How to Start A Multivendor Marketplace (The Complete Guide)

So you’re thinking about starting a multivendor marketplace but not sure where to start? 

That’s completely understandable as it is a bit more complex than starting a normal ecommerce business but don’t worry as we’ve created a guide that will help you get started the right way and increase the chances of your marketplace being a success, so let’s get started…

Step 1: Choosing A Niche

You probably have a good idea of what niche your marketplace is going to cater to but there is one main thing that you need to think about, which is:

Is the niche big enough?

This is because if your business starts to grow and become successful, you want there to be opportunities to expand so that you can bring in more vendors and more customers but if your niche is too narrow, you may find that there is a ceiling to the growth of your marketplace. 

An example of this would be Radio Controlled (RC) vehicles, if you built a marketplace that was just for RC cars and your domain name and branding were all focused around this, there are only so many sellers and buyers out there.

But if you built a marketplace for all types of RC vehicles or even wider hobbies that are similar, you could focus on RC cars to start with but the potential is there to expand once you become successful with the one niche area. 

Basically, think big but start small. 

Step 2: Create A Marketing Plan

This is the most important part of your business and also the most challenging part as you are going to have to do two different types of marketing. 

Attracting Vendors 

To start with, half of your marketing efforts are going to be attracting vendors as without these, you won’t have any products listed on your site.

When it comes to attracting vendors, there are a couple of things that you could consider, including:

  • Outreach – contact smaller online sellers and let them know that you are launching a marketplace and that you feel they would be a great fit
  • PR – reach out to publications and blogs that your potential vendors are likely to read and ask if you can do a press release about your new marketplace
  • Facebook Groups – most niches will have Facebook groups for sellers and getting involved with these can be a great way the word out there (just don’t be spammy)

But you need to convince vendors to consider investing their time into setting up a store on your marketplace, so you want to clearly communicate and promote:

  1. What your commission rates are 
  2. How to get started
  3. Any additional benefits that your marketplace offers
  4. How you are going to promote your marketplace

These aren’t guarantees that you will get sign-ups but by providing them with this type of information gives them the opportunity to make an informed decision and if you find that you are getting certain questions asked regularly, then make sure to answer these in your marketing. 

Attracting Customers

The process for this is going to be very similar to the way that you would market to a normal ecommerce website and will in most cases be a combination of:

  • SEO – this is ranking in search engines and you want to rank for your brand name and be looking to rank your category pages as well
  • Paid Ads – these could be Google or Facebook ads to make people aware of your marketplace
  • Influencers – reach out to influencers in your niche and ask them to mention your marketplace 

But there is one common mistake that marketplace owners make and that is building the platform, getting vendors and then start marketing once the platform is live.

Instead, what you want to do is start marketing your marketplace to potential customers before you go live and get them signed up to your email list so that when you do go live, you can communicate directly with people who are interested and this can lead to sales being generated from day 1.

Step 3: Figure Out Your Pricing

Your marketplace is a business and in order to be a successful business, it is going to need to be profitable and this is why figuring out your pricing is a very important part of the process. 

When it comes to revenue generation, your marketplace is going to have two primary sources:

1: Commissions From Sales

This is where you take a cut of the sales, usually as a percentage and it is often best for this percentage to include the payment processing fee (otherwise you end up with a confusing fee structure like Etsy!).

This is going to be a variable income from your sellers as it will depend on the number of sales that are generated as to how much money you make from commissions. 

But there is a fine line to walk when setting your commission rates as:

  • It needs to be a level that is viable for you as a marketplace 
  • It needs to be a level where it is attractive for vendors because if it is too high, it will eat into their profits too much and it won’t be worth them selling

Figuring this out is challenging and what works will vary between marketplaces but looking at what your competition is doing can be a good starting point. 

2: Subscriptions

Many marketplaces charge their sellers a monthly subscription fee and while this is great for established marketplaces, it can be a tough sell for new ones as your site is an unknown and you are asking people to invest both time and money in something that is unproven. 

This is why for many new marketplaces, it can be useful to set up a subscription framework, such as:

  • Different plans (having a free one can be helpful in getting vendors)
  • How much they will cost
  • What you get for each plan (number of products, features etc)

But give all sellers a free subscription for a time period (this could be 6 or 12 months for example) as this way they only have to invest their time and if you prove to be a good sales channel for the business, they will be inclined to go to a paid subscription once the free period end. 

So not only does this encourage sellers to sign up when you are just getting started but after that initial free period, you will start generating recurring revenue from the monthly subscriptions. 

Step 4: Choosing A Platform

By this point, you will have the outline of your marketplace and next is to find the right software to build it and this is the step in the process that most people start with but good planning is a key component to success! 

When it comes to multivendor software, there are a number of different options available but they mainly fall into three categories:

  • Hosted Marketplaces – these include the software and hosting for a monthly fee and they take care of all the technical aspects of maintaining your website
  • Self-hosted Marketplaces – this is software that you purchase but need to set up your own hosting in order to be able to run it
  • WordPress Plugins – these are also self-hosted but are run on the WordPress CMS as opposed to being custom-built software

But there are a number of things that you need to consider when choosing a platform, including:

  1. Platform features – does the platform have the features you need to run your marketplace, important features include vendor management, payment processing, inventory management and reporting tools
  2. Scalability – will the platform be able to handle a growing number of vendors and transactions and will it be able to accommodate your business needs in the long term?
  3. Customization – can the platform be customized to meet your specific needs this will include being able to customize your branding and the user experience along with being able to integrate with third-party tools
  4. Security – this is a critical consideration for any online marketplace and the platform should offer robust security features, such as secure payment processing, SSL encryption and user authentication (some of this may depend on your hosting)
  5. Cost – what are the costs associated with the platform? Look for a platform that offers transparent pricing, with no hidden fees or charges
  6. Support – you want to find a platform that provides excellent customer support, with fast response times and knowledgeable support staff
  7. User Experience – does the platform offer a good user experience, both for buyers and vendors as a smooth and intuitive user experience can help drive engagement and sales

This is where it can be helpful to take advantage of free trials or demos that the platform offers as this is going to be an integral part of your business and you want it to make your life easier, not more difficult. 

Step 5: Choosing A Payment Gateway

The payment gateway options that are available to you may be dependent on the platform you are using but you want your payment gateway of choice to help you streamline the process as much as possible.

Due to marketplaces being a niche industry within the world of ecommerce, there aren’t that many gateways that offer a solution but the two most popular are:

  • PayPal
  • Stripe
  • Mangopay
  • Adyen

These are very popular options and boast some big-name marketplaces amongst their clientele but it depends on where you are located as to the options that are available as these aren’t available in all countries unfortunately. 

There are also different ways that these payment gateways can process payments so that your vendors get paid and you also collect your commission fee, to learn more we recommend checking out the gateway’s websites to see how they operate. 

Step 6: Work With Your Vendors

This is an optional step but one that we highly recommend you do as you and your vendors are in a partnership and it benefits both parties if things are working properly.

So ask for feedback from your vendors to find out:

  • What they like
  • What they don’t like
  • Features they would like to be added

As the better the experience that you can offer them, the more likely they are to use your marketplace as one of their active sales channels. 

You could also create your own Facebook group just for your vendors, which can be a great way to get feedback indirectly and also easily communicate with them. 

A regular newsletter can also be a great way to keep them up to date with what is happening with your marketplace. 


Building a successful marketplace is one of the most challenging ecommerce businesses there is but with the right planning and execution, there is always a chance that you could go on to become the next Ebay or Etsy.

And while every step in this guide is important, we think the two most important ones are:

  • Creating a good marketing plan
  • Choosing the right platform

These two steps are going to give you a solid foundation and one without the other isn’t going to be enough to build a successful business.

Hi, I'm Paul, the Owner and Founder of EcommerceGold.
I ran my own Ecommerce Business for over 7 years and now help others start their own online retail empires!

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