How to Build a Marketplace Website

The growth of the sharing economy, with a peer-to-peer e-commerce sector, will reach $355 billion by 2025.

Despite the variety of marketplace platforms like Etsy, Amazon, or eBay, building your own with a well-thought strategy is a good business idea.

Let’s dive into how to design a marketplace site, establish your budget, and do what you can to deliver an excellent service.

How to Start an Online Marketplace

Follow these steps to figure out how to start a marketplace website:

• Step 1. Conduct the research that includes the basics of building a marketplace business: from market research to launching the platform.
• Step 2. Validate your idea to be sure you’ll succeed and then plan a marketplace website efficiently.
• Step 3. Set up all requirements for your marketplace startup.
• Step 4. Choose a dedicated team to design a marketplace website from scratch.
• Step 5. Define the final cost of marketplace website development.
• Step 6. Formulate a marketing strategy to enhance the success of your marketplace.
• Step 7. Build an MVP for the marketplace with basic features.

All these steps of marketplace software development have their specificities and winning strategies. Let’s discuss them one by one.

Getting and Validate Your Idea

Before choosing the right marketplace type and platform, do the research to consider the demands of the software you want to build.

That is why the first step is to value offers for your potential clients. As for marketplaces, you need to create problem statements.

For example, Airbnb provides travelers with cheaper rooms, BlaBlaCar is a response to sudden trips and schedules.

After you write down problems, analyze your competitors and market leaders to select the preferred niche your marketplace will cater to. Ideally, you need to create a product category to bridge the gap between what your competitors present and what customers want.

Then, you need to identify your target audience. After in-depth analysis and research, you get a clear understanding of the customer’s expectations and the solution they’re looking for.

How to validate your marketplace idea

After you come up with an idea, it’s time to validate it to ensure its interest to a target audience. It’s a time-consuming process, but it lets you avoid mistakes and move in the right direction.

Before making a project plan, answer the following question:

• Would you use your product, and how often?
• What do customers think about your product, and does it solve their problems?
• Do customers understand the intent of your product?
• What is the size of a present market?
• How dependent are you on the external investment?

To answer these questions, you need to talk to your partner(s) if you have one, gather feedback from your potential customers, and do manual research. Don’t interview your family or friends if you want to get disinterested insight and figure out how to design a booming marketplace.

How to Build a Marketplace Website

There are three options you can use to create a peer-to-peer marketplace:

• Development from scratch
• Using open-source software
• eCommerce platforms

Let us discuss in which cases you need to choose one of the options.

Website From Scratch

This option is suitable if you want to provide flexibility in terms of design, features, logic, focus on building a website from scratch. However, it’s a time-consuming and expensive solution, depending on your website vision.

It’s the right choice if you have initial money and want to diversify your business. Usually, it’s a unique niche where you want to address the gap between supply and demand or imitate an existing platform that has low conversion rates and give it a push.

Open-Source Platforms

If you have a limited budget of $5,000, then the platform-based development might be a good fit. They offer incredible functionality and flexibility while being free to download and install.

There are many self-hosted platforms, but the most popular are:

• It comes with a wide range of strong sides. These include out-of-box features, customizability, and seamless third-party integration. What is more, it’s medium to large businesses. Magento Open Source is a cost-free platform with basic functionalities, so you will only need to pay for other things such as a hosting service, niche theme, domain name.

It’s tailored for web development professionals and medium to large online stores. The platform requires a certain level of coding knowledge to use its potential extensively. Therefore, you’ll need professional developers when it comes to modification.

• It’s available to anyone with little e-commerce experience. Although it’s free, you still need to pay for similar fees such as a hosting service, a domain name, a theme, and some plugins. The total price when using Woocommerce can’t be predicted precisely, as it depends on the number of plugins you want for your store.

This platform is more suitable for small businesses with a limited budget. It’s highly customized with your WordPress admin dashboard. You can easily personalize your website and theme options, which allow you to change your design color, add different features to your shop and insert pictures and videos.

You’ll still need a software developer to complete the project for you.

SaaS solution

If you’re looking for easy integration and a nearly complete automated system, you may give SaaS a good thought. In this case, you’re also limited with funds and time and want to understand the need for a marketplace in your niche and location. SaaS platform is professionally managed and ensures that your website is up to running all the time. It provides a consistent experience for customers.

You can start a business rapidly and test a new niche.

The most effective way to test the market within your core audience is by designing a product with a minimum of features.

There are must-have features for a marketplace platform:

• User accounts, profiles, and settings. The two-sided marketplace is developed for two kinds of users: Buyer and Seller. Buyers’ core elements are registration, navigation, search and filtering, access to information about Sellers. Sellers primarily want to sell.This means let them handle their private and public information, create favorable offers for clients.
• Search and filtering. A well-considered system of filters and relevant suggestions will help you reduce bounce rate and boost your sales. It should be easy for buyers to search for goods or services.
• Sometimes, buyers need more information about the product or service. It’s crucial to let users get answers immediately to cut client complaints.
• Payment system integration. It’s vital to guarantee the online payments will be safe and secure and block all suspicious transactions and frauds. To avoid pitfalls, you can implement a trustful payment system like PayPal.
• Review and ratings. Rating reveals what users think about your product or service. Buyers should be able to leave their feedback and rate the seller.

Price of designing a marketplace website

The cost of creating a marketplace platform depends on the desired functionality, option you choose, and project team you work with.

It takes approximately 670 hours for developers to build a marketplace website with the basic functionality. With an average rate of $50 per hour in Eastern Europe, the cost to design a marketplace website will start from $33,500.

In fact, web development costs include development and non-development time for implementing the website’s features. The hourly price can reach up to $176,000, depending upon the complexity of desired features.

Post-development actions

After you build a website, you expect to present your project. However, take your time. To get the most out of your online marketplace, think about how to promote it effectively and get first users.

Who is your first client: sellers or buyers? You can start forming lists of sellers who can provide excellent service or products.

You should connect with sellers and convince them that your marketplace platform might be a good investment.

Here is where you can find sellers:

• Go to competitor’s marketplaces and find active providers there.
• Use relevant business directories and Google search.
• Look through social media.

While you’re trying to establish the first contact with the sellers, it’s time to take some steps to reach the potential buyers and build trusting relationships.

Here’s a hint on how to do it successfully.

1. Prototype a landing page to collect emails.
2. Participate actively in online forums, communities and tell about your project.
3. Work with popular social media influencers to attract more customers.
4. Start your blog.

After you engage interested users, you can launch a platform. A well-developed marketing strategy can help your business to increase sales and profits.

The next step you need to do is to set up the following KPIs metrics to track the digital marketing efforts:

• Usage metrics, like time spent on site and bounce rate.
• Transaction metrics, like buyer-to-seller rate and repeat purchase ratio.
• Business metrics: customer acquisition, ROI.

Wrapping Up

The process of developing an online marketplace business may seem difficult. However, knowing the basics of creating an online marketplace website will give you a chance to offer unique business solutions and boost business growth.

Author’s bio

Vitaly Kuprenko is a writer for Cleveroad. It’s a mobile and web development company with headquarters in Ukraine. He enjoys writing about technology and digital marketing.