The number of online shoppers continues growing daily due to a range of benefits purchases on the web provide. In practice, the number of online buyers in 2021 has increased by 900 million from 2020, which is now 2.14 billion digital purchasers worldwide. And the Sharing economy, which refers to the entire concept of marketplaces, is projected to surmount $355 billion by 2025. As for the business side, creating a marketplace is a great startup idea since it doesn’t require supplying any products. Instead, sellers post and offer goods on your platform. That’s why your business is doomed to success with this niche. This article will cover all the peculiarities of marketplace website development, including challenges, features, and many more.
Things to Consider Before Building a Marketplace
In certain cases, the idea should be adjusted to specific market requirements to be profitable and successful. That’s why before proceeding to the development process, you should analyze and define your target market.
Marketplace Website Potential
As it was mentioned above, online shopping is a modern way to receive products meeting your budget and requirements with two clicks. No wonder why the statistics are this successful:
- The marketplace market value is expected to advance at a compound annual growth rate (CAGR) by 9.7% from 2021 to 2028.
- The world-famous marketplaces profited $2.67 trillion in 2020
- P2P marketplaces like eBay or Amazon take over 62% of entire online sales in 2020 and are forecasted to surmount $7 trillion, covering 90% of entire online sales by 2024.
The main aspects impacted on such progress of marketplaces are the following:
- A growing number of online purchasers
- The convenience and easiness of buying products using mobile gadgets
- Unavailability of physical shopping due to the global pandemic
- Efficient search applying various filtering systems
- Widely applied AI integration
Besides, many entrepreneurs use marketplaces to expand product variety, manage online sales, boost cross-border expansion, advance logistics, automate operations, and lower costs.
Key Benefits of Building an Online Marketplace
Projects of any scale can benefit from building a marketplace platform and use its potential to expand the business. Let’s consider the advantages of online marketplaces to find out why they are so profitable:
- Financial benefits. Such websites can bring income without taking care of supplying goods or services. Your responsibility is to build a qualitative platform performing smoothly and seamlessly to attract first customers. The sellers post their products while you enhance your solution for your users.
- Adaptiveness and convenience. The concept of P2P platforms is connecting sellers offering goods or services and consumers who need them. Why is it profitable? Customers and suppliers attract each other to your website; Top-class products raise the client’s number, and sellers start posting on marketplaces due to a broad audience. Furthermore, you can select what niche to occupy yourself with no need to spend on production.
- Efficient creation. The website development market is full of tech-savvy specialists who are competent in building marketplace websites, so you’ll easily choose the one suitable for your requirements and budget.
- Rates and reviews. You are not responsible for the posted goods’ quality. Yet, you can create a section with feedback for sellers. Customers can write comments and attach images or videos of products they’ve bought. This will engage other users to shop on your website, as they can overview the actual quality of products.
These pros define the potency of marketplace website creation, so let’s find out its marketplace website development flow and peculiarities.
How to Start an Online Marketplace Website
There are steps of an online marketplace creation:
- Stage 1. Analysis comprising studying marketplace business development.
- Stage 2. Validating your idea by conducting market research and assessing its uniqueness.
- Stage 3. The planning phase defining the requirements for your platform.
- Stage 4. Building an MVP marketplace with elementary features.
- Stage 5. Hiring a competent development team to build the platform from scratch.
- Stage 6. Estimating the total cost of building a marketplace website.
- Stage 7. Thinking over a marketing strategy
Each creation phase has certain peculiarities worth covering. Let’s discuss them more precisely.
Researching the market helps to understand if your idea will become sought-after and profitable. You should define the pains and needs of consumers and see what solutions are now offered on the market by your competitors. Thus, you’ll be able to understand which niche to cover. Even if your idea is outstanding, the high competitiveness level won’t let it stand out from the crowd. To illustrate, Airbnb helps to save expenses on renting apartments.
Next, you should define your target audience. Conducting surveys may help you with defining the requirements and expectations of clients to your solution. As a result, it’ll be much easier for you to meet them by implementing the appropriate features.
Validation of Your Marketplace Idea
The more preparation you make, the closer you are to success. By validating your idea, you increase the relevance of your product. You can find the list of questions to assess the efficiency of your solution below:
- Would you use this product, and how often?
- What is the feedback from the interviewed group of potential customers?
- Do they clearly get the purpose of your solution?
- How dependent are you on external resources?
You should discuss these questions with your partners in case you have them and get an unbiased opinion of the focus group.
Here are what successful development companies provide their clients with during the planning stage:
- An utter requirements list assembled and structured by Requirements Analyst;
- Market analysis report and recommendations;
- Specification document comprising user stories, technical, and functional requirements;
- Wireframes built according to the specification;
- A thorough development time estimate of each feature.
Development: How to Build a Marketplace Website
There are two marketplace website building methods:
- Creation from scratch
- Creation applying a readymade marketplace platform
You should choose one of those two approaches depending on your case. The platform-based option is cost-efficient and time-saving, whereas a custom one will meet all your requirements, including the design and functionality, contain all the necessary features, and help you obtain your business goals.
Here’s the marketplace website development flow from scratch:
Step 1. Build a Prototype and Check the Idea
Start the creation process by building a mockup of your platform by creating interactive HTML or outlining it on paper. By doing this, you can attract first users and investors.
Step 2. Prepare the Project Specification
The next step is creating documentation that covers all the details of your product, such as all the required features with their description, design requirements, and necessary third-party integrations. In addition, the specification clarifies the tech part of building features for both clients and developers, as their views might be different. In addition, the team divides responsibilities to successfully develop your solution and make it meet all your requirements.
Step 3. Create a Marketplace Website MVP
A Minimum Viable Product decreases the time to market and your expenditures. It comprises sufficient functionality to satisfy the primary needs of customers. Besides, you can make further feedback-based platform enhancements due to reviews of your first clients.
It’s high time to mention the must-have features to include in your platform:
- User profiles, and settings. Marketplace creation consists of two types of interfaces: the one for the purchaser and the one for the seller. Buyers’ side should comprise the registration/ authorization screen, personalized offers, settings to change or recover the password, manage payment methods, and more. Sellers should be able to register and edit the information about themselves and post new products or services.
- Search and filtering system. Customers should be able to sort the most suitable offers by applying such parameters as price, size, location, and more.
- Online chat. To discuss the deal details, both clients and users should be able to send messages to each other using a real-time chat implemented into the website.
- Payment gateway integration. To complete financial operations between suppliers and purchasers, you should integrate a highly protected and reliable payment service, such as Stripe or PayPal.
- Seller’s feedback. After completing the purchase, clients should have an opportunity to share their experience in the section for seller’s rates and reviews. In turn, a supplier should be able to receive and observe them.
Here are some ideas of more sophisticated features to implement in your solution:
- Price and characteristics comparison
- Advanced search and sorting
- Sharing in social networks
- Gift certificates
- Customizable push notifications
- Buyers behavior tracking and statistics
- Enhanced goods and services management
Step 4. Attract a Broader Audience to Your Online Marketplace
You should increase the user awareness of your website solution to higher your credibility in their eyes. Moreover, your marketplace website shouldn’t stay empty on the release day, so make sure you attract at least a minimal user base till that moment.
Key Points to Build a Marketplace Website
Here are indispensable aspects to think over to develop a booming online marketplace:
- A domain name
- Web hosting account
- SSL Certificate
- Payment methods
Let’s discuss every point more precisely.
The domain name is your platform’s address making it available on the Internet. A great domain should be:
- Short and memorable
- With no numbers
- SEO- friendly
Web Hosting Account
Web hosting is a storage of the entire marketplace’s website data. When users look up for your website’s name in the browser, it’s converted into the IP address of your web hosting vendor’s computer. It keeps your platform’s files and sends them back to the client’s browser.
This certificate ensures your web solution with high data, privacy, and safety of every user. SSL is used for transmitting the data from a website to a web server. Besides, Google posts web marketplaces that possess this certificate.
Content Management System
CMS provides marketplace owners with content management tools with no scripting required. They also help edit the elements’ layout, place promoting banners, or add a new screen. You can apply ready CMS instruments from Joomla, WordPress, or Shopify, but they all have bounded functionality.
Your marketplace website can operate financial transactions by the three methods mentioned below:
- Direct payments. In this case, your platform does not participate in transactions. Yet, you have lower methods to charge fees and process refunds.
- Aggregated payments. The aggregated payments imply that your platform unites the purchaser’s finances and later sends the income to vendors via payouts.
- Parallel payments. The payment service divides customers’ payments at checkout and sends them to the seller and your website.
The Team You Need to Create Your Own Marketplace Website
The P2P web development involver the following experts:
- Project Manager
- UI/UX designer
- Web developer
- QA engineer
Let’s now proceed to an approximate cost estimate.
Price of Building a Marketplace Website
Rough calculations provide us with the following numbers (between $30,000 and $200,000). The main cost determining factor is the project complexity and developers you’ve hired for the project.
The price comprises the development and non-development time for the implementation of each feature. Experienced companies usually offer the Detailed estimate document during the Planning stage, comprising minimal and maximal timeframes to build each website’s part.
Estimating the total cost is quite easy; you should multiply the chosen software vendor’s hourly rate with the number of hours required to create a marketplace website. Let’s take a look at the table with our calculations:
|Designation||Minimal hours||Maximal hours||Average hours|
|Price at $30||Price at $50||Price at $150|
Read : D-U-N-S Number Guide
Post-development Actions to Make Your Custom Marketplace Successful
As we’ve already discussed, it is highly significant to attract the first users before launching your solution. It is worth promoting your platform among sellers who will start posting and offering their goods or services. For this, you can:
- Contact sellers who actively post on competitive marketplaces
- Use business directories and Google search to search for suppliers for your particular domain
- Search online or Facebook communities
Needless to say, that you should also invite shoppers to your platform by increasing their trustworthiness towards your marketplace. There are some tips to do that:
- Create a pre-releasing landing page to gather emails
- Discuss thematic questions on the Internet resources mentioning your platform
- Apply to influencers of your target audience and offer them to become your marketplace website’s ambassadors
- Create a blog or online group
Yet, gathering both sellers and purchasers is not the success of your platforms. You should make constant enhancements based on KPI (Key Performance Indicator), comprising usage metrics, transaction metrics, profit, and business metrics. A thorough consideration of consumers’ behavior defines the improvements worth making in your web marketplace.
Top 3 Marketplace Platforms
Let’s observe the most successful online marketplaces and check their profitability, customer service, and efficiency.
This is a globally used marketplace with a 9.4% worldwide market share. You can receive a 100 million Prime members base whose spendings are $1400 annually.
eBay takes first place in market share size (3.3% traffic worldwide). It offers a base with 168 million purchasers who bring $95 billion of yearly income.
Taobao is a China marketplace, which generates its profit by constantly raising the competitiveness level and offering paid promotions for products.
Online shopping is a time-saving and convenient way to purchase products without risking your health due to the current situation in the world. Thus, the demand for online marketplaces continues to grow, increasing the profit of the platforms’ owners by leaps and bounds. To build a profitable platform, you should cooperate with highly competent tech-savvy specialists who will make an excellent solution for you. Asa result, your platform will come in handy for conducting deals between sellers and shoppers, increasing your income successfully.
Content by :
Katherine Orekhova a technical writer at Cleveroad – mobile app development company. I’m keen on technology and innovations. My passion is to tell people about the latest tech trends in the world of IT.