In recent years, marketplaces and aggregators have been developing very rapidly, capturing new niches and directions. What are their features? How much does it cost to develop your marketplace? What are the monetization options?

What is a Marketplace and why is it needed?

In the simplest sense, a marketplace is an intermediary site between buyers and sellers. It allows the buyer a convenient way to select the right product according to the characteristics and prices from many suppliers. In general, the presence of such sites-aggregators of goods allows the buyer to choose exactly what he needs, and the seller – to increase sales and follow market trends. Creating your own marketplace as a business is a trend of recent years that is only growing.

There are a lot of similarities between marketplaces and message boards. At its core, this is an attempt to give a new life to the boards, launch an ad format for new products, attract large retailers and expand the functionality of the board.

What are marketplaces?

Initially, it all started with commodity platforms, but in recent years, marketplaces have been developing: narrow segments of services, education, medicine, restaurants, software, mobile applications, etc. Narrow-segmented marketplaces and aggregators are gaining popularity precisely due to the fact that it is much easier to attract targeted traffic in this way, offering convenient opportunities to search and order the right goods / services.

Hundreds and thousands of small marketplaces are launched every year, some successful, some not so much. The success or failure of such an aggregator depends on many reasons (more on this a little later), but for now, let’s look at the real leaders in the industry.

The largest marketplaces in the world:

  • Amazon
  • aliexpress
  • ebay
  • Google Play Store
  • AppStore
  • Udemy

In the post-Soviet space:

  • Ozone
  • Wildberries
  • Avito
  • Onliner
  • Kufar
  • YouDo

You can walk around them and see the features: they are all approximately similar in their work model (more on that later) and provide the user with great functionality. After you compare them with each other, you will come to one simple and important conclusion: the main value of the marketplace is a scalable software platform.

Features of the development of marketplaces

A typical successful marketplace is a highly loaded project that requires constant attention from developers and continuous development. Based on this, it is necessary to choose a platform for the marketplace. Each platform is a certain level of cost and opportunity.

What are the main functions that a marketplace should have:

  • Product catalog (by product we will mean both services and establishments, i.e. the main theme of the marketplace) with convenient search and sorting capabilities.
  • Several vendors (sellers) who offer prices for these products.
  • Ability to compare and purchase products by the user.
  • Maintaining the catalog and prices up to date.

This is the minimum that must be implemented for a more or less successful launch, it must be described in the terms of reference for the development of the marketplace platform. And then you can already turn around in different directions, it depends on the monetization model of your aggregator.

Technologies and platforms on which you can develop a Marketplace:

  1. The PHP + MySql bundle is the most expensive development of all options, performance and security depend on the evenness of the developer’s hands. Any architecture can be laid.
  2. On frameworks (Yii, Symphony, etc.) – it will be slightly cheaper than pure development through the use of framework libraries. The result also depends on the evenness of the hands. Other things being equal, the performance will be slightly worse than with native development.
  3. On CMS (1C-Bitrix, WordPress, Drupal, etc.) – it will be cheaper than on frameworks, since the CMS includes a huge number of modules and libraries. The simplest marketplaces can be assembled with minimal involvement of developers, but there will be performance losses. Free CMS are not particularly secure, this should also be taken into account.
  4. With the help of cloud platforms – this option is being developed, but due to severe limitations in the functionality, we will not consider it

How much does a marketplace development cost?

If we are considering the option of developing an MVP version on a CMS (for example, on 1C-Bitrix), then the cost will be in the range of $ 3-5 thousand. This budget will be enough for the initial launch and testing the project viability hypothesis. The price is verified by experience and several developments of MVP versions.

How to launch your own marketplace?

To successfully develop and launch a marketplace, you need to move in small iterations (or versions). The minimum version (MVP) should include the functions indicated above, and it is desirable to develop it as cheaply as possible (for example, on a CMS). This will allow you to test your hypothesis on a relatively budgetary basis and, if successful, invest the earned funds in an already serious development and expansion. If you move in the ideal product paradigm, then the launch may be delayed for a year or more, the budget will be exceeded, and the hypothesis may ultimately fail.

Monetization Models

Marketplaces have several main monetization models:

  1. Percentage of transactions (Aliexpress, Avito)
  2. Payment for a subscription by the seller (Onliner)
  3. Customer Subscription Payment (Udemy)
  4. Delivery of purchases, direct provision of services to customers (Amazon, Ozon, Wildberries)

You can add many other monetization points here, which will be globally tied to these models.

Opportunities for the development and promotion of the marketplace

Due to the huge number of products and narrow segments, the processes of development and promotion of the marketplace come down to three main tasks:

  1. Expansion of the product range, entering new niches and markets.
  2. Expansion of geography by connecting new vendors.
  3. Expansion of product segments and selections for targeted customer requests.
  4. An interesting option is to give the vendor the ability to create product cards for the marketplace. With it, you can constantly expand the range of products.
  5. Connecting standard product feeds, for example, in the YandexMarket format.

Preparation of a business plan for creating a marketplace

Often, marketplaces and aggregators are launched with the money of investors, so it is necessary to prepare a detailed business plan for the creation and development of the resource. If the MVP version is already attached to it, then the probability of getting investments increases.

Inside the business plan for the development of the marketplace should be the following:

  • Analysis of the marketplace market, its strengths and weaknesses in the niche in which the launch is planned.
  • Analysis of development and development costs (at least for 1-2 years).
  • Analysis of hypothetical earnings according to the chosen monetization model.
  • Primary TOR for development
  • Option for market development and geography growth
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