How to Build an Online Marketplace – Simplified
Online marketplace potentialEver thought of expanding your trading business online via a marketplace? Businesses are opting for trading online over traditional physical means due to conveniences brought about by cashless transactions, live shipment tracking, borderless communication, and digital escrow. Top online marketplaces like Amazon, eBay, and Taobao sold $3.25 trillion worth of products in 2022, and it is anticipated that this amount will rise to $27.15 trillion by 2027. This growth was lead by international online marketplaces. (Digitalcommerce360) Such a large market presents enormous possibilities for new marketplace platforms to fill a niche and establish a devoted following, even in the face of fierce competition. In particular vertical integrated marketplaces i.e markets focused on single market sector to serve some specific category of products to a targeted group. If you’re looking to create a marketplace website then know usability, style, and scalability will greatly affect how successful it is in the long run. Lordeys has more than 10 years of experience developing websites with a focus on user experience. This experience spans a wide range of industries, including e-commerce, manufacturing, architecture, automotive, and fintech. In this article, we’ll tell you exactly what the key stages in creating an online marketplace are, as well as some of their key aspects, and offer advice on how to choose the best option for your idea.
Why create a platform for an internet marketplace?As hinted earlier, online marketplaces can be divided into two main categories: vertical marketplaces that specialize in particular goods or services, like Airbnb, Uber, or Autotrader, and horizontal marketplaces, like Amazon, Ebay, or Aliexpress, that offer a wide variety of goods from many sellers. Connecting buyers and multiple sellers via an online marketplace offers undeniable benefits to both parties; buyers can select from the most favorable deals, while sellers can expand their customer base and boost product visibility. Notably, the platform’s owner also stands to gain substantial amount of money this arrangement.
• No need to keep your own goods in storageThe owner of the marketplace must oversee content, work to draw users, ensure that the platform functions properly and that the goods meet quality standards, but they do not need to manage inventory, rent warehouses, or employ couriers (unless it is a hybrid marketplace). All of this significantly lowers financial risk, costs of operation, and increases organizational freedom.
• Multiple revenue strategiesA marketplace owner has access to a wide variety of income sources. For example, there might be a set commission on each item sold, subscription costs, different advertising services, special features for loyal customers, access to cutting-edge analytics, or comprehensive customization of product cards for sellers. A marketplace owner can successfully increase the platform’s revenue and accomplish their business objectives by combining several of these monetization methods.
• ScalabilityOnline marketplaces are highly scalable, meaning that they can grow and expand rapidly with little additional investment. As your platform grows, you can attract more sellers and buyers, which in turn can generate more revenue and brand awareness.
The process of creating a marketplace Website or AppBuilding a marketplace takes patience, resources, and planning. It’s generally considered a complex or advance web development procress compared to building a simple company website. Unlike making a company website which you may skip on prototyping, building a marketplace requires evolution and extensive testing. This is why every marketplace is generally built in four stages: Analysis and business idea selecting appropriate technologies; creating user interfaces and prototypes; actual development; and post-release maintenance. Let’s examine each of them in more detail.
1. Research your ideaEvery company concept must first be validated. In this stage, business analysts and a product manager fully investigate the state of the market and the competition, establish the value proposition of their product, and determine the target market and use case scenarios. This preliminary stage should enable your team to pinpoint the future marketplace’s goal, the size of the prospective market, and the target market. For instance, the client’s idea was very obvious when Lordeys took on the development of the Top20Talent marketplace: build a platform for direct communication between Top 20% Talent and leading global and domestic companies in Asia. By acting as a digital middleman that draws enterprises and senior managers for direct hire, Top20Talent aimed to give employers access to human and AI vetted pool of only 20% of the top talent. Employers receive a proprietary artificial intelligence assessment tool of requested talent for their need. Job seekers take a free assessment to gauge their salary and probability to land jobs both listed on the site and offline.
2. Chose the right tech softwareThe next step is choosing appropriate technologies for its implementation once business study has confirmed the concept’s market potential. The server-side portion of the tech stack for marketplace website development includes the logic the marketplace runs on as well as a database to store data and users’ content, while the client-side portion is what users see when engaging with the platform. Today, there are plenty of technologies to choose from for creating an online marketplace. It is always a good idea to center your selection of technologies on a number of considerations, such as:
• Project’s capacityWhile a platform intended for future global scaling should be built with more advanced technologies and custom solutions from the outset (React, NodeJS, Strapi) a relatively small market serving the requirements of niche customers can effectively work on basic technologies like customized WordPress.
• Users MediumWhat technologies should be used for its development depends on whether consumers can access your marketplace through a browser, a mobile app, or both. It is possible to use a cross-platform approach with technologies like React Native to create a marketplace for multiple platforms from a single codebase, despite the fact that a website and mobile apps can be created using separate frameworks.
• CustomizationYou have complete control over the design, logic, and aesthetics of the market by using open-source software. However, this freedom comes at the expense of a more time-consuming and expensive development process, so if a paid ready-made solution meets your company objectives, it may be the best option.
• CostMore skilled developers are needed to operate a technology that is more complicated like React vs WordPress. This applies to both the active development period and post-release maintenance, so take into account such technological solutions, the costs of which can be effectively recouped over time. A competent and knowledgeable developer is always helpful when making the best technological decisions. As an illustration, our Top20Talent marketplace client originally intended to build the platform using React, a well-liked but not particularly cost-effective option as test run. In order to create a customized platform that could be launched in less than nine months, our team recommended customizing self-hosted WordPress. The finished product more than met the client’s expectations and performed admirably for its intended goal of Phase One, which was to put up a proof of concept for funding.
3. Design the UX/UI and build prototypesThe way users interact with a marketplace platform determines whether they will struggle to make an interaction with it or whether they will find the platform easy to use and stick around as regular customers. Building a brand’s identity and picture also requires innovative and high-quality design solutions. Because a strong first impression of the product is crucial for attracting initial customers, attempts to save money by using pre-existing templates or employing inexperienced UX/UI designers can backfire and harm a project at the launch stage. The development team builds the platform’s prototype during the UX/UI design process, which can be static or clickable and varies in fidelity from low to high (as Lordeys’s team did for Top20Talent by designing and programming every interface element in its prototype). An MVP (minimally viable product), which is the last and most complex stage of the initial product ideation phase, can be used to perform focus group research and improve the market concept and logic prior to starting the full-scale development.
Creating important features / functionsIt is time to put all the elements of the future market into practice, starting with front-end and back-end development, once they have been distinctly set and defined. Let’s look at the fundamental components that every online marketplace needs.
• Register and Log-inIt should be simple for users who will use the market to sign up and start using the marketplace. For this, think about integrating sign-on choices through Google, Facebook, Twitter, and other well-known social networks, which will expedite the onboarding process and enable users to share items from the market with their friends and subscribers right away.
• Products listAny marketplace must have this central component where customers can examine products and their details as well as learn about the different payment and delivery options. Depending on the goods or services, it may support high-resolution images, comprehensive specifications, or even an augmented reality (AR) integration that enables customers to test on new sunglasses via a webcam.
• SearchCustomers can find the specific item they’re looking for thanks to extensive search and filtering options, particularly when it comes to large marketplaces with a wide selection of products. For instance, a clothing marketplace could enable users to browse items by occasion (wedding, workplace meeting), materials, or even just by uploading a picture of an item that looks similar. Users could also filter items by price, size, and brand. In our example it would be employers searching for top20% candidates organized by industry, age, years of experience and so on.
• User dashboardThe implementation of this feature differs significantly for different types of users: they each need convenient options to view their order history, track recent interactions, manage their privacy settings, edit their user profile amongst other things. All these features need these features to be easily accessible.
• PaymentThe combination of conventional debit and credit cards with alternative payment methods like Apple Pay, Android Pay, WeChat Pay, and others creates a convenient purchasing experience that draws more users to the platform. Consider using secure payment gateway APIs from companies like Stripe or Braintree to incorporate these payment methods.
• AdvertisingPromotional tools can be very helpful for sellers and boost project income, as some vendors are likely to want to advertise their offerings. The provision of numerous advertising choices for various budgets pays off in the long run.
4. Maintain your marketplaceThe scope of development work is reduced after the marketplace is fully operational, but it is not entirely stopped. While it is always necessary to repair bugs, future improvements should be defined and given priority for development using data from customer behavior analysis. Post-release upkeep projects are frequently taken in-house because they require fewer developers and can be completed successfully without the need to hire specialized personnel. A project transfer will be much simpler if you and your development partner agree to document every element of the platform’s architecture and features before you begin development.
What Is The Price Of Building an Online Marketplace?Numerous factors affect how much it will cost to grow a market. A rough estimate for building such a platform is in the $30,000–350,000 region. First, the complexity of the platform and the technologies used to create it have an impact on the price. Utilizing pre-made solutions can initially appear to be very advantageous in terms of lowering development costs, but if the platform grows then you need to invest double for moving data and starting fresh on the correct scalable technology – why pay for two platforms when you can go straight for one?
Out-of-the-box versus custom marketplace creationBoth utilizing a pre-built platform and choosing a custom solution created to the specifications of the project have benefits and drawbacks. Of course, ready-made options have a reasonable price and can be implemented in a few months. However, a customized answer has a number of advantages that can significantly contribute to the market’s success. Besides, all the best market places online use their own custom solutions and teams.
Customization and functionalityMost ready-made solutions have all the essential features but do not provide the flexibility required to provide a truly unique user experience. On the other hand, with a custom design, you have complete control over the platform and can alter any aspect of the user interface or the underlying infrastructure.
ScalabilityAn out-of-the-box solution may restrict growth options precisely when the project is in the period of rapid expansion because the platform’s scalability is directly correlated with its technological capabilities. Any form of integration with cloud-based technologies and other modules is possible with custom solutions, and these modules can be used to handle a sharp rise in user numbers. Several Amazon Web Services, including Elastic Compute Cloud servers, S3 file storage, Relational Database Service, and CloudFront, were used on Top20Talent platform to spread data among servers all over the world. With the solution used by Lordeys, visitors from all over the globe can experience quick loading times and top performance.
SummaryAs you can see, there are a lot of factors to consider when deciding between a custom and off-the-shelf marketplace build. Making the right decision up front will spare you the bother of later moving the marketplace to a different technological platform. If you do plan to build your own custom marketplace, the above steps will guide you on basics but there is a lot more. We at Lordeys are here to realize your most creative ideas thanks to our decades of experience in developing distinctive UX, web, and product design solutions for a variety of businesses. Please prepare your marketplace ideas and get in touch with us to estimate your job and go over the specifics.
Build a scalable modern online marketplace for your business.