Despite a fine second-half performance after leaking an early goal at the Stade Marcel Cerdan, the young Blues were caught out twice more in their second defeat of their opening games.
Now victory over the Scots at Ewen Fields on 17 October is essential if City are to remain in contention for a top-two finish and a place in the knockout stages this winter.
Marseille had succumbed 4-1 to Barcelona, City's conquerors in their first game last month, but the Frenchmen showed they will be formidable rivals in the chase for qualification.
Blues coach Welsh gave a NextGen debut to 15-year-old Angus Gunn, with Eirik Johansen on international under-21 duty with Norway, and it soon became a baptism of fire.
Gunn did well to dive low to his right to palm away deflected shot from Chris Gadi-N'Kiasala, but Marseille took the lead in the 18th minute when Wesley Jobello lifted Omaur Diop's cross over Gunn.
City, who had to improve on a lacklustre first half, stepped it up after the interval, Denis Suarez showing why he is one of the most highly-rated young players around.
The Blues increased the tempo as the young Spaniard tried to orchestrate the recovery operation, but Welsh's side were unable to convert possession into goals.
Gunn had to save point blank from Jobello but was given no chance when a Marseille counter-attack allowed Diop to cross for substitute Madjid Ammari to put City 2-0 behind.
Marseille added a third deep into injury time when Florian Mouet scored from 18 yards to give the final scoreline an unrealistic look to say the least.