Digital Marketplace – learn how to build it

That is the second article and iconographic on Marketplace Explained. The first one was describing different types of marketplaces from the business perspective. If you have missed it, read it here. This piece is focused on marketplace implementation aspects.

Implementing a Marketplace is not a simple matter, and marketplaces are quite different when it comes to digital commerce functionality. This article will capture only the main characteristics of Marketplace implementation and highlight the key differences between building a regular Ecommerce shop and a Marketplace.

1 or 2 Systems

Depending on the Ecommerce vendors you use, there are two approaches to marketplace implementations.

Some Ecommerce vendors like Spryker or VTEX added built-in support for marketplace functionality. The main benefit here is that you have a single system to learn and support. Adding a Marketplace is an equivalent of a large upgrade vs. re-platforming. On the other hand, it would only work for businesses that are already using one of these platforms. Others should look at the two systems scenario, which involves integrating their existing Ecommerce system with an additional marketplace system like Mirakl. I call it the two systems solution.

3 Parties Transactions

In Marketplace, instead of two usual parties in an Ecommerce transaction (Buyer & Seller), there are three – Buyer, Seller, and Marketplace Operator. To complicate things further, in Enterprise Marketplace, the business that creates a marketplace has the dual role of the Operator and the Seller.

Having multiple sellers means that everything in the Ecommerce system needs to be looked at from this additional Seller perspective. Which merchant owns product data, whose price is it, which shipping or payment methods are used by which merchant, what inventory a merchant has, how merchants’ category structure is mapped to Marketplace categorization, and so on.

Merchants also need their own backend UI to manage their operations (Merchant Portal), and Marketplace Operator needs to have an interface to manage merchants, their products, and orders. The storefront needs to have new functionality too. Customers should be able to see merchants’ information and which merchants sell a product they want to buy.

Main Functional Differences

Other main differences are in Catalog, Payments, and Fulfillment areas.

Catalog

Marketplace sellers may have unique products in the catalog, or several merchants may sell the same product. To avoid duplication of product data, in the latter case, it is better to implement Offers. An offer is a light-weight object that links to the main product and only contains the seller’s price and availability. In some cases, offers can also have additional attributes like a condition – new or used.

Orders

Because customers can mix products from different merchants in the same cart, there are two types of Marketplace orders. From a customer and operator’s perspective, an order contains all products purchased by a customer. However, a Merchant is only interested in goods or services bought from him. That means we need to split the Marketplace order into several Merchant’s orders. While splitting the order, the system should properly allocate merchants’ portion of taxes and discounts.

Payments

The third party in Marketplace transactions complicates the payment implementation as well. Each merchant should be registered with the payment provider, which is responsible for distributing customer payment across merchants and retaining the marketplace operator’s commission. Please note that not all payment providers support marketplace functionality.

For a larger iconographic image, download a PDF version.

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