How do I Create A Marketplace On Shopify?

Shopify remains the most well-known ecommerce platform, known for its ease of setup and operation. However, as your ecommerce business scales, it may make more sense to pivot towards a marketplace model instead of a standard store.

Why? Marketplaces offer significant advantages over traditional single-store e-commerce, such as product catalog expansion, better margins, and the ability to appeal to a wider audience.

Naturally, many business owners have chosen to scale and expand their product categories by adding more vendors through models such as dropshipping. However, this raises the question: How exactly do you create a marketplace via Shopify?

Why Shopify?

Shopify is the market leader when it comes to setting up an ecommerce store. It is designed to be used, straight-out-of-the-box. It is designed to be as low-touch as possible, meaning that a prospective user does not need to have a strong depth of knowledge when it comes to things like coding. One of the main strengths of Shopify is its design focus - it features many different customisable themes which can help to make your marketplace stand out from the competition and help to create a unique brand experience.

Shopify is designed to be easy to navigate and use, with a pretty intuitive drag-and-drop interface. For a business that is just starting off, it can be a very cost-effective solution as it’s basic package is very affordable. Shopify works but there is definitely room for improvement as far as marketplace scalability goes. Creating a multi-vendor marketplace on Shopify involves using third-party apps since Shopify doesn't natively support multiple vendors in a single store.

The Need For Automation

Taking a manual approach when attempting to create a Shopify multivendor marketplace creates much unnecessary stress to running a business. A manual approach is simply too slow to facilitate the constant demands of a busy online marketplace and in the end, will likely lead to delays, arguments with both vendors and customers and ultimately, failure. Using 3rd party technology such as those availabe on the Shopify app store can help manage your processes.

The Shopify App Store

The Shopify App store is full of 3rd party integrations to help support your business. There are plenty of apps you can install to your marketplace operations, however many of these apps only focus on one area. So, for instance, your shipping may be taken care of but you may still have to manually onboard your vendors, maunually route their orders and manage other operations such as payments.

It is best to select an app which is designed to manage and automate all your marketplace operations as this will allow you to focus more of your time on other areas of your business, such as sales or marketing.

When choosing which app is the best suit for your business, it is best to take into consideration the different operational workflows of your business and how that app can solve the challeneges involved. Once you have selected the app that is right for you and your business goals, install it and then follow the installation steps.

Onboarding Your Vendors

Once you have installed your app of choice, you should look to onboard your vendors as quickly as possible. Ideally your selected app will offer the ability for vendors to have their own dashboards to integrate their product, stock and pricing data into your Shopify store in a way that reduces friction and encourages an amicable relationship.

Product Catalog

Having an up-to-date product catalog is crucial to making your marketplace a success. Your vendors may regularly update their product information or pricing and it is crucial that you are able to keep track of these updates.

For instance, what if a product’s specifications change? Product A is no longer 150cm long but 120cm or 200cm. Perhaps the available colours for that product have changed, does the information on your site reflect this? Having an app which allows you to automatically curate and publish new products from your vendors catalog can help eliminate any sources of error.

Stock levels and Pricing

If a customer places an order for a product which later turns out to be out of stock or otherwise unvailable, it is likely that the customer will not return to your store. If the price of an item from your vendor has decreased or increased, you will need to take this into account, to maintain marketplace competitiveness as well as factoring in the effect on your profit margin.

Having an app which can ensure that your product information is correct can reduce the likelihood of a negative customer experience.

Vendor Payment

Another key aspect is, of course, payment. Streamlining the payment process for your vendors will help reduce potential sources of friction between both parties. Configuring the correct commission rate for each vendor can be challenging and become increasing complex as the number of vendors on your platform grows. Automating this process is vital and when done manually, payment delays may deter vendors from continuing your working relationship.

Order Management

Manual order mangement can be risky, as the possibility of human error can be high. Once again, it is best to choosing an app which can automate this process for your Shopify marketplace. Automatic order routing is the best method of managing this process, ensuring that as soon as an order is placed, it is relayed back to the appropriate vendor for fulfillment.

Focus on the extent of the functionality around this topic when choosing your app. Having clear oversight over the fulfillment status of each order can help you to inform customers of lead times for delivery as well as help identity any issues which may have arisen during the fulfillment process.

Shipping Management

Multi vendor shipping can be challenging, as there are many factors to take into consideration. Shopify by default always assumes a single origin for each shipment. Marketplace shipping costs are calculated on the basis that the order is being picked, packed and shipped from a single location (e.g. your warehouse or shipped via a vendor). However, this is a very idealised scenario and one which you cannot solely rely on to always be the case.

As a result, you will have to pay particular attention to the different shipping methods and rates that will occur due to the items in your store. You may even be faced with the possibility of making a loss due to high shipping costs, costs which your vendors may not want to incur themselves. You can choose two main options, from supplying your vendors with shipping labels to having them invoice you for shipping costs.

Shipping Labels

For many smaller vendors, the costs of sending the goods themselves may be too high and may deter them from wanting to feature on your marketplace. For many smaller vendors, the costs of sending the goods themselves may be too high and may deter them from wanting to feature on your marketplace. Having an app that can automatically calculate shipping rates which serve to peserve the agreed upon margins for you and your vendors is the easiest method of handing this issue.

Tracking Information

When an order is placed in your store, you will need to supply the customer which some sort of tracking information, such as a delivery ETA. Nowadays, this has become an expected feature for many customers and if your marketplace is to remain competitive, you must be able to provide tracking information.

Marketplace Automation

The above points are all aspects to keep in mind when choosing which marketplace app to choose when opting to transform your Shopify store into a marketplace. The best apps are those designed to automate all the process involved in the running of an online marketplace, from inventory syncing to returns management.

Onport is designed to streamline the process of onboarding vendors onto your Shopify marketplace, allowing you to focus on scaling your business. Our documentation can help guide you through the process and ensure that your operations remain as efficient as possible.

Onport

Onport is an ecommerce marketplace and dropshipping platform enabling companies to centralize the core areas of backend marketplace dropshipping operations using next-generation composable technology - inventory syncing, order routing, shipping workflows, payment automation, and returns management.

The Onport Platform can accommodate both those seeking an out-of-the-box solution and, through an API with +3.000 endpoints, those who require a more flexible implementation.

“With Onport, we were able to launch in less than three months, which we just couldn’t have done, had we built the system ourselves.”

Frank A. Ricciardi | Founder & CEO at Maavee

From growing SMBs to well-established enterprise-level companies, its composable and adaptive infrastructure was designed to be a reliable partner for the growth of any company operating in the e-commerce marketplace and dropshipping space.

Over 200+ companies in the e-commerce space are future-proofing their business with a solution trusted by brands such as Stadium Goods, Cupra, Ivalo, and Naduvi.