Online marketplace platforms are believed to be one of the most promising ecommerce industries. However, two-thirds of them close in the first year.
In this article, NEKLO experts share insights on how to avoid mistakes when creating a marketplace website and promoting it.
Introduction: What Is A Marketplace?
A marketplace is an online platform where sellers and buyers find each other 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 specificity of the website, both companies and individuals can act as sellers.
How are marketplace platforms different from ordinary online stores? There are several main differences between them:
- The number of sellers and goods on the website
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.
- Offline presence
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.
- Audience and geography
Marketplaces tend to spend a lot of attention and resources on user acquisition. Therefore, they have more audience and traffic than normal online stores. In addition, advanced logistics allow marketplaces to work with wider geography.There are several types of marketplaces. We recommend you have a look at the table below to get an example of marketplaces types:
Benefits & Risks Of Building Marketplaces
The benefits of creating a marketplace include:
- A large selection of goods or services from different suppliers attracts more customers than individual online stores. And it is more convenient for suppliers to offer goods and services in the marketplace, where there is already demand than to create and promote their website or online store;
- The marketplace relieves the owner of problems with the delivery, communication with the buyer, and settlement of problems with orders. All this falls on the suppliers, and the owner of the marketplace is engaged in attracting users and developing the online platform.
Even though today the desire to create a marketplace may seem a good idea to get quick profit, it is also necessary to remember the risks this business idea may bring:
- The development and launch of a marketplace require a significant amount of investment at the start. You will have to attract and retain both buyers and suppliers at the same time. That is, the marketing budget needs to be doubled;
- You will need an experienced ecommerce consulting team to provide you with careful analytics at the start and help with a quick launch of an online service, as well as attracting users at an early stage and helping mitigate challenging situations.
What Do You Need To Start An Online Marketplace?
Development of the minimum viable product (MVP) will allow you to quickly launch your website. And after the start, you can and should develop the functionality of the marketplace.
On average, the development of an MVP for a marketplace will take 3-4 months. This time includes the entire process from the stage of analytics and design to the development itself if each stage is promptly coordinated.
What you need to do to get started:
- Product or offer cards;
- Categories and filters;
- Search by categories, types of goods, price, and supplier.
- In product cards, it is necessary to additionally provide fields for information about suppliers: brand or name, contact details, terms of delivery and return.
- Personal accounts of the supplier and customer
The accounts should include:
- Registration and authorization;
- Personal data management;
- For suppliers: placement of goods in the catalogue;
- For customers: shopping cart, purchase history, and order statuses.
- Payment module
Ask your ecommerce development company to include a payment module that will ensure the possibility of safe purchases, as well as the protection of payment data of both suppliers and customers.
- System Administration
Mandatory functions in the administrative panel include:
- Statistics and analytics for all suppliers and customers, as well as for transaction types;
- Moderation of user ads;
- Viewing and moderation of all data in the system to resolve disputes.
Marketplace development is a complex process that requires maximum concentration and responsibility as well as a qualified ecommerce developer as a partner. Therefore, before starting development, carefully analyze the niche, and determine the marketplace strategies, as well as the means of monetization. With the right calculations, the thought-over marketing and PR activities, the payback of the marketplace will be from 1 to 3 years, and then the website will work for a profit.
To avoid difficulties in the process of developing and launching a marketplace, you need to pay attention to the following aspects:
- Think over the composition of the team, its hierarchy, and the model of interaction between employees of various departments. Determine which specialists will definitely work with you in a team, and which ones you will outsource;
- Make a detailed plan, which will indicate all business processes and stages of interaction with users within the service;
- Remember the 2 main principles before selecting a team to provide you with ecommerce services. Firstly, specialists must be of a high level, have knowledge of launching new projects and have experience delivering custom ecommerce solutions. Secondly, the most expensive services are not always equal to the highest quality services. That is why pay special attention to the expertise of the ecommerce website design company you are going to hire;
- The internal interface and website structure should be intuitive to the user. There should not be complex algorithms that can repel a client who first visited the resource;
- The catalogue of goods should be created based on generally accepted and well-known categories. You don’t need to come up with your own, just analyze competitor sites in detail, as well as use the ratings of popular queries and categories. In the future, listen to user requests, upgrade existing product categories or create new ones;
- Develop a detailed marketing strategy, which will include online and offline promotion of the project. It is necessary from the very beginning to provide all channels and sources of communication with each target audience.
Our ecommerce development experts also highlighted the main problems that almost everyone who has ever developed a marketplace faces. Here they are:
- Always allow more time for the development of the platform itself. Trust our experience: creating the perfect product with the first attempt will not work. You will always have to improve and upgrade your solution.
- Recruit effective staff, even if it takes a lot of time and effort.
- Make sure no information is leaked before starting the project. First, it threatens to increase competition from other market participants. Secondly, information about the project may end up in the hands of the media before the site is fully ready for launch, and this threatens a possible reputational risk.
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.
If you follow the recommendations we have outlined, you will have a better chance of finding your place in the market. Don’t be afraid to make mistakes, constantly improve your app, stay on top of current trends, and listen to your users. And don’t forget that you can always find support on every ecommerce-related issue at NEKLO – just fill in the form on our website, and we’ll be back to you with the solution.