Marketplaces provide a convenient environment for deals between sellers and customers. They allow for flexibility in trade transactions and are popular among users. So, it is a profitable business idea to build an online marketplace.
This article will tell you about the most significant aspects you should pay attention to while starting a marketplace.
1. Determine a value for your future users
The number of marketplaces is growing. So, a unique value should distinguish your platform from others. With its help, you will build a community in your marketplace. Interest in your website will help you stay in the e-commerce game.
For example, you can create a platform that allows buyers to purchase directly from retailers or wholesale vendors. The Etsy platform is such a case. It offers buying and selling hand-made and vintage items right between sellers and buyers.
To outline your platform’s value, you need to make a market analysis. It shows your competitors, potential customers and the way you solve the customers’ pain points. The outcome of such research ensures that your marketplace will be in demand and bring you profit.
Notably, the marketplace industry has a broad audience – consumers of different age, marital status, needs, and preferences. So, you win the interest of your customers by covering particular preferences.
2. Choose a business model
There are three main types of marketplace business models:
- B2B (business-to-business). In this case, a marketplace helps businesses to exchange services and products. For example, one company can supply raw materials that another company uses in production. A prominent example of this model is Alibaba.
- B2C (business-to-customer). Such marketplaces link sellers and suppliers with buyers. This is the most widespread model in trade. For example, Amazon is based on this model.
- C2C (customer-to-customer). These are marketplaces where customers trade with each other. So, buyers are sellers in such trade environments. Prominent examples of this model are eBay and Airbnb.
Online platforms also combine these models and offer their customers a wider range of services. So, choose the business model or their combination depending on your marketplace niche.
3. Select a monetization strategy
From 2017 to 2022, online retail revenue doubled in the US, leaping from $425 billion to more than $875 billion.
To a large extent, it is due to the right monetization strategy. This aspect is the main revenue element that allows you to get paid for the service you offer. Let’s discuss the fundamental monetization strategies in the examples.
- Subscription fee
For example: you suggest a subscription for enhanced features for $15 per month.
- Transaction fee
For example: sellers pay 5% from the value of each deal on the marketplace.
- Listing fee
For example: the marketplace offers sellers to list each product for $11.
- Premium listings
For example: you offer sellers to keep their listings higher in the feed for $12 per week.
Featured ads are an excellent method for the vendors to move their products up the feed and get more visibility within your portal.
Your monetization strategy should have an exact value for your customers. For example, if you use a subscription model, it is helpful to define what benefits subscription brings. Thus, you will keep users loyal to your platform.
4. Develop your platform
A good software platform will help you to build perfect business logic for your marketplace.
There are two main options for building your website:
- Off-the-shelf software
- Building a marketplace from scratch
Let’s see the main pros and cons of each approach.
You can discover dozens of platforms that enable users to create a solution that fits your business. The most prominent examples of such products are Magento, CS-Cart Multi-Vendor, WooCommerce, Shopify.
These portals can be either open source, licensed, cloud-based or self-hosted. They suggest services for building marketplaces with different control over your solution. This means that maintaining and upgrading your platform depends on you or your chosen provider.
This option is perfect if you want to build a marketplace with streamlined business processes. This way, you create functionality and rules customized depending on your platform’s services.
You may wonder how to find a reliable development partner to build a reliable and secure marketplace. Let us tell you about the main options:
- Your own development team
This option means that you hire a team of developers based in your company. They develop your marketplace according to the assigned tasks and business goals.
- Freelancing team
To hire a freelancer from a team of freelance developers, you can visit such platforms as Upwork, PeoplePerHour, Fiverr, Freelancer, and others similar. Each team member is self-employed and focuses on their area of work.
- Software consultancy
It is a company that specializes in the development of custom web solutions. If you choose this option for the development of your platform, check the expertise of such a technical partner.
Your marketplace solution must be adaptable for adding new features. As your business grows, your platform also evolves, attracting more customers. So, the technologies must ensure the flexibility and safety of your solution. Your technical partner with proven expertise can advise you on that.
Also, we recommend that you start your platform as a minimum viable product (MVP). As a rule, you can deploy it within 3-4 months. After that, you will see how users accept your solution.
So, an MVP allows you to see the business potential of your product. At the same time, you will understand what improvements you can include in your portal.
5. Create a unique UX and intuitive UI design
Your brand has to present itself and show specific cherished values. The values and brand are closely connected. So, the design should clearly outline the values you want to promote with your platform.
In order to do that, you need to think over your design strategy that will clearly match your platform’s values and your customers’ needs. To make your platform user-friendly, create intuitive UX and appealing UI. Also, provide essential features and personalization. Thus, your portal will stand out from your competitors.
Starting a marketplace is a profitable venture regarding the rapid growth of the e-commerce industry. At the same time, it is vital that your platform offers unique value and presents it with a clear design to stand out from competitors. Also, your platform should be reliable and secure to provide the best user experience. Following the above five steps helps you achieve these goals and create an excellent marketplace.