Building a Multi-Seller Marketplace: What Goes Into It

A single-brand online store sells its own products. A marketplace sells other people's products, and that changes almost everything. You now have sellers to approve, listings to check, commissions to calculate, money to divide and disputes to settle between people who are not your employees. This guide sets out what goes into a marketplace so you can judge the size of the project before you commit.

Be sure you need a marketplace

Marketplaces have a chicken-and-egg problem: buyers come when there are sellers, and sellers come when there are buyers. Many local businesses do better with a single store that sells a curated range, or with a directory that lists sellers and sends enquiries to them. Our comparison of own store versus big marketplaces helps with this choice. Build a marketplace when you already have a group of sellers lined up, in one category or one town, and a reason buyers will come to you.

Seller onboarding and KYC

Each seller needs an account, a profile and a verification step. KYC, short for know your customer, means collecting identity and business details before you let someone sell. Typical items are a business name, a bank account for payouts, a PAN and, where the seller is registered, a GST number. Decide who approves sellers, what you do when documents are unclear, and how a seller can be suspended. Store these documents securely, since they are personal data; treat them with the same care as any customer data.

Catalogue rules and moderation

When many sellers add products, quality varies fast. Set rules for photographs, titles, categories and prohibited items. Decide whether new listings go live at once or wait for approval, and whether you review only a seller's first few listings. Without moderation the catalogue fills with duplicates and misleading descriptions, and buyers stop trusting it.

Commissions and how money flows

The usual model is a commission on each sale, either a percentage or a fixed fee that may differ by category. Write the rules in a seller agreement: what the commission is calculated on, whether shipping and tax are included, and how a refund affects it.

The harder question is how a buyer's single payment is divided. The practical answer is a payment gateway feature that splits money between you and the sellers. Razorpay offers this as Route, which, according to its documentation, lets a business split incoming funds among multiple parties, with transfers to linked accounts that can be instant or delayed. Cashfree offers Easy Split, which its documentation says deducts commissions and settles the remaining amount to vendors, with settlement timing configurable per vendor and refund splits that can be set. Both pages are in our sources.

Two cautions apply. First, these features may be available only to businesses that meet the gateway's eligibility conditions; Razorpay's page mentions criteria linked to RBI's payment aggregator rules and written confirmation of the use case. Second, features and eligibility change, so check the current documentation and talk to the gateway before you design around it. For a wider look at the gateways, see our gateway comparison.

Tax points to confirm with your CA

This is general information, not tax or legal advice. Under the GST law, an e-commerce operator that is not acting as an agent may have to collect tax at source, known as TCS, from the payments it makes to suppliers who sell through it. The GST Council's FAQ on the subject explains that the collection is made at a rate not exceeding one per cent, on the net value of taxable supplies made through the operator in a month, deposited and reported by the operator every month. The notified rate has been changed by the government over time, so do not rely on a number printed in an article, including this one.

Whether your marketplace counts as an e-commerce operator, how your commission is taxed, and what your sellers must do about registration are questions for your chartered accountant. Ask early, because the answers affect invoices, payout statements and reports in the software.

Returns, disputes and support

Decide who handles a return: the seller, you, or both. Set time limits, say who pays for reverse shipping and how a refund affects the seller's payout, since money may already have been transferred. A dispute path with simple states, such as opened, seller replied, resolved by admin, saves arguments later.

Admin tools you will need

• Seller approval queue with documents and a suspend option.
• Listing review and category management.
• Commission settings and payout reports per seller.
• Order, return and dispute dashboard.
• Tax and settlement reports your accountant can read.
• A seller panel where each seller manages only their own products, orders and earnings.

The admin side is often larger than the buyer-facing website. Plan time and budget for it. Our admin dashboard development service covers this.

Cost, timeline and next step

Marketplaces sit at the upper end of e-commerce work. Our published e-commerce ranges and timelines are in the e-commerce cost guide, and a multi-seller build with seller panels and split payouts will generally need more than a single-brand store. VS Tech Builders works in fixed-scope milestones, so we start by writing down the seller, payment and admin rules above. Contact us with your category and the sellers you already have.

Sources

Checked on 3 November 2026. Technology changes quickly; always confirm details with the official source before you act on them.

• Frequently Asked Questions on Tax Collection at Source (TCS) under GST — GST Council Secretariat
• Razorpay Route — Razorpay documentation
• Easy Split overview — Cashfree Payments documentation

Frequently asked questions

How do marketplaces pay sellers?

Usually through a payment gateway feature that splits one customer payment between the platform and the seller, after deducting commission. Razorpay Route and Cashfree Easy Split are examples. Availability and eligibility conditions apply, so check the gateway's current documentation and speak to them before you design the flow.

What is TCS for an e-commerce operator under GST?

It is tax collected at source. The GST Council's FAQ says an operator not acting as an agent collects a small percentage of the net value of taxable supplies made through it, and deposits and reports it monthly. The rate has changed over time, so confirm the current position with your chartered accountant.

Do I need seller KYC on my marketplace?

You should verify who is selling and where payouts go. Typical details are business name, bank account, PAN and a GST number where applicable. Payment gateways may also require seller details. Store the documents securely, because they are personal data.

Is a marketplace more expensive than a normal online store?

Generally yes, because it needs seller onboarding, a seller panel, commission logic, split payouts, returns handling and a larger admin side. The exact cost depends on your rules. A written scope of the seller, payment and admin features lets a studio give a fixed quote.