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How multi-vendor solution work

While you are thinking of an eCommerce business model multi-vendor eCommerce marketplace is the best option while you want less interaction with customers as a platform. Before getting started you need to know how multi-vendor solutions work and why to choose this solution.Let us make it clear in the following section.

Multi-vendor marketplace working process

A multi-vendor eCommerce marketplace model host vendors on their website to sell product to the customers. Let’s say Amazon, Alibaba, and Daraz are operating their online platform for the seller where various customers purchase products.

Once an order is placed those are sellers turn to fulfill the order. Meanwhile, marketplace owners can make money by receiving a commission rate and less headache of order fulfillment.

Here is the step list of how multi-vendor marketplace works:-

  1. Seller registers through the free or paid plan in the marketplace. At first, the seller applies for registration with the necessary documents. After the verification process marketplace admin approves or disapproves the seller.
  2. Once registration is complete, the seller uploads his products, then the admin approves it after checking validity, and finally, the customer can buy those products from the marketplace.
  3. The marketplace can set a commission rate as per the category. Therefore it generates revenue from the preset category commission on product sales from the seller.
  4. In case of any order, payments are transferred to the marketplace owner first while it is advance payment or cash on delivery after that payment is transfer to the seller.
  5. The marketplace is responsible for delivering the products. Nevertheless, the seller also involves in the delivery process. Which makes it easier for the marketplace.
  6. Product replacement or return by customers are also monitored by the marketplace.

Why ecommerce business owner are switching to multi vendor marketplace?

There are several benefits of a multi-vendor marketplace, therefore, it’s the most preferable platform based on commission. Here is the list of benefits.

Huge range of products: 

The products are sold by numerous sellers on a multi-vendor marketplace. Therefore the number of products is vast that helps to generate traffic and leads to sales easily.

Reduce half of the Pressure:

While you are running an online store then you must be concern about the product add & upgrade, logistics, pricing, etc. But multi-vendor stores switch these important aspects to the individual seller to take care of their own store. So you can generate revenue in this win-win situation with lesser pressure.

Low Operating Cost:

Each seller are managing their shop, therefore, you don’t need to hire extra member at your team. In fact, you can focus on the marketing of your marketplace.

Don’t need to maintain inventory by marketplace:

Likewise product add & upgrade, logistics, and pricing the inventory is also managed by the seller. Hence there isn’t any inventory maintenance. In the long run, it saves warehouse and human resource-related costs.

Flexibility for the Seller:

Multi-vendor eCommerce merchants can manage their product details, price, and delivery, product addition & updates as per their convenience. This flexibility makes it easier to gain more merchants.

Commission-based business model:

As the marketplace can have various numbers of sellers,  it generates revenue in each transaction between customer & seller. To retain existing sellers and attract new seller marketplace charge low amount.

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