The earliest marketplace is believed to have Asian roots and named “bazaar”, originated in Persia in 3,000 BCE. The market places arose when humans started trading, bringing together supply and demand in one place.
In the digital age, marketplaces go online replacing open-air commercial quarters and streets in cities for online peer-to-peer platforms. This has been so successful that global revenues from marketplace platform providers are expected $40.1 billion by 2022 with only American spending contribution almost 60%.
Last Cyber Monday in the US disrupted with an unprecedented $7.9 billion spending by Americans across the country. It’s not hard to guess that Amazon, eBay, Best Buy and Bonanza topped up their corporate accounts good.
Is this not a cause to think about how to make an online marketplace like Etsy or like eBay and join the caste of world-famous merchants?
How a marketplace is different from an online store
Marketplace and online store are both e-Commerce platforms but differ in functionality.
Well, an online store is a retail outlet with its unique domain name, a single storefront for selling goods of one seller. Platforms for building online stores on everybody’s A-list are Shopify, Magento, BigCommerce, and others. Individual online stores can be large, with hundreds of positions and small retailing goods of one or two brands only.
A marketplace is an electronic commerce two-sided platform; indeed, it is a market website, a meeting point for many buyers and many sellers where they chat and make daily deals through one website. It can be a website (AliExpress) or mobile app (Uber). In the case of the marketplace, the platform on its own is a mediator for those who sell and those who buy products or services. Buyers can select products from different retailers and purchase them remaining in one website or app like Amazon.
Not to confuse with price aggregators that differ by their primary goal to aggregate and show prices from different commercial websites for fees while multi stores allow creating your virtual store on the general and regulate the prices and products at the store.
Whichever you favor, a single store or marketplace, it’s going to influence your business model, development stack, marketing, and cost. Among other reasons, a type of marketplace defines the business model. Keep reading to learn about the types of online marketplaces with real examples.
Types of Online Marketplaces
A marketplace appeals consumers by its ability to offer a broader range of goods than a single store. Depending on the type of purchase demand, retail or wholesale, there are types of marketplaces meeting needs of all. Let’s see some examples of existing websites regarding their types to know how to build a marketplace platform that makes money.
American Newegg is a sort of horizontal global electronics marketplace that allows registered users to sell their own products of different categories. Its B2B and B2C model of selling attract over 42 mln users monthly since the beginning of 2019. Sellers can trade via Newegg Seller Portal, an online business management tool, upload in bulks FTP or API, drive customer engagement with marketing and promotional programs, fulfillment services of shipping, and many more.
Another example is ASOS, a U.K-based fashion multi-vendor platform for small business. Targeting young people up to 30 years, ASOS counts over 80,000 items of product listings covering the global market with 52 mln users monthly. Being in the fashion industry, ASOS induces its clients to open an online boutique having their own blog besides basic features, thus engaging customers to buy. You should really consider this feature when you make up your mind to create a marketplace website.
Marketplaces of physical products like ASOS, Real, and Zalando are horizontal, offering consumers fashion, electronics, home products, and others. Besides, customer-centric marketplaces partner with delivery providers giving an extra option of delivery estimation without living the resource (a seller has to specify weight and dimensions of selling goods in a product card).
Selling digital goods has definite flaws. You can’t touch and smell them. You can see them on your monitor, digital wallet, listen to them in your earphones or watching on a smart TV. That’s why this kind of platforms provides download libraries, online streaming, links, and audio/video processing.
Spotify and Apple iTunes Store are the leaders among digital marketplaces selling unique media content of high demand. There are no classical deals as if you buy clothes online. The popularity of music giants is due to their immediate response, and often creating demand first, for such secular trends as a paid subscription option.
Spotify marketplace is adorable for the user-specific playlists generated based on the history of music lovers. The platform pays a per-stream royalty rate musicians who are sellers of their music products. The rate there is still remaining a controversial issue, which gives great scope for actions for entrepreneurs building a marketplace startup of digital products. They can make a weakness into a strength.
Speaking about Apple, iPhone owners are avid shoppers in Apple Store due to the well-thought customer-centric UX and features. Sellers get direct access to any admirer of iPhones, iPads, or any with audio and video content, books, and many more. That is an appreciation of retailing here.
Udemy is an example of a vertical online educational hub where one can reach knowledge base with the click of a button. Being a C2C marketplace, the platform allows an expert to download video courses in a particular field for sale exciting online learning. It is quite a good way of passive income for knowledge possessors, isn’t it?
Property and spaces
Renting services are not yet transformed by digital technology totally. It’s probably why marketplaces of property and spaces for sale and rent are coming onto the market.
Airbnb attracts travelers outmaneuvering with its cultural ideology. A short-range renting platform and hospitality service allows offering homestays for cash reward to owners. Number 2 in the world Travel and Tourism category rank after Booking.com, it receives over 86 mln of users monthly providing around 4 million property listings worldwide. The company has neither property or listings and earns on commissions from each booking doing it competitively.
Also, HomeAway is worth a look. It is the most popular vacation rental marketplace in the US. You could say it is a vertical marketplace meeting the needs of people providing services through one category. The list of 2 mln rentals goes beyond beach houses, condos, villas, castles with cabins, barns, and even farmhouses highlighting area peculiarities. They bet on tenants letting them take over the search on their rules. It helps out renters to earn asking for description, photos, uniques details about the property, and price only.
Marketplaces for space sharing can’t be failed to leave out. Splacer offers creative spaces and venues in New York, San Francisco, Los Angeles, Miami, and Chicago for arranging events. Hosters put spaces for rental on Splacer with description, photos, amenities, services, rules of conduct and cost details in the profile. Websites like this contain local rentals primarily for occasions on the spot.
The most popular marketplaces of services that are in the public eye are 2 sided marketplaces of lean entrepreneurship model like Fiverr and Upwork where one can order digital services like writing, translating, content editing, programming, design, animating and others. There are two sign-in options as a service provider (seller) and service consumer (customer).
Both are horizontal B2B marketplaces; however, Upwork advances servicing from individual experts to individuals rather than business to business as it was before Elance and oDesk merged. Platforms provide a safe space for cooperation with payment monitoring and charging service provider.
Not less appealing is a C2C French marketplace of carpooling BlaBlaCar. In times of the sharing economy, it had a successful launch in Europe with 70 million users in 2019 and presence in 22 countries. It connects drivers on personal cars with passengers to share the travel cost. Both can chat on the platform and negotiate the details of the journey. Payment for a ride is made on the spot directly to the driver by cash.
People tend to economy thus ridesharing marketplaces keep growing. Concerning a marketplace cost, it will go below. We want to reveal to you all the possibilities, and you will see how to take a bite of this cake.
Summing up, marketplaces by customers can be B2B, B2C, or C2C. Vertical or horizontal marketplaces are characterized by the sold type of products or services from single or different sources.
How do online marketplaces make money
Marketplaces should have features that will keep sellers and buyers on the platform. Then any monetization is possible because the deal will be closed on the platform, and the transaction will happen within the platform.
For online marketplaces, there are several ways to get revenue.
Vendor-charged fee models
- Subscription fee. SaaS matters. For the last decade selling goods and services shifted towards offering them by subscription. Pros for buyers are they can pay less than buying a full product, to reject it for the upcoming period or upgrade to special access. Marketplaces benefit from the subscription fee as recurring revenue.
That’s exactly what powers sharing economy on a global scale. It’s a slam dunk as a monetization strategy for marketplaces of services. Sellers can split payments into small parts, which is affordable and start trading on your platform, thereby earning to repeat subscription fee.
- Sign up fee. It is a feasible and simple strategy to get payment from your sellers on the early stages of marketplace development. Applying sellers are charged once to get access to their online store based on your platform. Later you can charge sellers with a monthly or yearly fee, up to you.
Sign up fee lets you receive some money at the start. It would help if you showed your customers exclusive rights being early adopters of your platform, stimulating them to invest here.
- Listing fee. A listing fee is a payment from the vendor per product listing on the marketplace. It can be a flat amount, price-based amount N% of the product’s listing price, category-based for listing a product in a particular category, and a feature-based placing a product in the additional category.
Consider product listing fee for marketplaces of one-of-a-kind products such as antiques, handmade makes, artworks, etc.
- Selling fee. It is a revenue strategy when you bite a fixed interest of each sale when a transaction goes from buyer to seller. You can invoice vendors after they get direct payments from buyers every time while transaction happens or do it monthly, for example. With payouts model, you can collect payments from buyers and distribute them among sellers retaining your selling fee.
One more convenient option is parallel payments when fee separates at checkout automatically. That is more complicated technically but easier to track the balance.
- Lead fee. It’s a model for vendors to pay for seeing buyers list. It might come in handy for customer-centric marketplaces where customers show their request for a particular product or service and vendors fight to complete the order. The platform earns as a mediator provided the perfect place for it. Upwork and Fiverr come up with it again.
When your marketplace is running, you get things with regular charges stabilized; it’s high time to scale up. You can upgrade your platform with new features and generate extra revenues. Here is what we mean.
- Sponsored single products, pages, categories, stores. Dedicated promotions are a viable revenue strategy. Showing sponsored content, you help sellers to fuel their sales, engaging buyers to increase total spending volume.
You can place promotions of the same products and featured items at checkout, show seller store profiles on the main page or category page. Promoting this kind across your marketplace, you can earn charging based on time, location, the number of showings. It’s up to you to toy with sponsored packages for your vendors. Perhaps, you’ll make promo sets at different prices enabling vendors to deal with them up to their wish. As long as you offer feasible options that help earn both.
- Ads from third-party providers are treated as an extra revenue stream besides the existing ones. You can offer spaces on your website for rent to place ads with relevant products or services from outside advertisers. Provide for website design and work up tariff plans to make it possible.
Customer-charged fee models
- Bidding fees work only for auction marketplaces like sliBuy. Customers pay a small flat fee to bid on the product. Also, you can add a paid premium rights to customers showing them items similar to those in a wishlist or offer new lots to them first.
- Maintenance fees are quite a daring charge, but doing business is a venture in itself. So, you can include affordable extra fee at the payment for bid item proving it for the costs of maintaining the website. Note, give clear explanations to buyers it won’t be a surprise and improve your features to engage buyers and sellers to your marketplace.
There can be heaps of revenue models. We know you will invent your own keeping pace with trends of the market. Well, now the cherry on the cake: let’s see how to create your own marketplace.
How to create your own marketplace website like eBay, Etsy, Amazon
Multi-vendor marketplaces have skyrocketed since the 2000s. Being pioneers Amazon and eBay took chances in 1995 seriously. Whether Bezos or Omidyar faced challenges? They did. Also, be sure those challenges were much more complicated than today’s; at least because e-Commerce technology development was in its infancy and had limited possibilities.
The Challenges of Starting
In spite of the market experiencing a glut of online stores, e-Commerce is on an upward trajectory. Millions of entrepreneurs challenges every day. What these challenges are and how to start your online marketplace read below.
If the idea of building a marketplace is buzzing around your head, you might be on the way of niche research.
At the time Jeff Bezos got into bibliophiles making Amazon a mediator between publishers and readers. In good time Bezos understood to be the first he should expand opportunities going into a multi-niche and multi-vendor online store.
Now the situation has changed. The appearance of marketplaces covering highly specific needs of consumers in the international arena should also be recognized. Go the other way around, consider a blue ocean strategy, and create a product to impose demand.
However, if you tend to follow a general way then analyze keyword search for growing trends. Chosen niche will influence your business model and feature set to meet supply and demand profitably.
Speaking about the target audience, such a category as handmade goods stayed in the shadows for a long time. There was no online platform in the USA for lots of people to start a retail business using their skills and creative approach before Etsy appeared.
Etsy’s value proposition makes it possible for crafters to sell their goods to earn a living doing what they love and at the same time satisfy ambitions of keen admirers to have one-of-kind products. Benefits for each audience is a handy tool to sell and buy. Targeting to creators, Etsy thereby helped a lot of those who lost their jobs and had to earn handmading. Imagine how they feel beholden toward Etsy.
Working on the target audience of your marketplace, you should look outwards and find unrevealed potential that will help to discover an unexpected group of your customers. Do not forget to rich your platform with ratings and testimonials, rewards for adherent consumers, and true vivid stories about sellers.
A powerful force of any business is a strategy of earning money. Any business model will be feasible if a marketplace provides enough traction for vendors.
We have already gone over monetization ways thoroughly above. It would be best if you took up your business model while an idea of creating a marketplace came to your mind. You can follow the old path and use commission as a revenue option for consumer-based marketplaces or change the rules and provoke with unexpected charging models.
Start with hooking both sides of users of your platform with free services. Then introduce a fee for one of the sides, alternatively, for both like Airbnb. Continuing to improve the services of the platform to a higher level, you will discover new opportunities to earn.
Living proof of step-by-step confident business development is BlaBlaCar. Engaging 5 mln users in Ukraine, the company hasn’t yet come up with revenue models. Such things have happened. Nevertheless, that didn’t stop them from rising investments round by round.
It has been testing ways of monetization slaving to each country of presence. In most countries where BlaBlaCar is operating for a long time, it takes a 12% fee deducted from the ride cost. That is happening due to the transaction within the platform whose importance we emphasized above.
The main problem here is that buyers won’t use your marketplace without sellers, and sellers won’t sell without buyers. Both should come to the platform simultaneously. How to do that?
You should be ready to spend some money. In 2019 Q2 eBay sales and marketing expenses count $817 mln with a breaking peak of $945 mln in 2018 Q4. Don’t fail; these figures are of large scale platforms. Starting, you will need much less.
Definitely, eBay spends a lot to attract consumers via online and offline marketing. Sellers go there where buyers go. However, the first right step towards getting a considerable consumer base was to allow opening an account and start a business out of nowhere for anyone and costed nothing comparatively. A marketing ruse was that both sides could be sellers and buyers.
eBay always was a leader in a targeted shopping. A model when a shopper comes to the online store looking for some particular thing allows benefiting from it with content marketing. A rarity entails exciting news stories which you can use to satisfy buyers’ curiosity.
One more hint. You can sync prices with other platforms to control pricing and to show your consumers the full picture.
Buyers, in their turn, want to go shopping in a safe place. That is what Amazon secured for its users by the 2000s. Taking care of buyers is also a big deal. Today you have more options with technologies like fast and secure transactions than Omidyar in the 90s.
After all, we advise you to engage marketers in the development process who understand the target audience of the marketplace.
Planning bones of your platform you should keep in mind a real problem your marketplace solves that will earn money for you. The right choice of software technology for development from scratch, framework, or turnkey SaaS e-Commerce platform defines whether your virtual mall will not fail during Black Friday-esque sale day.
Choosing the suitable programming language and software technology
From scratch on JS frameworks
Developers are excited to use Node.js for high performance, easy code, and API creation. It can’t be too hard to hire them.
Asynchronous nature of Node.js allows sustaining high loads in the peak modes of highly scalable web applications. And its lightweight and simplicity of API creation make it better in any significant extent.
Perhaps, some will say Java or Scala rule due to JVM, reliable, and enterprise-proven, others will argue on PHP, said, Facebook and YouTube are running pretty well being highly loaded.
For any real-time web app, an event-driven non-blocking input/output model of Node.js is what you need for prime sales days. That’s it.
JS frameworks suit perfectly for mobile-first marketplaces like Facebook Marketplace (React Native), Uber (React Native + Express.js), or mobile apps of retailing giants like WalMart. It allows doing not double development time for both popular mobile platforms, iOS, and Android and implements the native code easier.
Black Friday, Cyber Monday, Amazon Prime Day and other one-day sales are often overloaded for retailers’ servers. To deal with that, WalMart, for example, distributed shopping traffic between web and mobile, putting all their mobile-based purchases through backend developed on Node.js. It saved their servers from being down and saved the proceeds. Nice move, isn’t it?
SaaS e-Commerce platforms
SaaS multi-vendor platforms are quite another matter.
They captivate sellers with quick and simple onboarding. It’s kind of ready-to-use MVP with a basic feature set and the least amount of effort on your part to start your business. Expanded features to scale up are offered at the extra fee in different packages. Salesforce Commerce Cloud (Demandware), Oracle Commerce Cloud, SAP Commerce Cloud (Hybris) are proven B2B platforms found in favor most.
However, in the last few years, a range of new platforms emerged in the market created to tailor new demands.
Marketplacer, a pretty new player, is listed on Crunchbase with $21 mln investments. It appeals prospects with slogan Think beyond eCommerce powering over 50 marketplaces around the world.
It seams creators worked out everything. Here you have Seller Management with onboarding, CRM, and reporting. Advert Management includes a promo option not only for expected products, services, listings or categories but also for holidays and events.
Order management and Returns allow creating an e-Commerce marketplace site that is trusted by buyers. Logistics tools support a variety of basic and complex shipping options.
With Marketing toolbox and Reporting owners of marketplaces have unlimited opportunities for engaging and keeping clients for their sellers. Automated charging is available with the most popular ways like PayPal, Credit card, direct debit, or prepaid. Moreover, such a usual thing like APIs is offered for custom integrations.
Near Me , a P2P software platform is designed for marketplaces operating in sharing economy. It is aimed to help enterprise brands to reach a crowd with related management tools. Developers of the platform bet on the community facet. The platform doesn’t promise over 25 000 users, but for $2000 per month marketplace owners will get franchising option, a free SSL certificate for the domain, multi-language, and priority support.
Near Me has powerful built-in SEO support. That is one of their best assets. The interface is available in several languages. Be ready to integrate third-parties of shipment providers additionally because the platform has already had only payment providers Stripe, Balanced, and PayPal.
Backed on the Silicon Valley investment fields, Near Me offer tools for emerging brands knowing at first hand about their needs. The system is believed to handle huge B2C and C2C traffic with custom integrations promised by enterprise service partners of the software company.
It is an excellent SaaS platform to build a marketplace to earn on a sharing economy concept.
SAP Commerce Cloud (former SAP Hybris) fascinates with its B2B2C possibilities. This multivendor e-Commerce software can please any skeptic with the omnichannel approach. SAP Commerce Cloud is designed to make retailing and wholesaling happen across all exploded customer touchpoints.
This e-Commerce software with a user-focused, not device or channel, approach to analytics is perfect for buyer-centric B2B or B2C marketplaces. It attaches great importance to Search and Navigation as a means of higher conversion and larger order volumes. A Subscription module enables to manage subscription attributes like pricing, terms, and conditions, etc. of subscription-based marketplaces.
A kind of a heart of this marketplace platform is a Payment module that can coordinate the flow of transactions between a large number of vendors, consumers, and banks. On top of that, this platform supports sales management of physical and digital goods with Bundling. Sellers of digital products will especially enjoy in-app purchases and up-selling possibilities.
A Rule Engine module is used for bundle rules, order management, warehouse and sourcing rules, and others. It allows managing business objects under rules. For example, sellers can create and manage dynamic and personalized promotions and keep track of results across the customer journey with Promotion engine.
Summing up, SAP Commerce Cloud is designed to run both B2B and B2C online marketplaces providing even Commerce infrastructure services as a part of core commerce functionality responsible for seamless connection of third-party services.
Of course, such platforms like Shopify can be used as a basis with Multivendor Marketplace for free during 15-day trial and White Labeled option in PRO package. Magento e-Commerce vendor offers extensions to upgrade your general online store up to the marketplace. The platform itself is not intended for building a multi-vendor virtual mall based on its basic functionality but strives to get a piece of market share segment.
15 features for a minimum viable product from scratch
Now you have to start with something. The best way to test the market within your target audience is by launching a product with a minimum set of features. An MVP (minimum viable product) of marketplace shows a vision of the product and allows trying it run for visioners.
Ready-to-use marketplace software platforms have already a basic functionality in their lite plans. In case you decide to run a custom-tailored marketplace, you’ll need to have all the features developed from scratch.
There are the following features in terms of Seller-Platform-Buyer concept that are necessary to start and do a product validation:
|Onboarding||Marketplace management tools||Product search|
|Seller’s profile||Responsive design||Buyer’s profile|
|Product management||Reporting and analytics||Searching and ordering history|
|Order processing||Payment and delivery||Checkout|
|Sales boosting tools||Communication tools||Reviews|
Do onboarding like Etsy offers. Clicking on the call-to-action button a seller can sign and set up shop preferences, name a shop, add listings, know how you’ll get paid and set up billing. These are five simple steps that can be passed in less than an hour.
Seller’s profile should be as full as possible to make sure buyers that a shop is credible. For the buyer’s profile, it is enough to request for a name, email, shipping address. Typically, you need to provide payment and/or payout options as well as scans of documents.
Making your checkout, consider the location of initial marketplace launch. PayPal or Stripe won’t work in areas where cash on delivery is preferable.
With Airbnb in the market, reviews cease to be something extra. It’s a common thing for any e-Commerce platform. That’s why you should allow buyers to assess interaction with sellers when launching an MVP.
People should browse products with a simple, intuitive search to have a positive experience towards completing a purchase. The simplest search is by the name of the product.
Responsive design will allow buyers to make purchases on-the-go at the early starting of your business and put off mobile marketplace app development.
Sales boosting tools are about promotion for products, discount programs, and marketing activities to drive sales. Which tools to implement depends on the type of your marketplace. To start for a multi-vendor marketplace like Amazon in its modest version listing promotion will be quite enough.
Searching history helps hesitate buyers to go to the desired product faster while repeated visiting and sellers are able to set popular goods to regulate the order of items showings. Order history helps buyers to keep track of the order processing status and all orders of current and past.
With order processing sellers do not need to miss new orders and arrange labels for dispatched, canceling orders, and what’s even more important — order return/refund.
Your sellers need simple product management with easy-to-fill product listing forms, including text and media content fields, ability to create product variations, and organize non-active items.
Marketplace management tools with Reporting and Analytics modules will be useful both for the seller and admin dashboard to keep the pace of sales and revenue numbers. Pay attention to getting integrated your marketplace with ERP to automate a routine with product feed import/export and a product status update.
Take care of yourself as the owner of the marketplace with payment methods to charge a transaction fee as your earnings. Also, provide your sellers with direct money fuel, and buyers with comfortable payment ways whether it is a credit card or online payment system like PayPal, Payoneer, Skrill.
Offering delivery methods, take into account a location and consumer preferences to set up a shipping strategy. Launching a marketplace, you can provide delivery with Shipment providers on buyers as usual everybody does it. Then offer special terms on delivery with insurance, for example.
Communication tools are of utter importance in cases of resolving order issues with buyers, supporting buyers during their shopping journey. That can be live chats, various communication forms on touchpoints, feedback section or review field, etc. it’s better to have something integrated than developed from scratch.
We advise you to lean on these features for your MVP. However, you can add any other ones to fly up if the specificity of your marketplace requires it.
Other features to make your custom marketplace successful
After having passed the early stages, your marketplace will be a stable and growing business unit. It will come the time to scale with new advanced features which attract more users from both sides providers and consumers.
Customizations. For individual sellers on marketplaces like Etsy and eBay, it is vital to stand out from the heap of stores with personal colorful storefront and logo. Add an option for sellers to tailor a store on their own.
Integrations with third parties as shipping and payment providers will help to automate manual efforts of your sellers. Automation, by the way, can be the next step of scaling your marketplace regarding any manual effort.
Vendor performance rewards could serve as an additional incentive for sellers to grow their business, especially because labeling attracts extra consumers to flow to the store.
Mobile apps are a quite expensive pleasure but can lift you to the next level of entrepreneurship. First, you can make a mobile app for buyers because they pay money through your marketplace. Then appreciate sellers with convenient management tools in their smartphone. To have a clear picture how to do it, we recommend reading our article on creating a mobile eCommerce app.
Product comparison is a quite common thing for spoilt buyers. So give this opportunity to shoppers, and you will benefit from it.
Wishlist will be a reminder for buyers what they want to buy. It works well, especially in the sales period, when avid shoppers try to buy up desired products for a great deal.
Social networks sharing is necessary for buyers to share with friends or relatives a product they want to buy quickly through popular messengers and thereby to increase brand awareness of store.
Sophisticated analytics and reporting with third-party providers can meet large-scale stores’ needs. Aiming to enterprise-level, you should set it in your strategic growth plan.
Bulk migration of listings from accounts of Amazon, eBay, or Rakuten global markets will allow large stores to onboard on your marketplace and transacting in your favor.
We highlighted the most desirable features. Sure, there are a lot of those you can think out and bring them to life. Now let’s see who’s behind this.
The team you need to hire
Marketplace development concern requires mature technology professionals to create it from scratch or experienced in platform-based e-Commerce development. Whom do you need and how many deft people should be engaged in your project?
Let’s see, if we are talking about the MVP development, a dedicated outsourced team of 5 key people will launch you a software part of your business.
- UI/UX designer is here that you will avoid messing up. At the time of eBay rise, UI/UX wasn’t a big thing. However, now if you offer poor and hasty design of your website, your business can never fail actually beginning. A designer designs a website to address its need.
- Backend developer works on the core side of your marketplace, developing logic and business processes. We can’t leave this team member out.
- Frontend developer makes your website look pleasant for users based on the backend processes.
- QA Engineer test your marketplace on passing a user flow. Sure, at the MVP stage, you can experiment with your early adopters, but QA can try the system leaving the ides validation users.
- Project manager is a person responsible for team and tasks management. It happens business owners do it on their own, but you should know that it is a quite time assuming the task. So, delegating is a better way.
All team members can be multiplied depending on the project scope. Backend developers can be doubled as well as frontend developers. DevOps can join the team to oversee the system operation.
Usually, software development companies like Aimprosoft set up a team with all members on its side to facilitate the process for a client. How much it costs to hire developers and build a marketplace read below.
How much does it cost to build a marketplace website from scratch
As a rule, it takes a couple of days for a senior specialist to estimate the cost of building a marketplace website. But business speaks figures. Therefore, we made a rough min-max estimate of a general platform-based marketplace for a quick start.
|Stages||Min hours based on the platform||Max hours based on the platform|
|From ERP and/or external source||32||160|
Frontend development includes:
- project setup and login;
- home page;
- listing page;
- product page;
- shopping cart page;
- thanks page.
Backend development includes:
- project setup;
- pricing algorithm implementation;
- products ETL common setup;
- shipping provider integration;
- e-Commerce platform (e.g. Hybris, CommerceTools, Shopify Plus etc.) integration.
Development testing and deployment requires ~30% of the main development in both stages. ~15% of development time goes to project management. The team collaboration implies to allow for ~25% of total development time having working discussions, inactivity timeout from both sides, delays in getting feedback or call to action, etc.
This rough estimate describes development based on an e-Commerce platform like Shopify Plus. In the case of the nonstandard web system, be ready to see higher figures. An online marketplace from scratch will cost you 2000 hours more.
|Country||Average hourly rate||Min ~ hours||Max ~ hours|
|USA||$80||$78 400||$133 120|
|Western Europe (Germany)||€60||€58 800||€99 840|
|UK||£55||£53 900||£91 520|
|Eastern Europe (Ukraine)||$30||$29 400||$49 920|
Your marketplace is running. The marketing campaign works for engaging users. Everything is going ok. The next stage refers to a post-development production.
Updates. Any software needs to be updated for correct running. Developers of the marketplace website can handle it the best way in time. The quantity of hours is considered separately from the total development time as usual.
Support. You will want your marketplace to run in normal mode 24/7. Regular backups and system monitoring are usually outsourced at early stages to the development provider. It is an affordable way to solve issues that keep business running. Support hour rates don’t differ from development rates in the normal way.
Hosting spendings. To run your website, you will need to host it. Amazon Cloud Services made a good showing there. Our clients prefer this hosting provider for reliability and a reasonable price. To estimate expected monthly costs you can with Simple Monthly Calculator. Note, SaaS e-Commerce platforms include hosting cost at least partly.
Development assistance. Launching an MVP, you have a list of features left for later. We discuss with the client the plan of building up. We send clients an agreed monthly quota with manhours needed to deliver upgrades based on the change request paper.
Amazon sellers aren’t going to be content with only one platform as figures show below. They consider other online marketplaces for their merchandise expansion these days.
That’s one more reason why multi-vendor marketplaces are on-demand among sellers attracting consumers with their price offering. Below, we are going to show you stages in the process of how to build an online marketplace with Aimprosoft.
We always start with business analysis clarifying a business model. Both sides should understand processes to design website logic. We find out business and project goals during the pre-estimation discussion. The first helps set up a development process to meet business requirements. The second is necessary to measure success. The initial details of the project will be the entry point to the estimation.
Proceeding from the goals and desired functionality we prepare a rough estimation to have greater clarity of money and time investment to get a marketplace done.
We both need a Statement of Work. It is a documented findings resulted from a business domain research and ground discussion with a client and stakeholders to outline the project completion points. The SoW is a common practice in software development being a basis for web app development.
A detailed estimation follows next with a demo feature set (Proof of Concept) to validate the idea. The testing stage shows if the project is feasible to go to market. The entire list of technologies and all as to technical part of the project is given in a technical functional specification with website UI mockups. Note, the testing stage can be skipped up on a client’s wish.
Marketplace development stage goes under the rules of the chosen methodology. After the development environment is set up by our DevOps we proceed to the development of the first stage of MVP in a case of the marketplace from scratch. The quality check of intermediate releases follows next meeting acceptance criteria.
Maintenance and support complets marketplace development process to provide a normal mode operation for your system 24/7. We make regular backups, implement automated deployment tools, and notificate a client about emerging issues. Timely maintenance measures save your web system from failing and your business from downtime. It is appropriate here to document advanced updates in a change request paper. A little proactivity may be in order.
To stay in a prosperous business, you have to be inventive and strive in the conditions of intense competition among selling platforms. Don’t worry to be anything but. There is always something left behind worth mentioning. If you are thinking about making money on transactions through the web platform for a long time, drop us a line to have a talk about how to create a multi-vendor marketplace.
You may also want to read