How to Build a Marketplace That Will be Easily Promoted, Popularized and Scaled
Marketplaces are popular places among corporate and individual users.
22:42 21 July 2020
If you are looking for an almost riskless idea to come up with a retail startup, the decision to build a marketplace website may be the most promising one. Marketplaces are popular places among corporate and individual users. What is more, your responsibility is significantly decreased compared to e-commerce store development.
However, how to build a marketplace? How to promote it in such a way to attract the equal share of sellers and buyers and motivate them to make transactions? Here is your guide to marketplace development and marketing.
Marketplace Definition and Popularity Statistics
In a nutshell, a marketplace is a platfrom that connects buyers and sellers in one place. This is a website that is free to login for each participant but depending on the monetization model, sellers may be required to share a part of their profit in a form of a commission from each transaction or as a payment for the possibility to list their goods on the platform.
Marketplace business model is very popular nowadays because of the two main reasons:
- Buyers may skip the personal website development and use the marketplace as the place to advertise their goods. Sometimes marketplaces also provide an opportunity to create a website as a part of the platfrom using the marketplace’s branded name as a part of the URL.
- Sellers get instant access to all the offers available and find the best deal for them.
Here is more data to prove that marketplace is a promising idea for startup development.
- Increasing sales is the main reason why retailers start using Amazon.
- 14% of online shoppers prefer to make the first purchase with the help of a marketplace, and 37% will do the same to make the second purchase.
What Are the Benefits of the Marketplace Model Over Offline Shopping
Online shopping is already a familiar way of making purchases. However, it becomes even more convenient and engaging with the help of marketplaces.
- Online shopping is quicker. What is more, with the help of advanced technologies, for example, AR and recommendation engines, it is possible to sell even more goods that will suit the buyers perfectly, thereby avoid disappointments and costly returns.
- Better selection of items. More sellers mean more items to compare, choose from, and buy at the best prices.
- Better prices. According to the statistics, better prices are the main reason why shoppers prefer to make purchases with the help of marketplaces. The opportunity to find the best deal becomes possible because of the great selection of sellers, as we’ve stated.
What is more, there are also a lot of benefits for business owners. According to American marketers, the main marketplace usage advantages include:
- The possibility to reach the customers in a place where they are ready to buy
- Increase brand awareness
- Compete with other companies on equal terms
- Increase sales
- Build trust with the help of authentic users reviews
- Use build-in promotional features.
What Is a Marketplace Example?
Since marketplaces are a popular form of interaction between sellers and buyers, there are a lot of famous platforms that follow this business model. Here are the leading ones.
- Amazon. This is a marketplace that doesn’t need long introductions. However, it was started as a classical retail store, and only then, it evolved into a global marketplace with insane revenues.
- Booking. Surely, you know how Booking works. However, it is still necessary to mention it as an example since its specific is in the fact that services (instead of goods as with Amazon) are sold here.
- Uber. This is one more service-exchange marketplace. What is more, it fits the idea of sharing economy and on-demand services very well. What is more, Uber was one of the first startups who felt these economical changes and decided to take advantage of them.
- Etsy. This is a p2p marketplace where sellers and buyers are individuals and handmade goods are sold.
- Prozorro is a Ukrainian e-procurement marketplace. Its task is to connect state authorities with entrepreneurs who are willing to sell goods or provide services in a partnership with local administrations,
How Does the Marketplace Model Work?
Match buyers with sellers and get a commission (or listing fee, or subscription payments)
How Do You Kickstart and Scale a Marketplace Business?
So, here is how to build a marketplace website and scale it competently.
Find a gap which prevents sellers and buyers meet each other
There is no need to create a second Amazon or Booking. Instead, you should find such a specific market necessity that will perfectly fir the marketplace business model.
Validate your idea
Before making any investments, you should validate your idea with the help of research and scientific methodologies, for example, SWOT, PEST, The Five Forces, and others.
Develop a concept
According to the research, “The concept development stage typically involves the generation and assessment of new product ideas and further refinement of the most promising ideas into new product concepts before they enter the development stage.” Take one more look at your already validated idea and make sure to come up with a clear concept.
Get in touch with a reliable vendor
Consider outsourcing if you are looking for the ways of how to create a marketplace website and save a lot. Find reliable companies on Clutch and get in touch with them.
Think about the features and design
The specifics of your idea will determine what features so you need to develop. Basically, there should be multi-vendor and multi-buyer support, payment system integration, personal profiles, customers’ reviews, and a shopping cart.
Come up with MVP
The features we have listed are enough to develop a minimum viable product to test it in real-life conditions.
Get feedback from the target audience
Your target audience feedback is the pool of usefull insights about what do they like and dislike in your marketplace app. Make sure to use them when developing additional features.
Take it into account when developing marketing strategies
Since you need to attract buyers and sellers at the same time, you should develop two marketing strategies that will go hand in hand.
Develop quality maintenance strategy
Honest reviews and best prices are the thigs customer like most. So, you should offer them to cooperate with reliable sellers only. For this, you need to come up with the requirements for sellers’ reliability and the quality of their products. For example, Uber doesn’t allow the drivers to use an app if their rating is under 4.
Develop an SEO and social media strategy
Social media platforms and SEO are free but effective tools to use. The first one will allow you to reach the target users, while the second will help you to support the website on the high positions in SERP.
Launch it to the market
Congratulations, you are done!
How Much Does It Cost to Build a Marketplace?
On average, the cost to build a marketplace website is approximately $50000. However, the price for your startup creation will also be formed individually, especially if you are going to follow the LEAN methodology and avoid overpaying for unnecessary features.
In addition, the final price will be also influenced by:
- The location of your vendor. It is possible to save a lot by outsourcing your marketplace development to Eastern Europe, for example.
- The complexity of the design. Outstanding design solutions can really cost a fortune but never forget that the users’ interface should remain convenient, and everything should be built in such a way that users have no stumbling block in the process of shopping.
- The number of features. Make sure to develop the only ones you really need.
- The number of add-ons like anti-fraud AI systems, and predictive analytics. These technologies are costly, however, they have great business potential providing security and data-driven insights for your future strategies.
Marketplace building is a promising idea, however, it is impossible without a competent development and marketing strategy, as well as strong technical support. So, make sure to validate your idea several times before investing, and get in touch with a reliable development company to assist you at every stage.