Ecommerce
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Online marketplace platforms are believed to be among the most promising e-commerce industries. However, two-thirds of them close in the first year. But why?
In this article, NEKLO experts share insights on how to avoid mistakes when creating a marketplace website and choosing the right platform, a step-by-step guide on building a successful marketplace store, and more. Buckle up!
A marketplace is an online platform where sellers and buyers find and interact with each other. Such platforms have very different specializations – from universal trading platforms with goods for all occasions to industry-specific marketplaces for services. For example, financial, insurance, or consulting. Depending on the website's specificity, companies and individuals can act as sellers.
There are several main differences between marketplaces and common online stores:
An online store usually offers products of one or more brands. The marketplace presents products from various sellers, often from many different categories. In this sense, it is like a large online hypermarket.
Many online stores exist offline, too, in the form of brick-and-mortar stores. Marketplaces usually do not have offline stores, but there are pickup points.
Marketplaces tend to focus a lot of attention and resources on user acquisition. Therefore, they have a larger audience and traffic than normal online stores. In addition, advanced logistics allow marketplaces to work with a wider geography.
There are several types of marketplaces. Let’s take a look at the table below to get a bird’s eye view on their types before creating a marketplace website.
If you want to build a marketplace website, you should know all the options: by specialization, by application, and by target audience.
This type of business model allows companies to trade goods and services. For example, Alibaba marketplace facilitates selling products in bulk between businesses. Monetization schemes for such platforms usually involve transaction or membership fees.
A model where businesses sell products and goods to individual customers while the marketplace charges a small percentage for every sale as a commission. An example of such a marketplace is Walmart, allowing businesses to achieve wide recognition and offer an extensive product range.
A type of marketplace where individuals buy and sell products or services. The monetization source for such platforms is either a transaction or a listing fee. A prominent example of a C2C marketplace is Craigslist, where you can find everything from furniture and appliances to clothes, housing, and jobs.
This type combines all the abovementioned marketplace approaches. How does it work? Let's look at Amazon. Although it is primarily a B2C marketplace, the platform has expanded over the years and now offers B2B opportunities (Amazon Business) and C2C options (Amazon for used items).
This categorization is based on the level of the platform's narrow focus on the specific areas. The options are:
Vertical marketplaces have narrow specialization, allowing them to sell only particular types of goods/services: real estate, vintage items, digital products, and musical instruments. For example, Chewy focuses exclusively on pet supplies, offering a wide selection of food, treats, toys, and accessories for all kinds of pets.
Horizontal marketplaces do not have specific niches and offer goods and services across multiple industries. Such platforms usually charge a transaction fee, and eBay is one of them. Started as an auction site, it has evolved into a massive marketplace with both new and used products.
Age-old question: mobile app or web app? The best practice from industry leaders is to have both.
Mobile marketplace apps allow on-the-go browsing and are very convenient and accessible. Additionally, smartphones enable marketplaces to offer location-specific deals or services. Nevertheless, when building a marketplace mobile app, remember that it will have a simpler interface and smaller screen size, which might not suit some customers.
Web marketplace is convenient to use from the desktop, but also must be responsive to provide the best user experience for mobile users. The advantages include a larger screen compared to mobile apps, allowing for more detailed view and research-intensive purchases, and smooth running of complex transactions.
Let's skip the most obvious features, such as well-designed pages or strong security measures, and concentrate on the other amazing features that can make your marketplace stand out.
Ask only for necessary information and enable social sign-in to save time and keep vendors' and customers' attention focused.
Facilitate website familiarization for newbies by creating clear FAQs and how-to videos for sellers. Provide some tips in dashboard navigation to ensure no one is left puzzled.
Make the personal account page easy to navigate and change settings, as no one likes to spend hours unraveling complex solutions.
Make sure people can find what they want in an ocean of diverse goods and services. Organize categorization properly to avoid confusion.
If you are considering creating a marketplace website, think about the convenience of its use on mobile devices. A responsive interface is the key.
Don't frustrate customers with scarce payment methods. Integrate your marketplace's most popular payment systems to create a seamless checkout experience.
Decide how you will track marketplace website metrics, marketing, and sales performance. Develop a dashboard with an intuitive interface and data visualization capabilities.
Other customers' experiences can provide valuable insights into a product, making it more likely to be bought or highlighting its sufficient cons. Enabling product reviews can help your customer make the most informed purchase decision.
Let people boast about their purchases on social media! Boost engagement by adding social sharing buttons to your marketplace pages.
A tailored approach to your customers is the one thing you cannot ignore in the 21st century. Create personalized offers and recommendations and give your customers exactly what they need.
While giants such as Amazon, Uber, or Etsy are setting trends in the marketplace domain, this does not mean there is no room for new projects. It is never too late to fill a niche or bring new ideas to life. What technologies and tools can help you with that task? We are going to explore marketplace website development tech stack.
It includes programming languages, libraries, frameworks, and other tools to create software, such as a marketplace website.
The answer is pretty obvious: budget, time, and project size. The development stage can involve building a marketplace from scratch or customizing and modifying an existing solution.
There 3 main technologies that are particularly suitable for building a marketplace and are acknowledged worldwide:
It considerably depends on the type of platform you want to develop: B2B, C2C, B2C, or hybrid. B2B marketplaces may prioritize seamless integrations to handle complex transactions. In contrast, B2C marketplaces might focus on a user-friendly and intuitive interface requiring a powerful frontend framework.
If you have any concerns about choosing the right stack, our team of professionals in e-commerce software development is ready to consult you and carefully review your project.
Even though today, the desire to create a marketplace website may seem a good idea to get quick profit, it is also necessary to remember the risks this business idea may bring:
While building a marketplace, it is great to dream big and see your platform next to Amazon. Still, at the beginning of such a massive project, it is wise to start from small steps and check whether the sellers and customers will find your marketplace lovely.
The development of the minimum viable product (MVP) will allow you to launch your website quickly. After the start, you can and should develop the functionality of the marketplace.
On average, developing an MVP for a marketplace will take 3-4 months. This time includes the entire process, from analytics and design to development itself, if each stage is promptly coordinated.
To start an online marketplace you need:
Remember to include a payment module that will ensure the possibility of safe purchases and the protection of payment data of both suppliers and customers.
Other important marketplace features include tools for sales and marketing, QA, and tax management. As you can see, developing a marketplace website with basic features requires a lot of effort and determination. Let's examine the detailed step-by-step process of building a marketplace to learn how to run your own marketplace.
Marketplace development is a complex process that requires maximum concentration and efforts, as well as a qualified e-commerce development service provider. To avoid difficulties in developing and launching a marketplace, you need to plan it carefully and make data-driven decisions at each step.
So, how do you build an online marketplace website? Check out our step-by-step guide below.
Determine the marketplace type and monetization model you'll use. Before starting development, carefully analyze the chosen niche: conduct market research, examine competitors' products, and determine the target audience.
Make a detailed plan which will indicate all business processes and stages of interaction with users within the service. Keep in mind that:
While defining the required functionality, it is important to list the features and prioritize them, as you probably won't be able to implement them all at once while building a marketplace. You can start from must-haves, moving to should-haves and nice-to-have features, or choose according to their value to users. Use market research results to determine the functionality and ensure that valuable features will be implemented first.
Assemble a development team. Think over its composition, hierarchy, and the interaction model between employees of various departments. Determine which specialists will work with you in a team and which ones you will outsource.
Remember the 2 main principles before selecting a team to provide you with e-commerce services:
If assembling the team yourself seems burdensome, you can always hire a software development services company to assemble the right dedicated team tailored to your project's specific needs.
The tech stack for marketplace development can be divided into two parts: client-side technologies, which include the website's visual elements, and server-side technologies, which encompass programming languages, frameworks, and databases.
Client's interface: HTML, CSS, and JavaScript.
Programming languages: C++, Java, Python, PHP, Ruby, etc.
Leading frameworks and libraries: Angular, React.js, Vue.js, Ruby on Rails, Fusion.Js, Backbone.js, Django.
Databases/database management system: MongoDB, MySQL, Oracle.
Cloud solutions: Amazon Web Services, Azure, Google Cloud.
Depending on the marketplace's size, the tech stack can vary. The well-known modern marketplaces work on completely different technologies yet bloom. That is why it is more about the correct use of technologies rather than trying to find one universal solution.
There are different types of software architecture that your future marketplace will be based on. The choice depends on your needs for scalability and flexibility, and user experience requirements. Here are some examples to consider:
Monolithic Architecture is a simpler structure where all functionalities are bundled together in a single codebase. It's sufficient for small marketplaces but can become cumbersome and difficult to maintain as the platform grows.
Microservices Architecture breaks down the marketplace into smaller, independent services that communicate with each other. It offers greater scalability and flexibility but requires more development effort.
Headless Architecture separates the front end (user interface) from the back end (data and logic). The backend provides APIs that can be accessed by any front end, making it a good choice for multi-platform marketplaces (web, mobile app, etc.).
Creating a marketplace website starts with the main features and integrations. The solution must contain all features required for seamless operation. Leave all the should-haves and nice-to-haves to the further development cycles.
What to start from? Marketplaces usually include user accounts and profiles, product listings and search, shopping cart and checkout, and product listing and order management. Provide a comprehensive admin interface for managing the marketplace, including adding sellers, monitoring transactions, analyzing platform usage, and setting fees.
Selecting a hosting provider is vital as the server characteristics influence your store’s load speed and overall performance. While choosing a hosting provider for your marketplace website, consider:
After selecting a suitable provider, ensure that your marketplace runs smoothly and provides a great user experience.
When all the feedback from the previous step is collected and analyzed, and you are sure that the target audience warmly accepts your product, you can continue marketplace website development. At this step, you should focus on the feedback received and users' pain points and figure out how to resolve them. The development team will add more features to the product and even make some design changes or modify user flow.
As you planned the platform's promotion in advance at Step 2, it is now high time to launch the campaign! Social media marketing, ads, collaboration with influencers, content marketing, SEO, and partnerships — the array is impressively wide.
Both sellers and buyers will evaluate your commission rates and the design and platform's ease of use.
When a marketplace website creation is completed and everything launched, consider planning your platform growth and further development. It may include scaling, introducing new features and payment gateways, expanding to new markets, or building community features.
If you follow the steps and recommendations outlined, you will have a better chance of finding your place in the market. Be bold and make mistakes; constantly improve your app, stay on top of current trends, and listen to your users.
Remember that with the right calculations, thought-out marketing, and PR activities, the payback of marketplace website development will be 1 to 3 years. Then, the website will work for a profit.
Our e-commerce development experts highlighted some tips to help you create a successful marketplace. Here they are:
Marektplace development cost starts from and can reach. The cost depends on the type of marketplace (web app or mobile app), and the scope of work. Typically, the range is the following:
Other considerable factors that influence the final cost include updates and maintenance, location of app developers, tech stack, UI/UX design, app infrastructure, and security and compliance features.
Here at NEKLO, we aim to support businesses that want to develop their e-commerce stores on popular platforms such as Magento, Big Commerce, and Shopify. Whether building a marketplace or migrating to a new e-commerce platform, web or mobile, we ensure timely delivery of quality products created with top-notch technology. Let's see some more examples.
The kids' fashion brand client asked NEKLO to build a custom Magento-based website with a Hyva theme front and provide seamless integrations with third-party solutions, including payment gateways and shipping carriers.
We delivered a competitive and user-friendly e-commerce solution that, due to the Hyva theme, became fast, efficient, and scalable.
Key results:
A client who specializes in skincare consultations asked NEKLO to create a custom Magento-based platform that would connect customers with skin care experts through video calls.
Our team created a skincare marketplace which allows users to book an appointment with the skincare experts and receive video consultations and get evidence-based product recommendations.
Key results:
Now, let's look at some outstanding examples of marketplace website development. We've already mentioned a lot of platforms that have been in the public spotlight in recent years. Let's see some more fascinating figures and find out interesting facts about them.
The cost of a small marketplace project with basic features starts at approximately $100,000 and may reach $125,000 or more. The most luxurious option is a complex marketplace project with advanced features, and the price starts at $350,000. Therefore, a medium-sized and complex marketplace website development is somewhere in between these two numbers.
To build a multi-vendor marketplace, first, choose the type of platform you want to develop, conduct market research, define your target audience, and check the competitors. Second, determine your business model and monetization strategy and write a business plan for the marketplace launch. Then, design a responsive, intuitive, and appealing interface and proceed to development.
To build a B2B marketplace, plan and list business-sensible features: quick reorders, price list management, flexible payment options, advanced catalog management, and international support. Then, continue with the design and development stage. The main distinction of the B2B marketplace from other types of such platforms lies in its participants: businesses, manufacturers, distributors, and wholesalers. Your marketplace must meet their needs to succeed.
The demand for marketplaces continues to grow, which leads to the emergence of new applications. There are many competitors in this niche, and if you are determined to enter it, you need a quality product that effectively addresses the specific needs of your target audience.
Remember that you can always find support on every e-commerce-related issue at NEKLO — just fill in the form on our website, and we'll get back to you with a solution.
US-based and operating globally, NEKLO spearheads digital transformation initiatives for businesses worldwide. We deliver software solutions complying with your market and legislation.
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