shop, Amazon, and Facebook. This, in turn, helps you to improve your site search rankings and promote your products on popular search channels.

How to attract sellers to sell on your multivendor marketplace?

While online marketplaces offer a host of benefits over brick-and-mortar stores, the former have their own set of challenges. For instance, the initial stages of setting up the online multivendor marketplace demand a lot of focus on building a strong supplier base by inspiring sellers to list their products on the marketplace. If you want to run your online multivendor marketplace smoothly, you must ensure that ample merchants or vendors are willing to offer their products and services through your platform. 

Here are some strategies on how you can attract more sellers to your online multivendor marketplace:

Reach out to sellers on existing platforms

The best places to begin searching for sellers are existing platforms like Facebook or online forums where your target vendors are likely to be active. Such platforms are a prime choice of providers to promote their items. Once you obtain the contacts of the sellers, you can demonstrate a comparison analysis to show how your marketplace is a better choice over other available options.

Adopt smart marketing strategies

In the digital age, the best way to market your multivendor marketplace is through online platforms. You can leverage the reach of social networking sites like Instagram and Facebook to promote your marketplace. The good old email marketing technique is also quite effective. Joining communities, groups, and discussion forums of vendors across different websites and social media channels will help you connect with them directly. Running display ad campaigns is also a great way to let sellers know about your marketplace. Create compelling ads for vendors to register as sellers on your online marketplace.

Create blogs 

Blogs are a time-tested method to draw sellers who would list their products on your online marketplace. Through the blogs, you can showcase success stories and reviews of your current sellers, share bits of business knowledge, and other data that would convince vendors of your credibility. Make sure that your blogs are search engine optimized to help them rank better on Google or other search engines. 

Provide logistics and customer support

One of the primary reasons sellers opt for online marketplaces is that they can get rid of the hassles of logistics, warehousing, customer support, etc. As an online marketplace, you have to offer sellers perks like packaging, warehousing, customer support, and doorstep delivery facilities so that they can focus on selling products. 

Be transparent with the commission structure

It’s best not to keep your sellers in the dark when it comes to the payment and commission structure. At the outset, clarify how you are charging the commission and install the modules at your marketplace website in a way that keeps ROI and expenses separate. Try to adopt a constant payment methodology, preferably at the end of the week to keep the books clean at either end.

Building loyalty in a multivendor marketplace

For online multivendor marketplaces, the loyalty issue has two sides - attracting sellers and attracting a strong customer base. In a way, both are related. 

The traditional loyalty program is a great driver to draw and retain customers. Besides having access to the wide range of products on offer, the loyalty program assures buyers that they have a better deal in terms of offers, discounts, fast and free delivery, flexible returns, etc. Once you have an active and loyal client base, you can attract more vendors to sell on your marketplace. Thus, you can welcome new vendors into the system and introduce customers to their offerings. Plus, you can use the loyalty schemes to let buyers know that they can trust new vendors and the products they have to offer.

In a nutshell, here’s why you should strive to build loyalty in your marketplace:

  • Loyal customers are more likely to keep coming back to your marketplace, mostly because they have had a pleasant buying experience in the past. On the other hand, loyal sellers would mean that your marketplace platform has a strong supply base.
  • Once your customers have developed a bond of trust with your marketplace, they will be inclined to return and spend more money on buying items off your shelves. If customers like and trust the products you offer, they will buy more, and in turn, boost your revenue.
  • Customer loyalty with your marketplace means that your competitors will lose out on potential clients and revenue. The more traffic you draw to your website, the lesser traffic is likely to go to your competitor’s site. Hence, great customer service and rewarding loyalty programs are a must to retain buyers.
  • The more loyal the customer or the seller, the more likely are you to get valuable feedback. It is often the loyal customers who actively participate in responding to feedback forms because they like your service and want you to improve.

Way Forward: Taking a cue from successful Shopify stores

If you’re wondering why it’s worth investing in Shopify, let us tell you about two thriving Shopify stores!

Boozy has seen unprecedented growth in sales since it established itself as a Shopify store. With the help of Shopify, Boozy has been able to customize its storefront to location-based needs. Besides the boost in sales, integration with Shopify enabled Boozy to fulfill on-demand delivery to multiple locations, becoming the Philippines’s largest online liquor store in terms of number of hubs/warehouses, number of riders, and Google search volume. 

Another remarkable example of a Shopify store would be JB Hi-Fi, Australia’s largest consumer electronics retailer with around 200 stores across the country. When JB Hi-Fi was met with the challenge of expansion by connecting its retail network and online business, it chose Shopify as its commerce partner. With Shopify, JB Hi-Fi saw an overall improvement in traffic and sales, achieved a 15% decrease in average page load time, and met the huge online rush during the peak pandemic period with minimum effort.

Boozy and JB Hi-Fi are not truly multivendor marketplaces since both of them sell specific products. However, their inventory comprises products from different brands, a principle that is well maintained in a multivendor marketplace. But, with the right apps and plugins, you can surely convert your Shopify store into a thriving online multivendor marketplace!

Sonakshi Agarwal

Sonakshi is a marketing specialist at AtomChat, who has just graduated with a bachelor's degree in communication from the University of Technology, Sydney.

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