How to Build a Marketplace Website That Users Will Love
An online marketplace is a website that connects vendors and buyers. Good illustrations of the marketplaces are Amazon, eBay, Etsy, Walmart, Uber, Airbnb. The key role of them is to bring together the right seller and customer. This kind of service differs from the usual online store. As the second ones sell only their own products online. A typical online shop is owned by one big company, e.g., Zara, IKEA, Nike, JYSK, Apple.
A marketplace allows both sellers and buyers to find each other in the easiest way and to make transactions. A platform can be used for exchanging goods or to trade since they include everything from online services and applications to physical items like beauty products, furniture, or clothing.
What are the other differences between a marketplace and an online store? Traditional online stores have one seller, two-sided marketplaces are used for selling by a lot of vendors. One more difference is the sales model. Marketplaces choose variable models. Online stores prefer a fixed one. Also, if we talk about marketplaces, they may need neither actual inventory nor a warehouse. Whereas online shops require at least storage.
In the article, we consider the following questions: the types of marketplaces; how to build a marketplace website; main steps in developing an online marketplace; the price of marketplace website creating; functions of a marketplace.
Let’s get started!
Main steps in building an online marketplace
There is no single answer on how to create an online marketplace because the ideas and development of each of them are specific. But there are two things that are irreplaceable. They are strategy and good planning.
Below, we are going to share with you key steps that can’t be ignored in building an online marketplace.
The preparatory stage
??Come up with an idea
Everything starts with the idea. Think about it. What problem will your marketplace solve? Ideally, it needs to be useful for both groups: the vendors and the customers.
Typically, buyers use marketplaces because they want to get well-quality items for a low price. Providers want to find customers and manage their sales in the easiest way possible. Plenty of marketplaces are based on improving the user experience. However, only improving is not enough. You need to solve a really painful problem for both groups of users.
Airbnb is a good example of a marketplace. The company started with a founders’ problem that they wanted to solve by themselves. Now it’s a marketplace that covers 99% of countries in the world.
First, the owners were focused on solving their own pain. Then it figured out that their pain resonated with the pain of millions of people. People that had unused space in their apartments and the other ones who wanted to rent cheap accommodation during traveling.
As we can see, the key idea was pretty simple and the service became a perfect solution for both sides.
??Define your target audience
How can you make sure that your idea will solve somebody’s problem? By talking with potential users. So, your next step is to identify your target audience.
To describe your potential customer use the following options: age, gender,?location, profession, hobbies, education, family, income, fears, and inspiration. You may add several more options to this list if you need to have some extra information.
In the case of marketplaces, there are two totally different types of buyer personas: the vendors and the customers. You need to define the target audience for both of them.
The more precise buyer personas are, the better you understand the behavior of potential customers.
Creating a target audience gives you a clear awareness of things that you have to do to satisfy clients.
??Make marketing research
In the perfect world, your idea would be unique and there were no similar products around. But the reality is different. Almost everything you want to do has already been done. Because of that, you need to understand who your competitors are, what the features of their product are, its drawbacks, and benefits. Ask yourself if you are able to offer more value than your competitors?
??How will you earn money?
?Before the development of the marketplace define the possible monetization model. There are several the most common:
The vendors need to pay a percentage or fixed fee for every successful transaction on the website.
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The users pay a monthly/yearly fee to use the marketplace.
Charging providers for every listing they add to the marketplace.
Some functions are free. But users need to pay if they want to get access to fully functional.
The more users the marketplace has, the more it can earn through advertisements. With this model, people usually don’t have to pay for using the platform because the ads generate revenue for the service.
Each of the models has some advantages and disadvantages. For example, the commission model is a great decision for huge marketplaces such as Amazon, Etsy, or eBay. Because the vendors need to pay only when they make money. For smaller platforms, it is better to choose the other variant.
The development stage
??Project specification
The website development?stage starts with project documentation. Despite the fact it may seem a boring and monotonous task, detailed documentation will save you plenty of time and money in the future. If you work with an in-house team, it isn’t that important. But if you choose to?hire dedicated web developers, the documentation will be an essential roadmap.
??Build the marketplace MVP
A great idea is to start with developing the minimum viable product (MVP). In short, MVP is a version of a website or app with enough features to be used by customers. It differs from the usual product in the number of functions. And, consequently, the total cost and development time.
Code&Care recommends starting with MVP. As it’s an extremely widespread situation when the entrepreneurs spend time planning, briefing, working before launch. But on the launch day, they understand that the idea doesn’t work, and they have to start from the very beginning.
If you launch MVP first, you will not waste a lot of time and money. But you will get valuable feedback from potential customers.
??Moving to a full-fledged platform
After building MVP and business idea validation, the work on the project should be continued. To get a profitable business, you need to engage new customers constantly and expand functionality.
The launch stage
Creating a marketplace is not enough. Launching it successfully is crucial. Prepare a launch plan by defining your launch timeline, marketing messaging and the primary channels you’ll use. Different industries, regions, and marketplace types will require different launch strategies – try and pick the most suitable one.
A great decision is to launch a service in two steps: product launch and marketing launch. Product launch supposes testing your platform and technology. Marketing launch means the involvement of as many related customers on your website as possible.
Remember even if your launch isn’t so successful you hoped for, it won’t mean a failure. You can always try again. For example, Airbnb had launched three times before the service was noticed.
How much does it cost to build a marketplace website?
The cost of the marketplace may vary from one to another. It depends on a lot of factors such as the functionality you have chosen, the number of?different specialists included in the team, the number of working hours on the marketplace development.
On average, the total cost may vary from $10 000 to $25 000. The more accurate you estimate all the details, the more precise cost you will get.
However, you need to be ready for some extra expenses. In case if you decide to add more functions or the work process lasts longer than it’s supposed to be.
To figure out how much the development of your marketplace will cost precisely, please email us with the comprehensive information:?[email protected].