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Marketplace software, also called multi-vendor digital marketplaces or e-commerce marketplaces, is a type of e-commerce software that allows companies to create their marketplaces, sell their merchandise, and attracts multiple merchants, resellers, and partners who sell products and services. The marketplace owner does not need to maintain an inventory of the reseller's products but rather the marketplace infrastructure itself, ensuring that other businesses are using it.
As a result of hosting multiple merchants, it’s likely to need to have a robust support network in case any of those merchants have a problem somewhere along the line. Customers with platform issues will likely also reach out, so having both front-end and back-end support will be necessary.
Based on user preferences, there are generally two types of marketplace software available for users, as mentioned below:
Cloud software
Cloud-based marketplace software help build the marketplace website through a user interface without coding knowledge or developer’s need. These type of software are the easiest and quickest way to launch marketplaces and are generally cloud-based, and doesn’t need any third-party hosting.
On-premises software
In contrast to the no-code cloud-based marketplace software, on-premises software is hosted on the owner’s or vendor’s server and is generally open-source software that allows customization. While on-premises software allows a wide range of feature addition, it is more expensive than the no-code cloud or hosted server models.
The following are some core features within marketplace software that can help users in many ways:
Administration: Managing the marketplace should be smooth and comprehensive. Marketplace administration provides marketplace operators complete control of the marketplace, which includes website management, managing buyer and vendor relationships, marketplace design configuration, API management and maintenance, staying compliant with security standards, and using analytics to monitor business-critical KPIs.
Payments and subscriptions: It allows marketplace operators to set different payment solutions like a credit card, cash on delivery, mobile wallets, buy now pay later (BNPL), etc., for customers. Merchants can also select payment models like one-time memberships, monthly or annual subscriptions, etc., for selling products and services. It must provide functionalities to manage and monitor transaction processes between buyers, vendors, and the marketplace owner and support multiple currencies.
Vendor management: Vendor management capabilities offer marketplace operators complete control over the vendor onboarding, management, and administration of marketplace vendors. It helps manage vendor relationships through permissions management and customizable dashboards to gain insight into vendor operations. Vendor management functionality also helps vendors and merchants manage their store, product price, promotions, and catalog for the buyers and customers.
Warehousing, shipping, and return management: Marketplace software must offer marketplace operators multiple shipping solutions like drop-shipping, centralized shipping, free shipping, or a combination. Marketplace owners can choose the one that suits their business the most. It also helps manage inventory across multiple locations and warehouses, order routing and fulfillment, and integrates with return management solutions for easy return.
Order management: A functionality to manage order fulfillment is a must have in marketplace software. Customers ordering from marketplaces can get an email notification, see their order status, track their order, and get invoices on successful payment. Additionally, vendors also get to know if customers have abandoned carts and work on eliminating bottlenecks at the product level to improve the overall shopping experience.
Catalog management: If a seller has thousands of products, filling up product details for each is time consuming. Marketplace software also offers features of catalog management to edit or update product information in bulk. It also syncs product feed with other marketplaces like google shopping which offer price comparison services and makes sure the product details are accurately reflected.
Marketing capabilities: Marketing capabilities of marketplace software help not only in promoting the business but also give a boost to the merchant’s sales. Marketplaces are often SEO-optimized, and host product reviews software, seller ratings, advertisements, and loyalty programs that help customers discover marketplaces and sellers.
Streamline store management: It’s easy and hassle-free work to manage an online store using marketplace software. Marketplace software comes with many pre-built features and functionalities like a storefront, shopping cart, catalog management, payment gateway, etc., for the ease of use of resellers.
Simplifies marketplace development: Marketplace owners managing marketplaces don’t have to worry about inventory management but are responsible for processing transactions. They just have to ensure businesses use it to their full potential. Marketplace owners invest in marketplace development and create monetized value-added services for resellers for profitability.
Target a larger audience: It provides a holistic opportunity for business owners, resellers, and end users. Resellers can reach a larger audience, and customers can compare many brands under one platform. It also helps in brand promotions and advocates for brand protection under the marketplace platform.
Small businesses: Small businesses venturing into starting the marketplace with few vendors and SKUs might benefit from marketplace software.
Mid-market companies: Mid-market companies with some e-commerce infrastructure or e-retail business that want to shift their business to a multi-vendor marketplace model to enhance their business offering can use the software.
Enterprises: Large organizations that have already attained growth and want to enhance their existing vendor relationships and bring them under more sophisticated commerce infrastructure and scale business.
Related solutions that can be used together with marketplace software include:
E-commerce platforms: E-commerce platforms function very similarly to marketplace software, except they only feature a single merchant rather than a variety.
E-commerce personalization software: E-commerce personalization software provides the tools to create personalized experiences for each customer. This often includes product recommendations based on viewing and purchasing history, as well as custom messaging for returning customers.
Payment gateways: Payment gateway software provides a means for customers to input their credit card information to make a payment securely. Payment gateways often use a variety of payment processors, so merchants can choose which processors they prefer to work with.
Software solutions can come with their own set of challenges.
Selection and implementation: Selecting the right marketplace software isn’t an easy task. Users often choose one size fits all solutions, which may not have all the necessary features. Also, it is often confusing to select and implement the right plugins and features for different types of vendors.
Time consuming: Building a marketplace is a massive undertaking and requires constant attention. While marketplace software provides standard features to create marketplaces, these may not be sufficient when unforeseen issues arise during building and testing.
Expensive: Opting for an advanced level of marketplace software is quite expensive. Small and medium-sized enterprises often want comprehensive marketplace software but find it difficult to pay for the add-on features as they often add up to the cost of the marketplace software itself.
Multiple businesses across industries can use marketplace software to launch multi-vendor marketplaces. Here’re some common examples of companies that can buy this software:
Retail: Any type of company that is into retail or wholesale business and wants to scale business in the e-commerce industry can launch marketplaces with the help of marketplace software. For example, Amazon, eBay, Target, Walmart, etc.
Software: Software vendors can use this software to launch marketplaces that help encourage other software vendors to list their products and do business on a single intuitive platform. For example, G2, Trustpilot, Trustradius, etc.
Services: Any services-based company across industries like construction, home-furnishing, interior designing, website development, and advertising agencies can create a service marketplace to bring all types of service providers under one platform.
Requirement gathering ensures that the software has all the features a business needs. It helps to understand the right tools required to perform critical task processes without wasting time figuring out how to do it. It also helps to ask critical questions about the need for the software. For example, marketplace software helps build multi-vendor marketplaces. Still, the buyer should also know the size of the business, how many vendors can be onboarded with each basic, intermediate, and advanced plan, and what amount of SKUs the marketplace can handle.
Create a long list
A long list helps refine software products with must-have marketplace software features such as product listings, vendor listings, marketplace administration, landing page creation, payments, and shipping features, order management features, etc. Buyers can add software based on no-code or on-premises standalone software or marketplace add-ons. Some other things to consider while creating a long list could be the product's popularity, the price offered for product add-ons, schemes for upgrading, and 24/7 customer service support.
Create a short list
A short list narrows down the long list of buyers and helps them make a constructive decision on which software to opt for. Short lists are more specific to the exact need of the buyer, mapped with the features offered by the product. For example, buyers looking for no-code marketplace software must not keep on-premises solutions on the short list.
Conduct demos
Demos are an essential part of the entire software implementation process. It ensures that the marketplace software runs smoothly and is compatible with the existing business system. It allows buyers to ask questions about the software's features and ensures the software vendor is entirely transparent about the product offerings.
Choose a selection team
A team comprised of in-house IT personnel, project managers, heads of departments, e-commerce experts, and end users must be part of the selection process. Along with senior management, this selection team is responsible for selecting the right software and checking the entire marketplace software onboarding process. Buyers can also outsource technical consultants with domain-specific expertise to give constructive recommendations and suggestions in this process.
Negotiation
To successfully negotiate, the buyer must carefully analyze the final offering provided by two or more marketplace software vendors. There are chances that vendors might offer similar software with similar features. In this case, the only differentiator may be the price provided by the vendor. The deciding factor during final selection in case of similar pricing might depend on product add-ons, unique customization, customer support post-implementation, etc.
Final decision
In most cases, the senior management or head of the department decides to select the software after carefully going through all the documented insights provided by the team during the product testing process. It is also essential to investigate all the vendor's terms and conditions beforehand to avoid any last-minute confusion.
Digital wallet integration
Integrating a variety of payment methods provides flexibility for both customers and merchants. By allowing both parties to pay and accept payments from various digital wallets, mobile payment apps, and other payment options, a wider variety of customers and merchants can participate.
Artificial intelligence
Artificial intelligence and machine learning power much of the personalization now available to e-commerce stores and marketplaces. Artificial intelligence can also power dynamic pricing, which automatically adjusts the pricing of items based on competitor prices and other information.