The online marketplace’s popularity is shocking. Considering Amazon as one of the world’s eCommerce leaders, numbers and statistics surprise and amaze: its net revenue exceeded $10 billion in 2018! Thus, online marketplace development becomes one of the most popular and potentially profitable methods to succeed in the eCommerce industry.
However, marketplace development for a successful business is rather hard unless you have a pure understanding of the essentials. In this article, we will shed some light on basic definitions and facts you should be aware of once you start your eCommerce marketplace. The sooner you start working on it, the sooner you will measure the positive results!
What is an online marketplace?
An online marketplace is a website where multiple providers can promote and sell their products or services to interested customers. This is a global platform where retailers meet customers, where manufacturers meet consumers. This eCommerce platform is highly convenient for both sides of cooperation: those who sell get an opportunity to reach out to an enormous number of potential clients; those who look for certain product or service get as much information from different sellers as they need, as well as can compare numerous options and pick the one that meets their requirements.
Here are some of the operations successful marketplaces can handle:
- Transaction processing;
- Pre-selling and cross-selling;
- Advertising and promoting;
- Packing and shipping etc.
Typically, marketplaces require a fee for each listing, purchase or successful transaction. They offer special opportunities and discounts for subscription and registration to create a powerful user database.
eCommerce marketplaces are the weighty elements of sharing economy. Many of them are built on the peer-to-peer model and thus, they provide even more unique opportunities. If you were just a buyer yesterday, you can easily become a seller today. And this is possible using only one single platform!
Classification of online marketplaces
To develop a viable business plan and powerful strategy of your future eCommerce business development, you should be aware of the basic types of online marketplaces.
Depending on a variety of products and services available on the eCommerce marketplace, there are 3 major types:
On these websites, you can find everything you want. One of the most famous representatives is eBay.
Here, you can find products offered by different retailers but at the same time, they all belong to one sort. For example, TrueFacet sells only jewelry and related products from different manufacturers. There is an opinion that vertical marketplaces have more potential than horizontal ones.
These type of marketplaces present products of different sorts and companies’ but at the same time, all of these products have a common feature. Take a look at Amazon to understand their specifics.
The model of relations defines the type of a marketplace, too:
- Peer-to-peer marketplaces are decentralized, and none of the third parties is engaged in the process;
- Business-to-consumer (B2C) platform brings together only businesses and consumers;
- Business-to-business (B2B) platform enables transactions and operations between businesses only;
- Consumer-to-consumer (C2C) platform conducts transactions only between consumers.
All of the marketplaces can either be eCommerce (each transaction is conducted online) or mCommerce (each transaction is conducted via mobile device).
Popularity and potential of eCommerce marketplaces
Some of our readers may wonder what caused such tremendous popularity of eCommerce platforms. We have analyzed reviews and opinions of both sides of cooperation and defined 2 primary reasons online marketplaces have obtained such strong positions recently:
Both retailers and buyers need just to sign up on a certain website and enjoy using it. Retailers post their listings and sell products with no necessity to develop their own website and invest money in an online store. On the other hand, consumers get access to a great number of products without leaving their homes or comfort zones.
Marketplace developers build a completely safe and protected environment for the users. Following the latest trends and methods, they guarantee that no data theft is possible.
Besides these 2 factors, there are lots of smaller but still significant ones. And all of them cause the forecasted eCommerce sales growth: Source
How to build a marketplace and change the target market with it
This is a crucial question, and most of the eCommerce enthusiasts and entrepreneurs look for the precise and definite answer to it. Well, first of all, we need to mention or even warn you that this process will take time, money and dedication. And before you dive into the depths of viable marketplace development and technologies needed for that, let’s choose the suitable method. Here, you will find a brief description and approximate evaluation of costs, time and dedication required:
Build it using SaaS product
- Cost: Low
- Time: 1m+
- Dedication: Low to Partial
This is the fastest way to validate your idea and start getting benefits from an online marketplace. However, here is the unpleasant fact: the product’s customization and design will suffer. Thus, you save time and money but miss a chance to develop an outstanding brand and attract users with great UI/UX design. There are lots of ready-made solutions you can employ to build an online marketplace like My Marketplace Builder.
Build it from scratch yourself
- Costs: Low to Medium
- Time: 24+ months depending on your tech proficiency and marketplace’s complexity
- Dedication: Full
Sounds quite challenging, doesn’t it? To build a marketplace from scratch all by yourself you need to:
- Build a deep understanding of the current situation in the market;
- Decide on the best web and mobile technologies for your marketplace;
- Build an MVP and attract first investors, sellers and buyers with it;
- Improve your coding and software engineering skills to build a high-quality solution;
- Test it thoroughly;
- Launch it and start working on business development.
Hire a team of IT professionals to build a marketplace for you
- Costs: High to Extra High
- Time: 6m+ depending on marketplace’s complexity
- Dedication: Partial
If you feel like there is a gap in your software engineering knowledge and lack of coding skills, you need to find and hire a team of competent specialists to do this part of the job for you. Here, 3 options are available:
- In-house team
We mean a team that will work with you in your office, shoulder to shoulder. This option is expensive, and cost depends on a country you grow your business in.
- Freelance developer
This is a highly popular but quite risky way to construct your online marketplace. You can find developers and testers on websites like Upwork. However, keep in mind that these people may be unreliable, unprofessional and toxic for your project.
- Offshore team
The term of outsourcing has appeared many years ago and lately, it is associated with software engineering services. Opting for this method, you build cooperation with a team overseas, sign documents and agreements, discuss critical requirements and delegate the complex task to those who know how to solve it.
We have built this article together with Clockwise Software IT professionals for you to take a first step towards the outstanding marketplace development. Do you have any questions or concerns? Just let us know about them and let’s eliminate any tiny detail that may bother you on your way to success!