Having an e-commerce business is not a big win these days. Making it big – in terms of reach and in terms of the business model – is what makes a website stand out among the plethora of online businesses. Looking at different aspects of these businesses, there are many moving parts to consider. Resources, inventory, entities involved, process flows, strategies… and the list goes on.
Any entrepreneur who is willing enough to go the extra mile would find a better method to deploy these aspects in a more enhanced, complex yet manageable and innovative way. What would be the output you ask? An enthralling journey of success.
Let’s look at the various models of e-commerce businesses; especially those with multiple entities in the basic system. Consider specific platforms such as Amazon and Doba.com. The former is a multi-vendor shopping cart site and the latter is a multi-site shopping platform.
Model: Marketplace vs Dropshipping
Both are distributed product supply strategies. Marketplace and drop-shipping would be the terms that would define these models. How they became the part of the same genre yet differ significantly is the topic of discussion here.
Marketplace and drop-shipping models use the same methodology for the business. Both do not essentially control the products physically. The business owner just creates a common platform for the demand to meet the supply. The entities involved and how they operate is how they differ from each other.
In a marketplace, the product to be sold goes from the “Seller” to the “Buyer” through an online portal and physically through shipping options provided either by the marketplace owner or the seller. In the drop-shipping model, the same pattern flows but there is the existence of a third party, the “vendor,” who supplies the product to the “Sellers.”
The Sellers in both models also differ. These differences will give you a better understanding of the inner workings of these systems. The Sellers in the drop shipping model have their own online portal or website where the customers place their order while in the marketplace – a commonplace(market) for all the sellers to put their products for sale. The customers can easily navigate between various sellers and the competition is more live and dynamic.
Another main aspect is inventory management. Vendors in Drop-shipping and the Seller in Marketplace manage in each model respectively. A wholesale model of inventory management is followed in the drop-shipping model. They curate, select, and merchandise products from the vendors on a bulk amount and pay a previously negotiated rate, The Sellers in the marketplace model either receive order amounts from the marketplace owner or even directly from the buyers and ship items from their own inventories.
Both models include brands and manufacturers. They have seller accounts with marketplaces and also work with drop shipping retailers as vendors.
When it comes to pricing, the one who holds the inventory in the marketplace model sets the price while the retailer sets the price of their wish in the drop-shipping model. With marketplaces, there is disclosure to the consumers that the product is physically located and controlled by someone other than the retailer.
Drop shipping hides these facts. The consumer sees a brand, but cannot identify that someone other than the retailer is fulfilling this product. This gives it an alias a blind drop shipping model.
All the while, we were discussing the characteristics of both the models and looking closely into the Seller, Vendor, and Source parts. Entities like the marketplace owner and the drop-shipping enabler are the key to the system. They are, by default, the most responsible and main benefactor of these businesses.
The whole system depends on the vision of the business owner and the success depends on how they manage all the other entities and processes involved in their system. Obtaining a flawless and reliable system to coordinate, monitor and manage is quintessential, not just for the success, but even to put forward a decent business portfolio. You can also check the Benefits of Multi-Seller Shopping Cart.
How to create a Multi-Seller Marketplace
Although this seems risky, new world technologies are constantly catching up with the new age as needs grow faster than you think. The best solution is available for both models. You are just a few steps behind stepping up to make your next big turn in the marketplace scene with iScripts MultiCart while iScripts MultiCart Enterprise gets you a kick start for your own drop-shipping business.
These unique solutions for your multi-level e-commerce market simplify your workload on the development requirement to huge extents and all you will require is to manage the real-world aspects of the business ecosystem you are about to create.
The Powerful admin panel gives complete access to each and every part of the system to closely manage and monitor them. Furthermore, these open-source scripts are highly customizable to include any features you might want to add now or in the future.
Have questions about our web software and Mobile Apps and how it can work with your existing business or online business idea? Call us at (312) 423-6728 with any questions you may have. We’d be happy to explain how our software works, including any additional business, needs you may have.