Online shopping is slowly becoming an integral part of the buying process in our day-to-day lives. They have become a powerful tool for brands looking to grow economically and reach a larger audience. When a brand creates the right strategy for its product and equips it with proper audience knowledge, it can create an e-commerce model that generates massive revenue, whether single or multi-vendor ecommerce website.
The main hurdle that brands face before switching to an online model is deciding whether to sell their products through their online store or become part of an established eCommerce model.
A brand that chooses to have its store can be classified as a single supplier, and a brand that joins an established market can be referred to as a multi-vendor e-commerce website. Assuming you are new to the market, it tends to be trying to choose which one to pick.
For this reason, this section of the blog will help in catering to the awareness regarding the subject, which can help your business grow to new heights of success.
Single Vendor Model
This model is usually a brand with a website where only the brand sells its products. Therefore, different customers only come to the site to buy products from the exclusive one seller. The single supplier model includes two parties. One is the company, i.e., the seller, and the other is the customer, i.e., the buyer.
The single-vendor model is popular with brands looking to sell their stock exclusively to their audience without intermediaries. Therefore, in this model, the company is responsible for product delivery/production, storage, and distribution of goods if and at the time of sale.
It also means the company gets the total sale price. A single-vendor ecommerce marketplace is also known as a standalone website.
Features of a Single Vendor E-commerce Website
The single-vendor model has one vendor serving all buyers, enabling the building of strong customer relationships.
1. Product Range:
No single supplier can meet all of the needs of its different customers. The product offerings of the single vendor e-commerce application only deal with the product requirements of the single company. Thus the range of the products offered here can be limited.
2. Better Ordering System
When only one supplier is involved, it becomes easier to activate the system and order goods. With a single vendor e-commerce app, you share the single-handed responsibility for managing the delivery expectations of your audience.
3. Streamlined workflow –
Coordination, delivery, and communication are made easier with a single vendor model. You primarily work with people from your own company, making communication easier.
4. Entering the Market –
Individual vendors can quickly enter the market because they already know the business. For this, all they need to do is bring their business online and command the readiness to manage the expectations of their audience.
5. Vendor Managed Products –
In a single vendor e-commerce platform, the seller has the full knowledge of the products they are selling, making it easier to manage them. The company has complete knowledge of the stock it has and what is sold out or no longer in demand, and therefore the product list can be modified accordingly.
Drawbacks of the single-vendor models
- Finding the Right Contractor –
- Building an online store requires a contractor or intermediary who has sufficient knowledge and can build the platform for you.
Sometimes it can be challenging to find the right agency in your particular niche that is willing to meet your needs at a price you are willing to pay.
- Limited Resources –
- Multi-vendor marketplaces have the advantage of having a third party manage the platform. Multi vendors have the advantage of multiplying their resources and making it easier for companies to build platforms. At the same time, single vendors do not have the same advantages.
- Contractor Risk –
- In the single supplier model, having only one contractor can sometimes be a problem. In other cases, your business may not be big enough to handle an in-house team and get the needful delivered from them. Furthermore, the risks with outsourcing to untrusted vendors can lead to severe risks like security and secrecy.
Multi-Vendor Marketplace Model
Compared to the single-vendor model, the multi-vendor model is an online store selling products from different vendors. In this model, many vendors come together to sell their wares through a shared store.
Therefore, a multi-vendor marketplace is a system where many vendors come together to display and sell their products with the help of an admin, e.g., a middleman. Since many sellers are involved, there are opportunities for higher profit margins.
These commercial centres permit clients to purchase items from various sellers under one rooftop, saving them an investment.
Envision going to the shopping centre to purchase some pants, and on second thought of going to 5 distinct brands to pick the ideal pair. You can stroll into one store and go with a similar decision once more.
The multi-vendor marketplace makes this possible. Some industries in which this market is expected to work well include the food industry, the service industry, and the food delivery industry.
Three entities participate in this model: suppliers, customers, and administrators. Admin manages the platform where this product is sold.
The multi-vendor model features
- Significant Savings – The multi-vendor marketplace has many daily vendors and transactions. This allows the market to take advantage of one seller or another.
- Overcome Fluctuations – We can identify fluctuations in demand for different products sold in different periods. However, this model has multiple suppliers, ensuring that these fluctuations can be controlled as product volumes can be adjusted.
- Expertise – Administrators in this model are usually design and development experts. This ensures that the website or app is functioning correctly and is kept up to date using constant feedback from the team.
- Increased Product Diversity – Selling products from multiple suppliers means product diversity. This ensures that the platform does not depend on a particular provider.
- Best choice for small businesses – SMEs don’t have the same resources as big brands, so they may not want to go the single-supplier route. The single-vendor model places a lot of responsibility and risk on the vendors, which can be minimised with the help of the multi-vendor model.
Drawbacks of the multi-vendor model
Management issues: This model requires seamless integration between different countries. In addition, there are many online interfaces, which make it challenging to deal with problems with tasks and processes.
High Cost – This model requires higher costs when dealing with different suppliers. The development, as well as the maintenance cost for developing the multi-vendor ecommerce platforms, is complex. Furthermore, the technology required for the development of multi-vendor platforms must support and hold good the requirement of different functionalities of the store.
Integration issues – Different product components are developed and maintained by different teams, making integration difficult. These problems can incur additional costs and expenses for the company.
Difference between models
The two models above have their respective advantages and disadvantages. While one might be more reasonable for one brand, another may favour choice two. We have recorded a portion of the critical contrasts between the two; they will assist you with settling on your choice more clearly.
Risk Factors: If you want to reach a larger audience, you may need to take the risks that come with it. While a multi-vendor marketplace allows you to grow taller, you also have less control over their products and sales.
To face fewer challenges, you can have your web-based store as you are answerable for dealing with your stock, stockpiling, and transportation. Then again, if you would rather not make a high introductory venture, the multi-merchant choice is the best approach. However, you might need to confront extra dangers.
- Web Interface/Application Interface – Single vendor eCommerce websites usually have a simplified interface compared to multiple vendors. This is because the market has a wide variety of products and vendors.
This complicates product selection and requires more steps. Variables such as location, store preferences, and additional filters must be added to the multi-store model. Choosing a product from just one brand is easier and faster.
- Development Costs – While both models require some investment in design and development, creating a multi-vendor marketplace is usually more expensive. An essential website for the business is relatively cheaper because there are fewer features and functions to add.
On the other hand, marketplaces may have more complex interfaces and higher development costs. There are also multiple platforms under this model, increasing the cost.
- Revenue Stream – The single store model has no middlemen, and therefore the seller receives the total amount of the sale, while the store owner receives a much lower margin.
In the case of a market, the owner’s income can come in the form of commissions, subscription fees, marketing fees, value-added services, etc. The most common way for the market to generate higher revenue is by increasing sales.
- Transaction models – Both models require an introduction to payment systems. The store’s payment system can be simple, as money is transferred from the buyer to the seller. On the other hand, ecommerce markets require a more complex system that allows money to be shared between parties and allows vendors to accept tips won.
- Traffic Volume – Multi-vendor markets tend to enjoy higher traffic. This is because the platform is multi-branded, which means it can appeal to a broader audience.
- Scalability – Scaling a multi-vendor store is easier because the owner only needs to add a few different brands to the store. On the other hand, single-vendor systems need to create new revenue streams to expand their business, taking more time and effort.
- Availability of Alternatives – Customers from multiple suppliers can choose from a wide selection of products and therefore have more choices of alternatives.
This allows customers to switch between products easily and find the best one for them and keeps them on the platform longer. A store has limitations in offering choices, so if customers are not satisfied with a brand’s product, they can leave the platform.
- Shipping – Shipping is easier for individual suppliers because the seller is the primary owner of the product.
When starting your online store, you may need to look at your competitors’ actions. You may also want to look at the main differences between the models, compare your brand to what the model offers, and tailor your needs based on what works best.
You may also want to maintain particular factors such as the level of control you want, the investment you can afford, and the expertise you have, and then make the right decision.
There are proven benefits to managing your marketplace with multiple vendors. It’s easy to automate; costs can be kept low, profitable for the seller and you as the owner, and convenient and safe for your customers. However, this takes work.
It would help if you devoted all your attention, time, and effort to adopting a multi-vendor marketing solution. In addition, a significant investment is required.
But Expand My Business has been busting this myth with end-to-end delivery solutions to manage your requirement for developing and marketing your ecommerce platform. With our delivery solutions, we allot you a dedicated project delivery manager who ensures the success of your project with our Escrow based milestone payment model. Get in touch with us today and get started today.
We are Team EMB the voice behind this insightful blog.