The marketplaces of 2021 promise to deliver an even more innovative and customer-centric experience. Even despite the popularity of marketplaces in the global retail arena, there are still market gaps that can be filled by your promising idea.
How to build an online marketplace while avoiding pitfalls, following the LEAN methodology, and offering the customer the experience they expect? Here is the ultimative guide on how to build an online marketplace in 2021.
Marketplace Business Model Definition and Benefits
The definition of the marketplace is quite simple. This is the platform that serves as an intermediary between sellers and buyers. What’s more, this approach turns out to be very beneficial for both parties, as well as for the owner. The best thing about the marketplace is that you shouldn’t have some goods or shouldn’t provide services on your own. The only task you need to do is to create the platform itself and attract users to it. Thus, this is a low-risk startup, especially if your idea is really outstanding.
And here are the benefits for buyers and sellers when they meet each other with the help of your marketplace app.
- Better choices. Since there are a lot of sellers gathered on the marketplace, the buyers get better opportunities to choose from. What’s more, 14% of buyers prefer marketplaces to make a first-time purchase.
- Better prices. Better prices are the key reason why shoppers turn to marketplaces globally.
- Better customer service. This is not always the case, however, most popular marketplaces provide better customer service compared to branded eCommerce stores. The point is that the marketplace owners understand the value of reputation, and that’s why they help both buyers and sellers to deal with their issues.
Marketplace Commerce Trends for 2021
So, before finding out how to build a web marketplace from scratch, it makes sense to find out what trends will dominate the shopping and retail industry in 2021 and follow them in your development process.
- AI adoption. Artificial intelligence is one of the strongest trends in retail and eCommerce. In 2021, marketplaces will be no exception. So, such elements as a recommendation engine, a chatbot, plus AI-powered data collection and anti-fraud tools are the must-have.
- Voice search/voice purchases. Voice search is one more AI-powered technology and in 2021, it is expected to be used by marketplaces to enable voice purchases. To put it simply, it will be working as a voice search in Google but within a specific marketplace and with the aim of finding a specific good or service.
- AR. Augmented reality is already a reality for eCommerce. A lot of branded apps allow for trying on a certain good before paying for it with the help of AR.
- Cryptos. Also, cryptocurrencies slowly cease to be something strange and unknown. Many countries legalize them at the legislative level. So if your target audience is supportive of cryptocurrencies, consider implementing this feature.
How to Build a Successful Marketplace?
So, here is how to build a two-sided marketplace step by step.
|1||The first stage of marketplace development starts with competent research. Here, you need to start with your idea validation which goes hand in hand with the market, competition, and target audience research. To make sure that your idea is promising, use such approaches as PEST, SWOT, Five Forces, and Focus Group Research. Their combination will allow you to reveal essential insights into the market, your competitors, your target audience, and the ways to improve your initial idea so that it becomes even more competitive in a certain economic environment.|
|2||The second stage of marketplace creation is the UI and UX design prototyping. At this stage, you should come up with a user-friendly skeleton of your future app, taking into account the user’s journey, their mental models, and the generally accepted practices in modern web and/or mobile design.|
|3||The third step is the creation of the marketplace itself. Now, you need to come up with a Minimum Viable Product (MVP, or the simplest version of your future solution with essential features only), test it by asking for feedback from your target user, and then proceed to quality assurance, manual and automated testing, as well as bug fixing and further improvements according to your target audience’s opinion.|
|4||At the last and never-ending stage of your project development, you should support and scale your marketplace, find new ways of attracting buyers and sellers and stay in touch with your users keeping their notes and suggestions in mind.|
Why Do Marketplaces Fail?
Now you know how to build a marketplace website. However, why are some marketplaces falling right after entering the niche? Below are the top reasons or the practices you should never follow.
- No idea validation. This is the core reason why most startups fail so make sure that your idea is really what your future customers need.
- No competitors research. Researching your competitors is the core way to find out how your idea can be improved in order to capture a great share of the market.
- No UX testing. Even if your idea is relevant for your customers, they may have their specific expectations of how it should work. To find them out, there is the need for user experience and user acceptance testing which are done after the first prototypes of the future solution are ready.
- Buyers and sellers share mismatches. Also, the shares of buyers and sellers who are active in the marketplace should be equal or almost equal so that each of the parties has the opportunity to make a deal.
- No quality assurance system. The goods or services presented in the marketplace should be of high quality. Implementing a rating system based on the customers’ testimonials makes sense while the buyers that can’t provide outstanding service shouldn’t be allowed to operate on the marketplace.
Marketplace Monetization Strategies
Knowing how to build a marketplace is half the battle. The next important question is how to make money out of it.
According to the research, “Most often, the marketplace business model is based on collecting fees for sales made through them. These fees differ depending on the platform and the category of products. Some marketplaces collect fees for listing the product. The sellers agree to such fees because marketplaces allow them to enter the market with low financial outlays. Consequently, such platforms are key selling venues for many sellers.”
- Fees. In this case, the marketplace owner receives a fee after each of the deals is finalized with the help of the platform.
- Listings. According to this model, the buyer pays for the opportunity to list his goods, plus there are often special offers to pay for the highest positions in listings.
- Subscription. In this case, buyers pay for the subscription and get the right to use the marketplace functionality.
- Paid ads. In this case, the marketplace is free for buyers and sellers, however, there are a lot of embedded ads and pop-ups.
How Much Does It Cost to Build an Online Marketplace?
The price to create a marketplace is highly individual. On average, the price is $30,000 at least for the simplest solution. Keep in mind that the final cost may be even higher if there are additional AI and ML features and integrated tools, augmented reality features, a highly customized design, or some unpredictable bottlenecks that took the development time, and money.
You should also budget for market research and final testing since checking everything up in advance is always cheaper than fixing mistakes and other target audience mismatches.
How Long Does It Take to Build a Marketplace?
The time to build a marketplace from scratch is individual as well. As a rule, it takes 4-8 months depending on the complexity of the features and designs you want to implement, market changes, and target audience analysis.
So, creating a web or mobile marketplace is a promising startup in 2021. However, the core difficulty is in finding a potentially successful idea and testing it with the real audience. Since marketplace creation isn’t a cheap venture, you should test every hypothesis before investing in this or that feature, tool, or design element. What’s more, partnering with a reliable, tech-savvy, and the experienced vendor will allow you to cut costs on non-essential things and create a high-end solution that will fully meet the expectations of your target audience.