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We no longer associate the word "marketplace" with grocery shopping early Sunday morning. Now, thanks to Amazon, eBay, and Etsy, marketplaces are strongly associated with digital shopping websites, where you can buy any product you can imagine. But why are such trading websites so popular?  

Two-sided platforms offer small businesses an effective selling channel. In such a way, marketplaces eliminate the need to spend money and time maintaining their own online shopping store. 

For such a service, site owners change commissions and earn money without actually selling anything. 

If you can't wait to launch your own marketplace business, you are in the right place. This article is about developing a marketplace start-up in six steps and turning it into a profitable business. 

But first, let's define the ultimate meaning of a digital trading platform. 

What is the digital marketplace?

A marketplace is a platform that gathers retailers who offer their products and numerous buyers who buy from them. In a nutshell, the website performs as an intermediary between buyers and sellers. Such a website could be in the form of a website or mobile app, targeted to different users. 

Types of marketplaces

You need to select the type of marketplace and define end-users. There are B2C (business to clients), B2B (business to business), and P2P (peer to peer) marketplaces. 

Let's look at each marketplace type in more detail.  

  • Business to clients

B2C marketplaces serve small businesses and individuals. While some marketplaces, like Amazon, offer products, others, such as TaskRabbit, offer services.

  • Business to business

There are also B2B marketplaces, which means sellers and buyers sell and buy wholesale products. The list of B2B marketplaces includes websites like RapNet that sell diamonds and Alibaba B2B.  

  • Peer to peer

Don't forget about P2P marketplaces, where both buyers and sellers are individuals. One example is Airbnb that offers apartments and houses for rent. 

However, the market of trading platforms is even more granular, and each project varies with the products and services it includes. 

There is a marketplace for selling used products such as Decluttr and Ubup. 

There are also job marketplaces, like UpWork and Fever, where you can find freelancers for various tasks. 

Let's concentrate on developing true online marketplaces where vendors can sell physical products to consumers.

But how does such a marketplace differ from a regular e-commerce website? 

Online marketplace vs. online store

You need to be aware of six differences between the marketplace and an e-commerce website:  

  • The number of sellers. As an online store owner, you perform as a single seller at your e-commerce website. As a marketplace business owner, you do not need to sell anything to receive profit, since many sellers offer their goods, through whom you can earn money. 
  • Product variety. Typical online stores offer up to 10 product categories, but marketplaces include products from different industries. For example, Amazon, the biggest online marketplace, counts 36 categories and over 12 million products, including books, media, wine, etc. 
  • Features. The online store consists of two parts - an admin panel to manage users and products, and a customer profile to add products to a shopping cart and complete the checkout. The two-sided platform includes features for three types of users. They are an admin panel to manage users; a seller profile to list products, manage orders, receive payments; and a buyer profile, which has the same functionality as one in an online store. 
  • Traffic load. Even popular online stores hardly count over 10,000 users per month. Online marketplaces should be powerful enough to handle substantial traffic loads. For example, Amazon counts 5.7 billion shoppers each month. 
  • Tech stack. To build an e-commerce website, you can leverage e-commerce platforms. But to build a vast marketplace, those platform capacities wouldn't be enough. Thus, consider using such popular marketplace builders as Zielcommerce, 3Dcart, Arcadier, or Yo!Kart. If their features are still not enough for you, you can hire developers to build a project from the ground up. 
  • Monetization. When you are managing an online store, direct purchases are your primary source of income. However, owning a marketplace opens new streams of earning money, including service commissions, promotions, etc. We will look at them later. 

In a nutshell, an online marketplace is like an e-commerce website on steroids. Such platforms include more products provided by multiple sellers and substantial monthly traffic loads. 

Now, let's see how to develop a marketplace start-up from scratch or using existing platforms? 

Building an online marketplace website: SaaS vs. from scratch 

When building a marketplace you can leverage an existing e-commerce platform with pre-build features. Such platforms are known as SaaS solutions, which means the software as a service. You also can hire a development team to build an online marketplace from scratch. 

In both cases, you end up with your own two-sided platform. But, there are essential differences between these approaches to pay attention to. Before deciding in favor of a platform-built or custom-built marketplace, consider the following: 

  • Customization

By customization, we mean adding features and changing the design to meet your business needs. In the case where you need a UI/UX design tailored to your brand and a bunch of sophisticated features, consider building a project from scratch. If, however, you want to create a simple project with essential features and template design, you can use a pre-coded platform. 

  • Traffic load

A high traffic load negatively impacts marketplaces that are not ready for it. Thus, they can crash and cause inconvenience to users. If you expect your platform to handle around 10 000 users per month, a platform-built site will perfectly meet your needs. 

However, if you are going to develop a marketplace like Amazon with a high traffic load, you need custom marketplace development. In this way, developers will create the infrastructure on cloud servers that automatically expand operating capacities. So, the project architecture can work without downtimes, even with 1,000,000 website visitors per second. 

  • Timeframes 

In case you expect to launch your platform in 1 or 2 months, rely on existing marketplace builders. Thus, you need to make very few changes to the SaaS marketplace to launch it within a short period. 

When timeframes are not your main priority, build such a project from scratch. 

  • Addons 

Take at least some time to research the additional features you can add after launching your trading platform, since, as your business grows, you will need something more than just a shopping cart and checkout for buyers, and a product catalog for sellers. 

Investigate whether your platform's store has add-ons for email marketing and advanced product recommendation tools, as you will need them sooner as you think. 

In the case of needing more add-ons,  developing a custom online marketplace will work the best. 

Once you find room for new features, your development team can code and add it to your custom project within several weeks. Thus, you receive total control over marketplace website functionality. 

  • Tech complexity

If you have at least a basic knowledge of coding, know how to buy a domain name, and set up a server, choose SaaS. 

If you have to google what  "server" means, then hiring web developers is your option of choice. Even if you are not going to create a unique marketplace and the primary SaaS platform meets your needs, we suggest you team up with a development team to set up your marketplace. 


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