What Is an Online Marketplace?
Different vendors/sellers register on the multi-vendor site where they upload, display, and sell their products or services. The sellers pay a commission to the marketplace owner for using the readymade platform and its other services which may include customer support, logistics, etc. The portal and its policies, transactions, etc. are managed by the marketplace admin/operator.
Why Are Online Marketplaces Becoming Popular?
Recent market surveys suggest that multi-seller stores account for more than 50% of global online sales. Also, online marketplace sales grew by 20% in 2018 to reach $1.8 trillion. These promising figures have tempted many entrepreneurs to adopt this business model over a regular online store.
For starters, this is the in thing and customers are increasingly opting to shop online in multi-seller shops where they get more products at competitive prices. Secondly, it saves costs both for the business owner as well as the sellers. The owner doesn’t have to maintain inventory and the sellers are free from the burden of taking care of the technical aspects.
What Type Of Online Marketplace Platform Are You Aiming At?
The very first thing you need to do is to decide what kind of buy and sell platform you want. Is it supposed to be an online marketplace for sellers? A B2B, B2C, or P2P marketplace platform development? Are you wondering how to build a marketplace app, that is a cross-platform solution?
Before you get to the development process, we recommend you create the business plan for your online marketplace platform which would answer the following questions?
What industry should it work for? Is it a unique product or are there competitors already?
Whom is it created for? What does my project have to offer? How will it solve my customer’s pains?
What marketing + distribution techniques will work the best to create an online marketplace that would be on everyone's lips?
How can I monetize the project? What are the possible ways to earn money on it?
If you’re targeting to build a shared economy app or B2B/B2C marketplace app, you might find the detailed steps to go in the article on launching a scalable online marketplace platform.
How To Build A Marketplace: 4 Stages Of The Development Process?
So, your idea seems to have real potential. It solves existing problems, there is a market for it, and even the possibility of earning money. However, don’t hurry to approach investors yet. You first have to figure out how to launch a marketplace website.
1. Build a marketplace prototype and test the idea
First, you need to get the idea out of your head and make it visual. This can be done with a prototype, which is a sketch or a simplified model, of what you are going to build.
Here’s a small tip: a prototype along with technical requirements will be useful when you start developing your product. So, it sometimes makes sense to hire a professional to create an online marketplace prototype of high-quality. However, you can also do this yourself. If you decide to do it by yourself, read our extensive guide on prototyping. It explains everything step-by-step so that you can successfully build your own prototype, even if you have no relevant background.
The prototype is the best way to present an idea to a co-founder or first employee, generate interest from your first users, and attract early investments.
2. Prepare the project documentation
Though this may seem to be a monotonous task, creating detailed project documentation will save you plenty of time and money in the marketplace website development process. It doesn’t matter if you hire in-house developers or a dedicated team - the documentation will be a clear roadmap for them.
This stage helps ensure that everyone correctly understands the goal and functionality of the product they build.
3. Build a marketplace website MVP
After preparing the prototype and project documentation, you are now ready to start developing the product, or the minimum viable product, to be exact.
A minimum viable product, or the MVP, is a product with just enough features to attract early users. The main idea behind the MVP is to get the application into the hands of the target audience as soon as possible. After releasing the MVP, you will rely on user feedback and must be ready to make steady improvements.
Sometimes the MVP reveals a sad truth – that the assumptions you made during the market analysis are false, and the idea wasn’t as brilliant as it first appeared. You now have a chance to change the direction slightly and adjust the idea to meet the real needs of the market - or give up. In the latter case, early failure means cheap failure.
4. Grow your online marketplace user base
The dream scenario for each small business is that, upon releasing a marketplace app, you immediately gather thousands of users, both suppliers, and customers. Unfortunately, you can’t rely on such a happy coincidence. That’s why you should start growing your user base long before the online marketplace is built. This is how you can attract your most loyal customers.
How to attract sellers to your marketplace?
You may think that no one is interested in entering your marketplace until there is a strong buyer base. But the reality is quite different. Suppliers and service providers are constantly searching for new channels through which they can sell their products or skills. And if you manage to pitch them on the potential of selling on your platform, they will willingly register. Just make sure to present all the benefits and perks of your marketplace service.
Where to find potential sellers?
If a contractor is already using a marketplace, they are potentially open to similar offers as well. In addition, they already have an active source of orders (your competitor’s platform), which means they won’t push you if they won't get immediate results.
Look for active service providers in the region of your interest. Offer special conditions, such as subscription discounts or free access to premium features, to draw the attention of established businesses.
Check out specific groups on Facebook, subscribe to industry-related hashtags, check reviews, etc. Along with finding a few potential users, you’ll have a handful of ideas about how to develop your marketplace further.
How to attract customers to your marketplace?
So, you managed to attract the first suppliers or contractors to your marketplace. Congratulations! But you’re not done yet. No marketplace is successful without a base of loyal users. So think carefully about how you can increase customer awareness of your service. Here are a few ideas:
But, please, don’t write about your service. Think about topics that are interesting to your potential buyers, give valuable advice, or share relevant stories. If your marketplace offers goods and services for pets, your blog should help pet owners. You could also share entertaining content like home videos with cats. If you bet on user-generated content, your chances to succeed increase.
Facebook groups, forums, etc. are the best places to draw the attention of your potential audience.
You can start gathering emails long before the platform itself is built. Just create an online marketplace landing page, share it on relevant channels, and launch ads targeting your audience.
Contact bloggers or local celebrities and try to make them your ambassadors. Their fans will definitely follow.
You have to make sure that on launch day, your marketplace won’t be a tabula rasa without a single listing. This kills trust in your page and makes it highly unlikely that you will attract new users. So, do your best to build a small but loyal community before the launch.
Cost and Time of Marketplace Website Development
Being in the early stages of marketplace startup development, you are likely short on money. So, the marketplace website cost is a significant factor.
Hiring an in-house team could cost you a fortune. However, there is always the option to outsource. You can assign the development process to a company from another country and save a big piece of your budget pie. App development outsourcing is a great option to reduce expenses without risking quality. You should definitely learn more about it!
These are the main stages in marketplace development and their approximate duration:
Analyze the current market, research the demand, and study competitor services. You can do this on your own or together with an experienced business analyst. Involving a professional will get you detailed project requirements, which will be a solid starting point for your development process.
Don’t neglect the work of an experienced UX profit. Their job is to ensure that the users have the best experience when working with your app. A good UX is a competitive advantage, just like a catchy and stylish interface.
The time required to build a marketplace app is much harder to estimate since the time and cost of the development process completely depends on the application’s functionality, the chosen technology stack, the size of the team, and more. However, the approximate numbers mentioned above are real.
To achieve exclusive software quality, development and QA processes should run simultaneously. Some business owners see software testing as a piece of the cake that they can do by themselves. However, a test engineer can implement various techniques to cover most of the possible usage scenarios, ensuring that your customers don’t face an unexpected problem during app usage.
When starting from scratch, your marketplace app development team should include:
A business analyst
A UX/UI designer
Software developers (frontend and backend pros, or full-stack programmers);
A manual or automation QA engineer, depending on your project needs.
How to Choose a Marketplace Development Platform ?
How to create a perfect marketplace? To build a custom platform from scratch. In any other case, you will face certain restrictions and limitations. Before selecting the necessary platform, we recommend considering the following issues:
Required Marketplace Functionality
One more thing to remember – none of the platforms will offer you the possibility of building the exact marketplace of your dreams. There will be restrictions imposed by the subscription plan and the capabilities of your platform itself.
If this does not prevent your platform from working in the way it should, everything seems to be OK. If you have encountered difficulties with workflow and understanding that they are caused by the native peculiarities of the platform – it’s time to change the subscription plan, choose another service, or transfer your business to your own servers.
Must-Have Features for a Marketplace MVP
So, you’ve decided on the tools and technologies. But the hardest choice is still to come. Which features should you implement in your MVP, and which ones can wait? Here’s a list of features your marketplace MVP must include:
Easy social login
Profiles for buyers and sellers
Search and filtering
These are the absolute minimum features your marketplace app needs to start attracting customers. Later on, you’ll add more sophisticated features to improve the user experience and increase your revenue. Moreover, customer interaction will give your ideas for new functionality as well!
Why Does Your Business Need High-Quality Online Marketplace Software?
A well-tested, flexible and scalable online marketplace software is the key to success for your multi-seller website. MartPro's customizable multi-vendor eCommerce platform has built successful marketplaces for a host of industry verticals and business models. Whatever be your business model we likely have a solution built for it already. All you need is to explore the feature-rich platform and see how easily you can tweak not only the frontend but the backend as well.