Multisite domain or sub directory?

Hi guys

We’re expecting to have around 30-40 multi-vendor stores from our existing customer base, using marketpress, created on our multisite network when we first launch.

Each vendor will control their own site to a certain degree, and new vendors should easily be able to sign up for their own store, without any issues. We want to make it as simple for them as possible to create their store, post products and sell, and communicate with potential buyers.

We expect this to grow far beyond that in the first year based on existing demand, and we may be able to reach around 400 multi-vendor sites in the first 12-18 months. We’ll be hosting on Amazon web services.

We’re trying to decide which route to go regarding initial multisite set up. Separate domains for each vendor site (e.g. http://www.theirsite.oursite.com), or separate directory (www.oursite.com/theirsite)?

We will be keeping branding consistent throughout the site, and vendors won’t have the option of settings up their own .com domains like with bigcartel and similar.

Any thoughts on pros and cons of domains or directories for multisite setup?

Thanks.