The Best Solution for a Small E-commerce Business May Be to Sell on an Existing Multi-Vendor Platform

Choosing or creating products or services to sell can take time, effort, and money, but there’s a whole mountain of work involved in actually getting that product to market and making sales. If you choose to create your own e-commerce website you’ll need to consider the following costs:

  • Website hosting, site security, updates, maintenance
  • Design costs
  • Inventory management and shipping integrations
  • Marketing
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Managing all of these factors can turn into a part-time job—and they cost money—taking valuable time away which could be spent offering your customers a great service or working on new product ideas. If you’re starting your business alone or with a small team, it’s far more cost-effective to join an existing marketplace whose owner can take care of the day-to-day responsibilities of running an e-commerce business.

In this article we’re going to make the case for why a multi-vendor marketplace is the ideal solution for small businesses—remember, there’s safety in numbers.

Reducing the risks

Risks are inevitable whatever way you choose to do business, but choosing a multi-vendor platform can help significantly reduce risks in key ways:

  • Avoid large, initial financial outlays
  • Speed up opening by bypassing website development
  • Secure existing traffic and customers
  • Learn lessons and best practices fast

Let’s dig a little deeper into who joining a marketplace reduces risks—financial, technological, traffic generation, and business.

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1. Financial risks

As we mentioned above, there are a number of costs involved in setting up an independent e-commerce store, particularly in terms of website development. Launching a standalone e-commerce site can cost anywhere between $11,000 and $500,000. These aren’t just one-time investments, as websites need to be regularly updated, redesigned, secured, and backed up. If you don’t have the skills to do this yourself you’ll need to hire a developer.

A multi-vendor marketplace usually takes care of all these factors for you while leaving you with plenty of opportunities to customize your store in terms of branding, domain names, and marketing.

2. Technological difficulties

If you have no experience with coding then a marketplace is a great solution. Not only will you have access to professionally designed and easily customizable store themes and landing pages, you’ll often have access to professional developers if you have specific requirements.

It’s the responsibility of the marketplace owner to maintain crucial e-commerce elements such as site security, page loading speed, uptime, backups, and general site maintenance. Handling these yourself means a big financial and productivity hit.

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3. Traffic generation

You can generate traffic to your site in two ways: organically or through paid channels.

Organic means developing a presence on social media and directing that traffic to your store or creating quality content that ranks on Google searches (in other words, search engine optimization). You can expect to wait around six months to a year for any noticeable organic traffic.

Paid ads (Google Search and Display, Facebook, Instagram, and LinkedIn) are great traffic generators but they cost money and not only will you have to get to grips with a platform’s ad backend, but you’ll need graphic design and copywriting input.

The benefit of joining an existing marketplace is its pre-existing traffic and customer base. An established marketplace will already be acquiring traffic, perhaps through SEO, ads, and social channels. You can consider investing in other customer acquisition strategies once you’re up and running.

4. Business failures

A big advantage of joining a marketplace is that you can learn valuable business lessons from your fellow vendors. There’s a lot to be said for learning through failure, but why not learn through others’ success?

With the marketplace owner taking on a big chunk of responsibility you’re free to test new products, new marketing strategies, or acquire new business skill sets. Arguably, using your time in this way is more valuable to you as an entrepreneur than figuring out the complexities of server maintenance or calculating shipping costs.

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A cost-effective solution

Going it alone inevitably means a bigger financial outlay than the costs involved in joining a multi-vendor marketplace. Here’s a breakdown of website setup costs for small-, medium-, and large/enterprise-sized e-commerce stores:

 Small (small catalog, no custom programming, off-the-shelf theme, light trafficMedium (small catalog, light custom programming, customized theme, medium traffic)Custom/Enterprise (systems integration, large catalog, custom programming, custom design, high traffic)
Licensing<$500<$5,000$5,000-$100,000
Hosting (monthly)350500$1,000-$2,000+
Design<$3,000$5,000-$10,000$10,000-$150,000+
Custom development<$500$2,000-$5,000$10,000-$150,000+
Setup/configuration<$3,000$2,000-$5,000$2,000-$10,000+
Training/onboarding<$500-$1,000$500-$2,000$500-$5,000+
Maintenance (monthly)$500+$1,000-$2,000$2,000-$5,000+
Total setup11000$15,500-$29,000$30,500-$422,000+
Total annual12000$18,000-$30,000$36,000-$84,000

Learn lessons and collaborate

One of the great advantages of joining a multi-vendor marketplace is becoming part of an existing, functioning business ecosystem, overseen by a marketplace owner whose sole purpose is to help you set up and start selling and growing your business as quickly and efficiently as possible.

As we talked about earlier, there’s strength in numbers and being part of a community always has a number of “soft benefits”. A lot of marketplace owners facilitate community building among their vendors, creating things like newsletters, forums, or groups on social media platforms. What can you learn from engaging in your marketplace community?

  • Discover new trending products or services that are selling well on other vendors’ stores.
  • Piggyback off of successful marketing campaigns—replicate what’s working for others rather than reinventing the wheel.
  • Learn about other vendors’ customers including their pain points, buying habits, complaints and address these on your store.
  • Talk to vendors and gain insights about industries or territories that you’re looking to expand into.
  • Last but not least: joining a community is great for moral support, to celebrate successes, and to commiserate on setbacks. Running a small online business can be lonely, so make the best of the community that comes with a multi-vendor marketplace.

A multi-vendor marketplace really is a great place to start your small business, even if you plan to go it alone in the future. By joining a marketplace you’ll reduce risk, cut costs, learn valuable lessons, and free up precious time and resources to focus on acquiring customers.

You may even have your own idea for a multi-vendor marketplace. Check out our article where we answer seven of the most common questions asked about selling on a multi-vendor platform.

If you are interested in learning more or having an expert evaluate your marketplace or marketplace idea, get in touch with a Shuup marketplace expert today!

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