Shopify Marketplace: Everything You Need to Know to Build an Online Marketplace

When you hear e-commerce, there might be a few names that come running to your mind. Shopify could definitely be one of your choices, as it is one of the biggest e-commerce platforms worldwide with a significant market share.

It is indeed a popular platform for businesses looking to sell their products online. With its user-friendly interface and customizable features, it's no wonder that many entrepreneurs are turning to Shopify to set up their online stores. But did you know that you can also build a Shopify marketplace? In this article, we will explore the Shopify marketplace in detail, its benefits, how you can get started with it, and much more.

What is a Marketplace?

Source: Canva

Before we begin, let's try and understand what exactly a marketplace is.

A marketplace is a platform where multiple sellers come together to offer their products to customers. You can think of it as a virtual shopping mall where different shops showcase their products, and customers can browse through a variety of options. Some of the most popular marketplaces that we are sure have heard of or used include eBay, Amazon, Etsy, etc.

Although it opens up a world of opportunities for sellers, marketplace stores are quite different from e-commerce stores and have more challenges. One big issue is dealing with many sellers, which makes things like the shopping cart, shipping, fulfilling orders, and setting commission rates more complicated when there are lots of different items from different sellers.

Is Shopify a Marketplace?

Now, we are approaching the big question: Is Shopify a marketplace? Yes and no.

Shopify is not your usual marketplace (like Alibaba or Amazon), as it does not come with any multi-vendor features or capabilities. It is primarily an e-commerce platform where businesses can create online stores and sell their products online. As merchants, you can create and control your online stores and connect with other platforms to sell, including marketplaces and social media platforms.

Although Shopify isn’t an online marketplace that fits the exact definition, the Shopify Shop app is worth the mention and functions similarly to online marketplaces. It is a digital assistant and a convenient mobile app that serves like a marketplace for Shopify merchants. It allows customers to easily track packages, discover new stores and products, make purchases using Shop Pay, and engage with their favorite brands.

Source: Shopify

Some of its key features include:

• Simplified Package Tracking: Keep track of your orders from multiple stores in one place.
• Seamless Product Discovery: Explore a curated selection of products from top brands and discover new favorites.
• Effortless Shopping with Shop Pay: Enjoy a fast and secure checkout experience with Shop Pay.
• Stay Connected with Your Favorite Brands: Receive updates, promotions, and exclusive offers from your favorite brands.

With the app, you can also manage your brand profile, customize product listings, and engage with customers through the Shop app.

Creating a Marketplace With Shopify Marketplace Kit

Source: Shopify

That said, if you are still looking for a complete marketplace experience, you can consider Shopify Marketplace Kit.

This Kit helps you add commerce features to any platform, use Shopify's commerce features, and connect your platform to other merchants and their products.

Shopify Marketplace Kit is a set of APIs and tools that allow developers to build marketplaces on any platform. This means that you can use Shopify Marketplace Kit to add e-commerce functionality to your existing website, app, or social media platform. It is a powerful tool for businesses that want to reach a wider audience and sell their products to more people.

Read more: Shopify Markets: The Secret Weapon To Bring Your Business To International Market

How Does Shopify Marketplace Kit Work?

Source: Shopify

The Shopify Marketplace Kit connects Shopify merchants to your platform through a channel app. Partners create this app, and merchants install it in the Shopify admin. Multiple merchants can then publish their store products to the channel app in the Shopify admin, making these products available on your platform. When multiple merchants publish, and buyers purchase on your platform, you've established a simple marketplace. That’s it!

4 Benefits of Using Shopify for Marketplace

Creating a marketplace with Shopify Marketplace Kit comes with many advantages, including:

• All-in-One Marketplace Kit

Shopify's Marketplace Kit takes care of the essential aspects that all admin apps need to handle. This includes connecting to a merchant’s store, retrieving and storing data, and displaying overview and onboarding pages. The use of technologies like the Storefront API, JWT authentication, and well-supported common technologies simplifies the complexity of these processes.

• Fast Setup Time

One of the standout advantages of using Shopify for a marketplace is the speed at which you can go from concept to reality. The Marketplace Kit, along with the Shopify Marketplace Admin and Buyer apps, accelerates the development process. With ready-to-use starting points and key technologies incorporated, you can significantly reduce setup time and focus on customizing your marketplace according to your vision.

• Quick Learning

We know that building the initial setup in a normal scenario can take months. Shopify has condensed years of experience into the Marketplace Kit, ensuring that every partner has a seamless experience. Shopify also provides resources, coupled with the provided apps, that empower partners to add additional functionality to their marketplace. The tutorials are available on Shopify.dev/marketplaces and serve as valuable guides for partners at various stages of development.

• Ease of Customization

Customization is made easy with Shopify's Marketplace Kit. The apps use common technologies, such as the MUI - Material UI library, making it accessible for partners to modify according to their preferences. Whether it's changing the CSS library or creating new sections on the onboarding page, the kit provides flexibility for partners to tailor the marketplace to their unique requirements.

How to Get Started on a Marketplace with Shopify?

Now that you understand the benefits of Shopify Marketplace let's explore how you can get started and make the most of this platform.

Requirements:

Before you dive in, make sure you have the following basics covered:

• Latest versions of Node.js and npm installed
• Yarn installed
• Sequelize CLI installed (it's handy for the channel app as it uses Sequelize as the ORM)

Also, make sure you have:

• Completed the GraphQL and REST Admin API setup and authenticated with the APIs using OAuth and offline access.
• Created a Partner account and a development store.
• Got a good grip on how apps fit into Shopify, various ways to distribute your app, and an understanding of channels.
• Turned your app into a sales channel.
• Familiarity with the Storefront API.

Let’s get started!

Creating a Channel App

Source: Shopify

To connect Shopify merchants to your marketplace platform, you need to create a channel app. This app acts as a bridge between Shopify and your platform, facilitating the publication of products from the merchants' stores to the marketplace.

To do this, you can follow these steps:

• Clone the repository for the merchant-facing sales channel app: git clone https://github.com/Shopify/shopify-marketplaces-admin-app.git
• Create a .env file in the project root and add the required access scopes.
• Install necessary packages using yarn install.
• Connect the app to your database using Sequelize ORM. Adjust values in config/config.json and run migrations with npx sequelize-cli db:migrate.
• Review the code structure, including the frontend code, server setup, custom functions, and webpack configuration.

Once your channel app is created and approved by Shopify, merchants can install it in their Shopify admin to start publishing their products.

Quick read: How to Sell Services on Shopify: 5 Steps to Building a Store

Onboarding Merchants

Source: Shopify

Once your channel app is installed by merchants, you can onboard them to your marketplace. Through the channel app pages you create in the Shopify admin, merchants onboard, publish products and track their progress. The other key pages in the channel app include:

Homepage:

This is what merchants first see when they open the channel app. For new installations or incomplete onboarding, it displays an introduction to the marketplace with a link to the onboarding page. If onboarding is complete, it offers an overview of the merchant's status and the products they're selling.

Onboarding Page:

This page guides merchants through the steps needed to sell on the marketplace, providing dynamic feedback on their progress. It includes onboarding information, terms and conditions agreement, and, if relevant, checks for eligibility requirements.

Settings Page:

After onboarding, merchants can access this page to view and modify their information. It displays relevant details encountered during onboarding, like terms and conditions and account connections.

Marketplace eligibility requirements, which you can determine based on shop configuration and REST Admin API queries, are at your discretion.

Building Buyer-Facing Pages (Shops)

Source: Shopify

Picture a regular store having its own homepage and separate pages for different types of products. Sounds simple, right? But in a marketplace, one channel app takes care of many shops, all on the same platform. At the same time, a great marketplace is also in charge of improving conversion by providing buyers with crucial information about these shops and their products. This information not only assists buyers but also allows merchants to stand out in a competitive marketplace.

With Shopify's Marketplace Kit, you get the commerce essentials and the Storefront API, which you can use to create an engaging storefront experience for each shop on the marketplace. You can create:

Shop Pages:

In the context of a marketplace, creating shop pages is unique. A single-channel app hosts multiple storefronts, and a marketplace needs to control the appearance of various brands. Shop pages display essential details for each shop, such as the shop name, description, and a link to the storefront.

Product Categories:

These pages showcase product types that merchants have organized in their storefronts. For instance, you can render clothing in categories like coats, handbags, and dresses.

Product Sort:

Enable buyers to organize shops on the marketplace based on specific criteria, like sorting shops by name.

Product Filter:

Let buyers narrow down their search by adding filters based on specific criteria, such as filtering products by price range.

Creating a Shop Discovery Experience

Source: Shopify

The process of discovery is when buyers find out about the shops in your marketplace. A great marketplace experience makes it easy for buyers to quickly find and refine lists of shops, enhancing satisfaction and boosting conversion rates. This includes displaying and organizing the products in a user-friendly and intuitive manner. Customers should be able to easily browse through the available products, search for specific items, and access detailed product information. To enable this, you must have the following:

• Shop Search:

Enable buyers to find shops where your channel app is installed by adding a search function, like searching for shops by name.

• Shop Sort:

Allow buyers to arrange shops on the marketplace based on specific criteria. For instance, you can add the ability to sort shops by name.

• Shop Filter:

Let buyers narrow down their search by adding filters based on specific criteria, such as filtering shops by country.

Choosing Cart and Checkout Methods

Source: Shopify

So, now you have created a marketplace with all the shops and products set up. But there is a small problem. Every time a customer adds a product to a cart or wants to checkout, they are redirected to the merchant's own online store. This means they have to leave your marketplace to complete the transaction of each individual product or from each merchant. That doesn't sound so hassle-free, does it? With Shopify Marketplace Kit, you can remove this hurdle and allow buyers to select and purchase the items they want while browsing the marketplace.

There are two ways Shopify enables this.

• A marketplace-level cart: This allows buyers to accumulate products from various shops seamlessly. This means a smoother transaction process as users can select items for purchase without leaving the marketplace.

• A multi-shop cart page: It helps you conveniently display all chosen products and estimates associated costs across different stores.

And that is all. By following these steps, you will be ready with your marketplace in no time. For more detailed instructions, you can visit the page here.

Challenges to Consider on Shopify Marketplace

Source: Canva

While Shopify Marketplace Kit is perfect for building your marketplace, there are certain challenges and considerations you need to be aware of:

Shopify API Limits

The Storefront API, a key part of the Marketplace Kit, mainly works at the individual shop level. This can be a challenge when you want to perform actions involving multiple shops simultaneously, like getting a list of shops for a specific product. Sorting or filtering shops at the marketplace level may also have some limitations. The tutorials mainly focus on handling data at the shop level, so performing broader marketplace operations might require extra consideration.

Customization and Flexibility

While Shopify provides a solid foundation for building a marketplace, there may be certain limitations in terms of customization and flexibility. If you have specific requirements that go beyond the capabilities of the platform, you may need to explore additional third-party solutions or apps to support it.

Huge Learning Curve for Beginners

For beginners, using Shopify Marketplace Kit might take a bit of time to grasp.

Understanding how shops interact, the limitations of the Storefront API at the marketplace level, and managing product synchronization can be challenging initially. Although Shopify has in-depth tutorials to help, newcomers should be patient and dedicate time to learning these concepts for effective use of the Marketplace Kit.

4 Must-Know Apps for Building a Shopify Marketplace

Here are four Shopify apps that will help you run your Shopify marketplace smoothly:

ShipTurtle Marketplace Creator

Source: Shopify

Rating: 4.7/5 (48 reviews)

ShipTurtle offers seamless syncing, order management, and revenue-boosting without the hassle of inventory risks. With 100+ shipping integrations and automated processes, it's a true game-changer. Vendors enjoy real-time dashboards, and the app's flexibility and ease of use make it a top choice.

Source: Shopify

Key features:

• Effortless store-to-marketplace transition.
• Comprehensive shipping integrations.
• Automated order processing and bulk actions.
• Flexible commission automation.
• Budget-friendly plans.

Pricing:

Starts at $29/month, billed annually.

Etsy Integration & Sync

Source: Shopify

Rating: 4.8/5 (431 reviews)

This user-friendly app facilitates effortless bulk uploads and imports of products, ensuring your Etsy SEO-optimized titles and prices remain intact. The app also boasts 24/7 live chat and email support, ensuring a smooth experience. While not endorsed by Etsy, it leverages the Etsy API for reliable integration.

Key features:

• Effortless bulk upload and import of products.
• Real-time synchronization of inventory, orders, and products.
• User-friendly order fulfillment with or without tracking numbers.
• Automatic syncing of price, title, images, etc., from Shopify to Etsy.
• VAT syncing for Etsy sales in Shopify.

Pricing:

Starts at just $19.9/month for the basic plan. Free plan available.

Multi-Vendor Marketplace

Source: Shopify

Rating: 4.6/5 (717 reviews)

Multi-Vendor Marketplace's feature-rich module simplifies the addition and management of sellers, offering them individual profiles and collection pages. Admins have full control, setting global and individual commissions effortlessly.

Key features:

• Seamless transformation into a marketplace.
• Flexible commission settings.
• Easy product management through CSV files.
• Customizable seller profiles and product pages.
• Partner-friendly features.

Pricing:

Starts at just $10/month for the basic plan.

Order Fulfillment Guru

Source: Shopify

Rating: 5/5 (95 reviews)

This Order Management System (OMS) is tailored for Shopify and Shopify Plus users. You can enjoy the convenience of managing everything within Shopify, from order administration to prepaid shipping labels and auto-invoicing. Order Fulfillment Guru is a reliable solution if you need efficient multi-vendor and multi-warehouse order fulfillment.

Key features:

• Automatic order assignment based on routing rules.
• Easy splitting and sending of orders through various channels.
• Real-time synchronization of orders, products, and inventory between Shopify stores.
• Built exclusively for Shopify, ensuring seamless integration.
• Additional features like prepaid shipping labels, ShipStation integration, and auto-invoicing.

Pricing:

Starts at $9.95/month. Free plan available.

Key Takeaway

Creating a marketplace is more complex than an online store, but the free Shopify Marketplace Kit makes it easy. The detailed tutorials simplify developing a marketplace channel app and connecting it externally. It's the perfect solution to build a fully functional marketplace from scratch. So, what are you waiting for? Get started with Shopify marketplace today!

Explore more, check out: Shopify for Artists: The Complete Guide to Sell Online