The reason behind your decision of creating an online marketplace can be different. Jeff Bezos, the Amazon founder, wanted to create an eCommerce platform where people can buy and sell books online – Now the company sells everything!
Robert Kalin, Etsy founder, wanted to sell wood-encased computers that he crafted; now they have all the vintage items in the world.
Driven by different reasons, these entrepreneurs created some marvelous, online marketplace and have made entering the niche of physical product eCommerce a bit challenging for a beginner. However, you still have the ability to win by building an online marketplace that would change the course of how consumer behavior works.
So how can one start if they have a perfect idea?
What are the key highlighted tips to follow to create a marketplace? Let’s find it out.
What is an online marketplace?
It is an app or a website where third-party vendors can submit their goods or services and present them to potential customers. They offer a peer-to-peer approach, meaning that anyone can become a distributor and start selling online.
Apart from this, an online marketplace can operate in different business models including B2B and B2C, etc. The P2P model, in particular, is expected to reach $355 billion by 2025.
Isn’t this something to build your interest and start your way with an online marketplace?
Below are steps that will help you with marketplace MVP development.
1. Clarify your MVP idea and value
The first and most important thing is to figure out the potential of your idea. Is your marketplace solving a problem? And what is the unique value that sets you apart from all the industry leaders?
And this doesn’t only apply to the seller’s side, it also applies to the buyer’s expectation. When defining a problem worth solving, take a look at the market leaders and competitors. There’s a higher chance that your niche is already covered somewhere. But this shouldn’t stop you from trying. Narrowing your focus geographically, or to a certain sector can be of great help.
Once you analyze this, the next step is to learn your target audience. How old are they? What are their interests? What are their habits? Proper analysis and research are worth the effort and can lead to a lot of exciting results that you’ll enjoy in the future.
To best summarize this, here are some points that you can follow:
- Is there any need for your MVP in the target market?
- What problem is it solving?
- For what target audience are you solving the problem?
- Why is your solution better than the existing alternatives?
- In what areas can you improve the existing experience?
We’re sure you can fill this out and find even more handful questions when conducting market research, make surveys, or hold interviews.
2. Choose the Right Business Model
Once you have all the data, the next step is to pinpoint what business model can best suit your needs. Here are some business models that can tune your focus.
- Business to Business (B2B)
- Business to Consumer (B2C)
- Consumer to Consumer (C2C)
- Peer to Peer (P2P)
Next, decide what monetization model suits your idea best. There are plenty of revenue models you can fit into these terms. Here are some of the common ones:
- Subscription: A paid subscription plan gives the users access to your platform based on monthly or yearly payments. The plan can also include the ability to post promoted and free listings, as well as advertise them.
- Commission: Sellers are charged a selected rate per transaction. For all the products or services sold, you’ll get a small commission. For certain goods, the commission can be higher.
- Freemium: Users get free access to basic functionality of the online marketplace, but the revenue is generated from additional services such as advertising, whitelisting, or special offers to shoppers.
- Listing Fee: Every time a new product is posted, a fixed listing fee will be deducted from the vendor.
3. Start developing your online marketplace MVP
To bring your idea to life, you can either build an app from scratch by yourself, use third-party services or outsource the whole marketplace development process.
If you’re a beginner, then it’s recommended to outsource your app as it is both cheaper and more reasonable than hiring and managing an internal team or a group of freelancers. Outsourcing will also help you get great insights into your niche idea and the experienced team can help you make reliable business decisions.
Once you’ve decided to trust your app development to a vendor, take a look at other things you need to take care of:
- A domain name
- Website hosting
- Integration with a payment solution
- SSL certificate
The most important part of the MVP development process is to decide on the app functionality. These are the features you most likely want to have in your online marketplace app:
- User Account, Profile, and Settings Panel
- Marketplace Search Engine and Filters
- Real-time tracking, Analytics, and Charts
- Payment Integration
- Ratings, Reviews, and Feedback
Prioritize the features you want to have in your app and move on to the marketplace development process
4. Put your MVP into action
Testing the MVP marketplace app is necessary to get rid of all the bugs, segment mistakes and to overall complete the development process. It is also important that you gather feedback from community members and polish it further if required.
Once all your landmarks are checked, it is time to launch your marketplace. Here are some tips that will help you with the launch process.
- Improve your SEO to attract clients from Google Search (both paid and free)
- Look for online forums, build social profiles and start promoting your brand (Organic and Paid)
- Contact sellers that are active in your niche and invite them to join your platform
- Set up a pre-launch email campaign
- Contact influencers and try to turn them into your early ambassadors
- Participate in community discussions such as groups, online forums, and meetings
5. From step one to initial growth
Sales won’t start as soon as you build an MVP marketplace. It will take some time, effort, and marketing before you achieve stable brand credibility. Along with obvious strategies like social media ads, SEO, blogging, Google PPC, there are countless other opportunities you can follow.
For example, Pinterest is a great platform for sharing visual content. And you can literally grab thousands of traffic from this. Get aid from all social media, pay attention to local platforms, and you will surely see some great results.
Another point worth mentioning here is that all new sellers require your support or tuning. You can offer them access to a knowledge base that includes video tutorials, blogs, updates. Also, you can conduct one-to-one meetings with most promising sellers to help them develop their business within your marketplace.
All the major marketplace platforms like Etsy, Amazon run a dedicated knowledge base section from which both the sellers and buyers can benefit.
Bonus Idea: Master Project Management
By mastering project management, it doesn’t mean that you have to get a degree for this or an online course. Understanding the basic terms and how the business works will help you stay on top of things.
Creating an MVP for an online marketplace is not a piece of cake, you need specific planning from idea to launch to be successful. The failure rate of startups is around 90% with over 21% of startups failing in the first year of operation. That’s a lot if you’ve not successfully planned ahead for your future.
If you work with an agency, you will surely have a project manager that will assist you with all the terminologies and business retention. If you’re working with an in-house team then you’ll have to hire a project manager or keep in hold of your own things.
Whatever the case, always consult with a technical specialist before you make any dramatic moves. This will help save both your time and resources.
How much does it cost to build a marketplace app?
Now, the main part, how much does starting an online marketplace cost in 2021? Roughly speaking, the price can start anywhere from $45,000 for a simple MVP to $100,00 and beyond for a full-featured app with complex architecture.
Let’s review where these numbers come from.
So to build a marketplace, you need your team to include the following roles:
- Business Analyst
- UX/UI Designers
- Web Developers/Designers
- QA Engineers
- Project Manager
At Clockwise, you can grab a precise MVP estimate whitepaper of every stage involved in the step. The document includes the maximum and minimum numbers of hours along with the estimated cost of all the workers based on geographical location.
Over to you now
Hopefully, this guide has helped you get the initial idea of what starting an online marketplace looks like and how you can build an MVP. It is clear that online sales have improved a lot and the recent pandemic even gave it a large push.
The example of marketplaces such as Uber, Airbnb, Lyft, and many more prove that all you require is an idea to get started. If your idea solves a problem of general consumers – you can easily cash it out.