The trend of moving business online has intensified due to the global COVID-19 pandemic. This led to the fact that people began not only to buy more goods on the Internet, but also to provide various services online.
According to the site statista, the share of e-commerce sales will only increase every year. For this reason, many companies are investing in developing their own e-commerce sites.
One of the unoccupied and promising niches is the development of a marketplace. Today, the share of marketplaces is almost unoccupied, and Google and Yandex search engines give them more preference in search results than online stores or online catalogs.
What is a marketplace
A marketplace is an online platform that helps bring buyers and sellers together in one place. By unloading, sellers can upload their goods, and buyers can find the necessary thing for themselves using the search and showcase.
Among foreign examples, the main ones are Alibaba and Amazon, the largest marketplaces in China and the United States; in the CIS, these are Rozetka, Ozon, Avito.
In this article, we will tell you in detail about the basic features and benefits of the marketplace, as well as tell you how to open an online marketplace.
How does the marketplace work?
In order to open your own marketplace, you need to understand how it works, as well as how to properly implement its benefits.
Unlike online stores, you, as the owner of the platform, are not required to sell your goods or services, but can receive commissions from each transaction on the site. This provides many possibilities. You can sell both your products or services, and the services of competitors, or sell nothing at all.
In the marketplace model, sales play an important role, for this it is important to attract as many sellers as possible to the platform and agree on the terms of placement with them.
After that, you can start promoting your Internet project. Invest money in advertising, SEO in order to attract the maximum number of buyers to your marketplace.
How to create your own marketplace in 7 steps
After reading the benefits, you probably thought about creating a marketplace, but you should understand that this is a complex product that is not so easy to launch. To open an online marketplace you will need to go through 7 stages
- Niche and segment . Even though the marketplace niche is not as busy, you should choose the direction in which there is less competition, as well as the area in which you have a lot of experience, as well as the type of clients you will work with
- monetization model . In addition to commissions on the platform, you can implement other opportunities to earn money (banner, listing, mailing)
- Required functionality . Depending on the niche, as well as the segment with which you will work, you will need basic functionality. It differs from project to project, somewhere more is invested in design, optimization or creation of personal accounts.
- Development Technology . To create your own marketplace today there are many options. It is difficult and almost impossible to say unequivocally which option is right for your niche without a detailed analysis.
- Budget planning . After analyzing all possible technologies for the development of the marketplace, you proceed to planning the budget that you are ready to invest in the development of the platform.
- Closing deals . At this stage, you should find suppliers of goods or services for your platform and agree on the percentage of transactions with them
- Marketing plan. Includes the creation of a strategy for external promotion (SEO, email, targeted advertising) and internal promotion of sellers.
The fact is that people are increasingly looking for information on the Internet rather than offline, and this applies not only to goods, but also to services and consultations. By creating a website that can cover the basic needs of customers, you will receive a constant cash flow. You can open a marketplace in the following niches:
If you decide to create an e-commerce marketplace, consider what product categories your platform will offer. You could sell electronics, clothing and accessories, and home goods.
If you’re looking into how to create a marketplace like TaskRabbit or Fiverr, then you’re looking at a services marketplace. These marketplaces match service providers (such as merchants) with customers who need help with skilled repairs or odd jobs (such as light fixture repairs).
- Real estate
A popular and demanded niche, due to the fact that people do not want to overpay commissions to realtors or consultants, but want to buy or rent real estate without third parties
Through an interactive platform, you can give customers the opportunity to compare products and services of interest, in the future, receive a commission for clicking on the link.
- Car rental
This marketplace will greatly simplify the rental of vehicles or equipment, making it in two clicks.
With the help of the marketplace, you no longer have to go to the market. Ordering vegetables and fruits will be available through a mobile phone or PC
- Used items
You can create your own marketplace for the sale of already used items. It can be both: electronics and used cars.
- Art objects
In addition to the niches listed above, the sale of creative objects also remains promising and unoccupied. It can be both web and tangible objects that we can touch.
- Booking tours
In addition to regular tours, you can offer non-standard and exotic trips for clients.
As you can see, the marketplace niche is not limited to products, but includes a large number of destinations that even today remain unoccupied.
One of the brightest examples of a non-typical marketplace for goods is the marketplace “Fair of Masters”. This marketplace specializes in the sale of handmade products. More than 100 thousand artisans and craftsmen from all over the country are actively working on the platform.
About how the marketplace was created, about the technologies and difficulties that arose on the way to creating an e-commerce project, you can see in an interview with Oscar Hartman and the owner of this platform, Denis Kochergin.
Marketplace monetization. Which model to choose?
Option 1. Sales commission
The commission is paid by the seller in the event that he earned himself. The trading platforms Uber, eBay, Airbnb work according to this principle.
Option 2. Paid placement
Regardless of whether your supplier has earned, he pays a monthly subscription fee for placing his goods or services on your platform.
Option 3. Premium listing
This model provides that an additional fee may be provided for placement in the first positions.
Option 4: Pay Per Click
With this model, you pay per click on your link.
Option 5. Placement of banners
By connecting the service from Google Adsense for placing banners, you can increase the profitability of the platform.
In order to stand out in a niche and attract more suppliers, you can offer them a lower commission on the platform or choose a combined approach using several monetization models to maximize profits.
How to make a marketplace. Platform for creating a marketplace
The market today offers a large number of platforms for creating a marketplace, from different product companies that already have their own product, and studios that develop individual software for each customer. However, ready-made solutions are far from always suitable, and there are enough of their own features. The most popular are listed below.
- Woocommerce WCFM
Plugin for prebuilt WordPress CMS platform. Great for small projects that won’t have a lot of workload or quantity of goods. The peculiarity is that the project was not originally developed for the CIS market, so third-party integrations will have to be done manually, buying programmers’ hours. The platform does not accommodate marketing modules.
- X-Cart Multi-Vendor A
turnkey solution that was created for the American and European markets. The marketplace offers a flexible system system depending on the customer’s budget. The most expensive package includes a full list of modules and will cost $6,000, but you will have to hire additional developers to adapt to the Russian market. The weak point of the platform remains the mobile version of the platform.
This company also offers development using its product. According to many ratings, this platform is one of the best ready-made marketplace platforms, accommodating a large number of different modules. But this product also has its drawbacks. In order for the project to work, you need to pay an annual subscription, which in a few years can lead to high costs. Marketing modules are not fully developed. For development under the individual request of the client, alas, this solution will not work.
- Development from scratch on a framework
This approach to development differs in that each component of the marketplace will be created manually. The total product development time can take from 6-12 months, depending on the functionality. The main advantage of development on the framework is the possibility of maximum customization of the product. Unlike ready-made solutions, development on a framework will cost more.
What functionality does the marketplace need
In addition to organizational issues, a monetization model or a niche for a marketplace, you should pay attention to the technical components of the site. The table below lists the software modules and the time required to create them.
Average number of hours required to develop an online marketplace
|Basic functionality required to create a site marketplace||The minimum number of hours required to develop this element|
|user’s personal account||264|
|A wish list||70|
|Integration with third-party services||110|
User LC. When developing, it should be borne in mind that the personal profiles of sellers and buyers should be different, due to the fact that they perform different actions.
Catalog. Due to the catalog and filters, platform clients will find the necessary services or goods.
Customer reviews. It is extremely important that users share their experience with other buyers, be able to leave a comment or rate.
Online chat. For niches such as the marketplace, support and communication with customers is extremely important. Due to the online chat, platform managers will be able to answer user questions within a few minutes
Authorization. It simplifies the creation of a personal profile for both sellers and buyers by registering on the marketplace using social networks.
A wish list. Due to this component, the user experience is improved, and the process of ordering goods or services is simplified.
Uploading data. It is extremely important for sellers to ensure that goods are quickly uploaded to the marketplace. This is possible thanks to import via (API,XML, CSV). Depending on the niche, one or the other option is selected.
Documentation. This module simplifies mutual settlements with suppliers of services and goods. Your partners will be able to print the necessary documents for accounting or financial monitoring through their personal account.
Monetization module. According to the chosen monetization scheme, modules are programmed to make a profit, and payment systems are also connected.
Marketing module. Discounts and marketing benefits for sellers and buyers will be developed here in order to increase customer focus and sales on the marketplace.
SEO module. An important element for the marketplace, thanks to it you can get direct traffic from the search results. Metadata can be generated automatically (which simplifies the work for the manager) or manually written by the manager.
Integration with third party services. It is extremely important, since mailing services, chat bots, delivery services are connected at this stage
Design. Although this part does not relate to development, it plays an important role because it makes your marketplace more interactive and more attractive than others on the market.
How much does it cost to create a marketplace?
As shown above, the cost of the marketplace depends on the elements that will be on the site. But it is worth noting that it takes 944 hours to develop a marketplace from scratch. Below is a table on the cost of the marketplace, depending on the choice of contractor.
|contractor type||Hourly rate||The final cost of the project based on the required 944 hours|
|digital agency||15$||15 000$|
|Specialized company||30$||$28 320|
|Company from TOP 10||60$||$56 640|
Although, in turn, in order to correctly calculate how much the marketplace costs, you need to draw up a technical task, which will include a list of all the requirements for the design and business logic of the site itself, how everything will work correctly.
If the development from scratch when designing all modules and bonus goodies for the marketplace exceeds the initial budget, you should think about the possible creation of a product with “basic functionality”, that is, an MVP version of the project. This is the basic set of functional modules required to run. This option implies that many functional parts will be missing, but this will be enough to test the future success of the project.
To learn more about what MVP is and what benefits it brings, you can read the article at the link at the link .
Vendor selection and contracts
After the platform is ready, you need to move on to finding suppliers of goods and services, as well as to their further retention. This stage will include 5 elements
- Search for sellers. Due to the ad boards and platforms of competitors, it is easy for entrepreneurs who are ready to work on your marketplace.
- Retention. After you have found potential suppliers. It is necessary to think over a system of motivation and bonuses so that they do not go to work for a competitor
- Agreement of conditions. It is worth agreeing personal conditions with each seller: the amount of commissions, as well as a payment system convenient for him.
- Support and motivation. After the seller is placed on the platform, you need to track its effectiveness and success. Assign a personal manager to provide advice on issues of interest.
- Settlement. Sellers will spend funds on the platform and will need to send relevant documents to the accounting department. In order to reduce the time for this operation, a settlement module is created. Your partners will be able to see the balance in their personal account (how much was spent, how much is left) and download this information via PDF or CSV to close the monthly reporting.
Without creating a convenient and economically attractive ecosystem, it will be difficult to attract hosts willing to work with you. To do this, it is worth planning this stage in advance, having previously talked with potential candidates and learned their requirements.
Depending on your marketing budget, you need to plan how your team will use to attract customers. Below are 4 types of online product promotion:
- SEO. You must develop your marketplace both in terms of internal and external optimization. Due to this, you can get more direct transitions.
- PPC advertising . Targeted advertising for marketplace visitors. There are two most common – for 1000 impressions or pay for clicks.
- Email distribution. After registering on the marketplace, you will get access to personal email users. It will be possible to create trigger mailings based on user preferences.
- Content marketing. You can talk about your platform in different sources and in different forms. This can be either a video on YouTube or writing articles for publication on third-party sources (Telegram publics, Facebook groups or Liga net news resources)
Don’t limit yourself to PPC advertising or just SEO. If you use each of these tools in the proportion you need, then you will achieve the desired result and will be able to clearly stake out a place for yourself in a particular niche.
Summing up, you can clearly see how important the role of marketing is for the development and creation of a marketplace, and that it is important to think over your own strategy and voice the necessary requirements for its implementation in advance, at the stage of drawing up the terms of reference. To find out in more detail why you need a technical task, you can read our article .