A marketplace is a platform where vendors can sell their products or services, so it works as an intermediary between buyers and sellers. The ultimate examples of online marketplaces are eBay, Amazon, Uber, Etsy, Airbnb. In this guide, we will describe in detail how to create an online marketplace.
What are the ways to create a marketplace?
Online commerce is divided into three main sectors: online stores, various distribution services like SaaS, PaaS, and marketplaces. There are several main models for building a marketplace:
- Marketplaces on the free CMS platforms
- E-commerce platforms
- Customized products
- Individual development
Marketplace development, like any other business, begins with setting goals and objectives. Firstly, you should answer three main questions: type of a marketplace, what I will sell, who I will sell to.
Marketplace type depends on the target audience: business-to-business (B2B), business-to-customer (B2C), and peer-to-peer (P2P), sometimes referred to as customer-to-customer (C2C).
Marketplaces can also be divided based on focus. Vertical marketplaces present a particular niche and offer a narrow segment of goods and services (e.g. Etsy). Horizontal marketplaces
have a large variety of goods (e.g. eBay, Amazon, Aliexpress).
Also, it is necessary to understand that marketplaces can have different monetization strategies: commission, listing fees and premium listings, advertising, subscription fees, lead fees. There is no ideal solution and you can use a few of them.
When you have decided what are your goals, target audience, and all the main parameters, you can proceed directly to e-commerce marketplace software.
CS-Cart is a professional marketplace platform that has over 500 marketplace features and 100% open access to the source code which makes it fully customizable. A great solution for small and medium businesses, it provides free technical support for 3 months.
Pricing: 3 pricing plans at $1,450, $3,500, and $7,500/all one-time payment.
Arcadier is the fastest-growing Software-as-a-Service (SaaS) tool for marketplaces, suitable both for small businesses and large companies, it offers customization and scalability. Arcadier provides online guides and dedicated customer service staff for marketplace owners. Pricing: 4 pricing plans offering different customization scope at a monthly fee of $79, $199, $499, and custom pricing.
Agora is a powerful B2B platform SAAS or on the customer’s equipment with more than 200 modules, suitable for small and large companies. If necessary, this platform can be modified like a constructor. It has also a mobile app for iOS and Android, as well as the standard browser version of the Agora B2B platform. Prices start from $600 up to $5,500 per month. Agora provides additional services such as 1C integration, CRM integration, integration with a third-party API system.
How much does it cost to build a marketplace website?
In addition to the high cost of licenses, there is a problem with a limited number of experienced specialists. On average, launching a marketplace will take 6-12 months and a total price starts from $500,000.
MVP for a marketplace
A marketplace is a startup that requires a lot of effort and money. And if the business model is not working, the sooner the entrepreneur understands this, the better. Launching an MVP (Minimum Viable Product) helps to validate your idea with the potential customers taking minimum efforts, marketplace MVP is the first version of your product with only basic features.
In the end, we will mention some common mistakes that should be avoided.
1. Marketplace vs e-commerce store confusion
The marketplace makes money through different monetization strategies (e.g. for every transaction) and presents a great variety of goods and services. An e-commerce store sells exclusively their own products.
2. Thinking marketplaces are easy
Marketplaces are exciting but hard businesses. It requires often a 5-10 year to get a billion-dollar business. Airbnb is now valued at $13 billion, but it took seven years.
3. Not managing your marketplace risks
The main drawback of marketplaces is that you don’t fully control the goods and services provided via your website and if something goes wrong, your marketplace will be blamed for it. The problem with many new marketplaces on the web is that they don’t know how to deal with these situations.
At the moment there are dozens of marketplaces and according to Medium.com, their revenue will double by 2023. However, if you are planning to start your own marketplace, Evercode Lab can offer you a customized solution for creating an e-commerce service. Our company operates since 2011. During this time, we launched several successful e-commerce products, including a fast-food delivery service – FoodFox (now Yandex.Food), Atomic wallet – a multi-currency crypto wallet, CRM system for Cadfem CIS, etc. 70% of our projects are focused on the international market. To learn more about how to choose the right marketplace software, contact our company.