Single Vendor Online Store vs. Multi-vendor Marketplace: Which one to Go for?

Published by Color Experts International May 27, 2021

Difference between Single Vendor Online Store and Multi-vendor Marketplace:

In order to fathom the difference between a single vendor online store and a multi-vendor marketplace, you have to know what they are at first. This is because many people are clueless about the functioning of these systems. They use both these terms interchangeably.

Online store predominantly implies a website where a single seller sells products or services. Under this system, customers make purchases directly from the seller. The store owner manages all the essentials of the business including stocking, inventories, orders, shipping, warehousing, branding, and marketing. The notable point in this system is, there are only two parties involved- seller and client.

Examples: Warby Parker, American Giant, and Harry’s are some of the iconic online brands you can look up to.

When it comes to a multi-vendor marketplace, it basically refers to an online store where multiple sellers sell their products or services. This system involves three entities- owner, seller, and client. The owner invites multiple vendors to register themselves and start selling their goods. Once the sellers catalog their products on their storefronts, the owner can carry out all the marketing campaigns to drive traffic to his website. The benefit that clients receive under this model is, they don’t have to jump from one store to another to liken products’ prices and quality. They can view products from different vendors under one roof and make their decisions based on their preferences.

Examples: Amazon, eBay, and Walmart are the top multi-vendor marketplaces that we can name.

Advantages of a Single Vendor Online Store:

An online store consisting of a single seller has a number of benefits. If your goal is to run a small online business, this system will be an ideal one for you. Let me list some key benefits of this type of online store.

Involvement with Limited People:

In a single vendor online shop, you have less hassles and drawbacks. You don’t have to deal with plenty of people. You just have to maintain interaction and rapport with one supplier which no doubt will reduce your burden and build mutual trust.

Reduced Cost:

Along with the minimized cost coming from a single supplier, even the inventory cost also declines in this model. No matter whether you sell single niche products or multi-niche products, the number of items in the inventory will be far lesser as compared to a marketplace.

Smooth Order Management:

In this system, you are selling products from one particular brand. Hence, when you order the product from a particular supplier, it’s facile and hassle-free for you to keep track of all the products. This will also allow you to have better control of your inventory.

Advantages of a Multi-vendor Marketplace:

We mentioned above some key benefits of building a single seller online store. That being said, even a multi-vendor marketplace also promises some amazing benefits for those who plan to run a medium or large-sized online business. Let’s take a look at them-

Multiple suppliers, a Boon:

More than one supplier may be a drawback in a small-scale business. But in a medium or large-scale business, multiple suppliers come in handy. If one of the suppliers is secured by your competitors or they face any financial difficulties, other suppliers will yet continue supplying products to your vendors. And this is a massive advantage to keep your business rolling.

Higher Traffic Volume:

In this model, you have multiple sellers which means that it’s pretty facile to drive traffic in your marketplace. You don’t have to put effort single-handedly rather you will get assistance from them. On top of that, it’s also comparatively easy to earn clients’ credibility in this model due to the existence of many vendors. Clients have the luxury to pick and choose their necessary products from different storefronts as per their preference.

No Hassle of Inventory and Logistics Management:

In general, if you are running a single-vendor online business, logistics and inventory are two key factors that you have to emphasize. If any of these functions are hampered, your business will be badly impacted. But in a multi-vendor business model, you can stay super chill in terms of inventory and shipment of your products. This is the concern of the vendors to monitor if they have enough items in their inventory. They have to handle the matters of order management, on-time delivery, cash return, etc. You just have to stay engaged with marketing, branding, and maintaining your website.

Which one to Go for???

Both models of e-commerce business have their benefits as you can see above. One point that we can say certainly is, single vendor online store and multi-vendor online marketplace, both of them are lucrative businesses. But which one you should pick to start your business depends mainly on certain factors. We can’t provide a blanket rule that a particular business is suitable for all types of people. If your plan is to initiate a small business with limited capital and resources, a single vendor store is the best for you. On the other hand, if your target is to show up big as a brand and budget isn’t an issue for you, we would suggest you to go for a multi-vendor marketplace.

Over to you

E-commerce business is a trend nowadays and a profitable business too. Not only the upper-class people but also the middle-class ones prefer to buy their desired products from online stores. This tendency has further mounted in the ongoing pandemic. Depending on your ability, passion, and preference, choose one of the above-mentioned models of online business and start making big bucks. If you can execute all the essentials of starting an e-commerce business perfectly like choosing a niche, picking an e-commerce platform, selecting a target audience, etc. success is just a step away from you!!!