A multi-vendor marketplace lets many independent sellers list and sell on one platform. Buyers shop and pay once; the platform keeps a commission and pays each seller. It sounds like an online store with more sellers — but the hard parts are different: onboarding sellers, splitting money correctly, shipping from many places, and the tax obligations that come with being a marketplace operator.
This guide covers what to plan before you build. To see the buyer side, try the multi-vendor marketplace demo.
Start with the model, not the features
Three questions shape everything else:
- Who are the sellers? Small makers who need hand-holding, or established brands with their own systems?
- Who ships? Each seller with their own courier, or your platform's courier partner — or both?
- How do you earn? A commission per category, a monthly seller plan, listing fees, or advertising?
A crafts marketplace for 300 small makers and a B2B platform for 40 distributors need very different software, even if both are "marketplaces".
Seller onboarding and trust
Sellers should be able to sign up themselves, but not go live unchecked:
- KYC: GST number or PAN, bank account verification, and business details
- Agreement: commission, returns and payout terms accepted at sign-up
- Listing review: new sellers' first products checked before going live
- Ratings and disputes: buyer feedback, return rates and the ability to pause a seller
A seller dashboard — products, stock, orders, shipping labels and payouts — is what keeps sellers active. If they have to email your team to change a price, they won't.
Payments: one checkout, many sellers
Buyers should pay once, even when their cart holds products from three sellers. Behind the scenes:
- The order is split by seller into sub-orders.
- The payment goes through a licensed payment aggregator that supports split settlements (Razorpay Route, Cashfree and similar).
- Your commission is kept and each seller's share is paid out on a schedule — weekly, say, after the return window.
- Refunds and returns adjust the right seller's payout.
Building your own escrow by collecting all the money into your bank account and paying sellers by hand is how marketplaces get into regulatory and accounting trouble. Use the aggregator's split features.
Tax: the marketplace operator's obligations
Being an e-commerce operator brings specific duties in India, including:
- TCS under GST on the net value of sellers' taxable supplies made through your platform
- TDS under the Income-tax Act on payments to sellers
- Reporting those collections and deductions in your returns, and giving sellers the details they need
The rates and thresholds have changed in recent years, so confirm the current ones with your CA before launch. The software's job is to calculate them per seller and per payout, and produce the reports — not to decide the rate.
Shipping from many places
- Seller ships: the seller prints a label from their dashboard; tracking flows back to the buyer.
- Platform courier: pickups from each seller's address through an aggregator such as Shiprocket.
- Split deliveries: a buyer whose cart has three sellers may get three parcels — tell them before they pay.
Returns need clear rules per category, with the return shipped back to the right seller and the payout adjusted.
What to launch with
A first version that works beats a big one that's late:
- Seller sign-up with KYC and a simple dashboard
- Product listings with categories, search and filters
- One checkout with split settlements
- Seller-shipped orders with tracking
- Commission per category and weekly payouts
- Admin screens for approvals, disputes and reports
Leave seller ads, subscriptions, a mobile app and B2B quotes for the next phase.
Build or use a marketplace platform?
Hosted marketplace plugins can get a small marketplace live quickly. A custom build makes sense when your rules are different — B2B pricing and credit terms, makers who need assisted onboarding, special commissions, your own courier logic — or when you expect to grow beyond what a plugin handles. Either way, payments and tax logic deserve the most care.
The short version
A marketplace is a payments, trust and logistics business with a storefront on top. Get seller onboarding, split settlements and tax reporting right first; the storefront is the easy part.
See the multi-vendor marketplace demo, the e-commerce website demo, or talk to us about your marketplace.