2021 is the year of the online marketplace industry boost. For example, Statista predicts that sales on Amazon, one of the biggest known marketplaces, are going to reach $468.78 billion in 2021. Of course, starting from scratch is always a challenge. Still, knowing the best approach and practices is a real key to success.
So how to create an online marketplace that sells and won’t just fail? We have prepared seven helpful tips for a sky-rocket launch of your marketplace. We have enough expertise to minimize the risks and help you grow.
What is an online marketplace?
To begin with, let’s define this website type. What’s the difference between a marketplace and a simple online store? By definition, an online marketplace is a platform, where different vendors sell their goods to customers. A marketplace owner is bringing the right customers and sellers together and earns a certain type commission. As for online stores, it is a single store that owns the website and products and sells its own goods online.
Below is an example of a multi-vendor marketplace:
Best practices to launch an online marketplace
1. Find the right niche for your marketplace
To begin with, define what type of goods or services will be available in your online marketplace. Then, narrow your focus and set up your target audience segments and preferred location.
While your marketplace is new, it’s more effective to find and attract only target customers with a primary focus on their preferences and needs. Don’t add as many goods and services as possible. Only after your platform scales, you can expand the offerings list. Thus later you will cover more consumers and make profits.
2. Choose a monetization strategy
Picking the way you want to make money on your platform, or monetization strategy comes next. Below is the list of the most popular strategies, used by the biggest marketplaces like Amazon, eBay, and Etsy. At this stage, you should select the most suitable revenue model, that will generate your profit:
- Subscription fee model, when either some or all users pay a fee to get access to the marketplace.
- Transaction fee model, when you get a small share from all transactions done on your online platform. For example, promotions and ads, membership payments, and etc.
- The listing fee is one of the most popular models when a fee is charged for each item published on the platform.
- Premium listings are good for making offerings more visible.
- The advertising model allows third-party advertisers to promote and make profits on the platform.
3. Define the features list and tech stack
Providing platform customers with the best user experience, is the next step. We have collected a unified list of ‘must-have’ features for your marketplace. We don’t aim to limit your ideas. We offer the basics for your idea growth:
- Security and Authorization
- Registration for both vendors and buyers
- Managing user’s profile and data
- Controlling items listing
- Search and list of filters
- Statistics and analytics reports
- Boost items options
- Ratings and reviews
- Clear payment functionality
It’s the recommended feature list for any marketplace type. Be it a peer-to-peer (P2P) marketplace, like Etsy, Amazon, Uber, eBay, or Upwork; or a B2C marketplace, like App Store, Google Play. Or even if it’s a B2B platform, that connects many B2B sellers, namely brands and manufacturers and other businesses, buyers. Add these features by default.
And of course, before building a marketplace, think about the tech stack you will use. To put it simply, if you choose the wrong tools, you might get technical issues once you launch, i.e. slow page loading speed, and so on.
When it comes to development from scratch, we suggest using recent technologies. As a rule, they provide up-to-date tools and features and profound community support. Among the most popular technologies, Codica team recommends Vue.js and React (for front-end) and Ruby, Node.js (for back-end).
Below you can see the technology stack that we recommend for successful marketplace development.
Another option here is to try an out-of-the-box solution. This way, you will be able to launch faster.
If you want to give a try to a ready-made solution, check the best marketplace software on G2, based on users’ reviews.
4. Launch an MVP
Once you finish with the must-have features list and tech stack, we suggest you create a Minimum Viable product first. There is no need to start with a fully-functional product at once. The MVP option has proved its efficiency and does not need much time and costs.
Some advantages of MVP vs a full platform development:
- Fast release;
- Saving both time and money;
- Knowing your customers’ needs from the start;
- Gathering the early product adopters;
- Additional idea improvements (if needed).
5. Pay attention to design
Keep in mind that design impacts all the spectrum of the customers’ emotions, feelings, and decisions. So both UI and UX designers should be involved as early as possible and help develop an intuitive, and attractive solution. Some helpful tips here:
- Make easy and intuitive navigation
As you can see, a user journey and intuitive navigation are two key components of usability. Hence, if you make it easy to buy products on your platform, the number of sales will increase.
- Establish trust
Do your best to provide ‘important information only’ on your website pages, and not overload them with long-reads. Save story-telling for other platforms.
- Increase user engagement
Make sure that your marketplace idea is clear to the customers and you have the right match between vendors and buyers. Provide the users with a complete understanding of platform advantages and a variety of products or services.
6. Acquire vendors and buyers
The chicken and egg problem is very common for online marketplaces. Therefore, the best strategy here is to take care of this aspect of a marketplace launch as early as possible.
Let’s see what tactics will be effective if you want to build a website like Amazon:
- Contact and invite sellers and buyers from other platforms;
- Think of some helpful guides for your marketplace;
- Research and provide the unique offer for both vendors and buyers;
- Set up clear and fair commission models;
- Implement a helpful functionality to assist vendors to control their goods’ sale;
- Provide support to solve all possible issues.
7. Promote your platform
Finally, when it comes to promotion, it’s a challenging task for any marketplace type. Have a look at some efficient techniques to help you grow:
- Social networking;
- Email Marketing;
- Paid Ads.
To su up, building a multi-vendor marketplace like Amazon or Etsy seems to be a real challenge. True, it requires your time, energy, resources, and skills. Even Rome wasn’t built in a day! Yet, I hope that with the helpful tips above you will launch a successful platform and prosper.
About the Author
Dmitry Chekalin is a CEO @Codica. Software Entrepreneur with 15+ years of experience. Focused on the lean startup approach. I write about startups, marketplaces and SaaS products, and custom software development.