In this present day, e-commerce business is booming, as many businesses are moving into the online retail space in order to reach a good number of their audience and unlock their potential in maximizing their profits. E-commerce is becoming a big business that dictates the latest trends. E-commerce sites have been in existence for some time now. They are playing a big part in the world wide web. Nowadays, online stores work great. The world of business is changing rapidly. Companies are now moving their goods and services online. The e-commerce service providers are trying their possible best to reach their customer wants and needs in the most efficient means. e-commerce business is the determinant of the latest trend, and it’s showing no sign of declining.
If you have an e-commerce you might consider the possibility to make it a multi-vendor shop. Owners of multiple product vendor websites have the huge advantage of getting passive earnings because they earn a commission on each sale. Consider, the more vendors in your websites, the more sales, the more you can earn without lifting a finger. In addition to that, the more vendors, the more traffic is brought to your site and the more its positioning improves.
Now you are in the mood to create a multivendor marketplace because you can earn lots of profit. But wait, you need to choose a plugin which can perform all the actions and functionalities of a marketplace. Here we come with a solution. With the help of WordPress WooCommerce Multi Vendor Marketplace, you can convert your WooCommerce Website into a fully functional marketplace. Still worried... let's take a quick look at its features and the getting started guide.
Okay, so now you are thinking of making money ($$$$$$$$$$$$$). Let's go through various pricing models of this Multivendor Marketplace. How can a marketplace owner generate revenue from the marketplace? We shall discuss the revenue/pricing model of WordPress WooCommerce Multivendor Marketplace one by one.
Commission Based Model
Charging a commission for each product/transaction is one of the popular business models for the marketplaces same applies here. When a customer pays the seller for the product, the marketplace facilitates the payment and charges a percentage or a fixed amount. The benefit that this business model provides, is that the sellers are not charged until they start earning from the marketplace and is definitely attractive to the sellers. From the marketplace point of view, this will be producing great deals of profits in the long run. The big and best-known marketplace platforms like - Etsy, eBay, Flipkart, Amazon etc. use this commission-based model.
Initially, you get two options with the marketplace to charge a commission on the sale of its vendors, Global Commission and Seller Commission.
Global Commission - This is the commission that works on everything, no matter what type of product is, what kind of category is and what kind of vendor selling the product. Marketplace owner gets a percentage based commission on each and every transaction of any item.
Let's take a simple example to understand this better- In your marketplace there are three kinds of products (A, B and C) their respective prices are $100, $200 and $300 and global commission of the marketplace owner is 10%. So on every transaction of those items, marketplace owner will get $10, $20 and $30 as commission.
Seller Commission - This is a very interesting commission structure we have. In this commission, the marketplace owner can set different commission percentage on different sellers/vendors. In simple words, if there are two vendors (V1 and V2) so, the marketplace owner can set different commission like 10% for V1 and 30% for V2.
Now you are thinking why it is required? It is required because the association of vendors with your marketplace is different from each other. The period of association of a vendor with your marketplace can be varied. And the most interesting factor the sales volume of two vendors is different. Go through below image:
There is a vendor who is offering a great quality of their products. So the buyer will definitely go for the products of that vendor. It means sales volume of that vendor is higher than other vendors. So here you can charge some less commission percentage on that vendor.
Now, what are you thinking? Is this enough for this commission based model? No, there are various other ways to charge the commission to the vendor/seller of the marketplace. But for that, you need purchase a plugin named Marketplace Advanced Commission for WordPress WooCommerce. WooCommerce Marketplace Advanced Commission gives the ability to admin to set commission for products, categories, and subcategories. Admin can also use various commission rules to charge commission from the seller.
Category Commission - This is the commission that works on the category basis. Marketplace owner can set the commission based on categories. Suppose there are various categories and subcategories are available in the marketplace like (Clothes, Mobile Phones, Tablets, Laptops, Books, Accessories etc). Now, the owner can apply different commission on every category or subcategory. For example 10% commission on Books, 20% on Clothes, 15% on Accessories and so on. So whenever the purchases on those categories happen, the commission will be charged accordingly.
Product Commission - In every marketplace, there must be a product that is so much popular among the buyers. So, to generate more and more revenue from sales of that product, marketplace owner put the commission on that product and gain profit.
Rule-based Commission - In this marketplace owner will be able to add different commission rules as per his requirement. While adding a new commission rule, he can define a range of price and even can choose the type of commission as “Fixed” or “Percentage”.
Membership/Subscription based model
When e-commerce is becoming more and more conventional, a new variety of products will come to the market online to fulfill the needs of the consumers. However, it can be a challenge for those who are selling non-physical items to set up a shop and add digital products, as this is still rather a new concept. Thus, the seller can face a lot of unexpected issues along the way. But it is not happening in WooCommerce Multi Vendor Marketplace. You can create a marketplace where users are charged on the basis of subscription. In other ways, you can create a marketplace for downloadable products.
A Membership/Subscription model is one where either some or all of the marketplace's users are charged a recurring fee to access the marketplace. These Marketplaces help the sellers in finding new customers. Memberships are usually applicable to digital and downloadable product types and some of the marketplaces utilizing this type of membership model are - Amazon Prime Videos, Netflix, Itunes, Shutterstock, Audiojungle, codecanyon etc. These sites make a careful and critical examination of all the subscribers in order to guarantee quality matches and create a sense of exclusivity that justifies their fee.
Advertisement as an offer based model
As an online business, showcasing featured products on your front page is one of the factors that are likely to affect your customer's impression the most. The reason I made this statement is that featured products are the best products in your store, and they will represent the rest of your entire product line. But you can make money also with the help of this feature. It become very easy to charge vendors for making their products on the top row.
You can also make a banner on your homepage and display various offers of products or various products. You can charge vendor to put their products in that banner.
Hope you like the Article.