How to Build Online Marketplace: Step by Step Guide

With global e-commerce sales reaching up to $5.4 Trillion in 2022 and an industry-leading online marketplace selling $2.67 Trillion in 2020 alone, this is the high time to build online marketplace of your own.

The industry is booming, the user base is responding well, the online marketplace is one of the world’s largest industries. This has attracted many businesses and start-ups to create a marketplace website of their own.

If you too want to develop a marketplace solution but don’t know how to, this blog is for you. Here, we will be looking at everything starting from the definition of the marketplace to how to build a successful marketplace.

With this being said, let’s get right into it:

What is Online Marketplace Development?

It has been some years since Covid-19 first struck the world with its deadly blow. And during this time, our lives as well as the world’s economy, and industry took a huge blow. Banks, the medical industry, local shops, etc were at a huge disadvantage.

However, as tragic as it was, there were some industries that were booming due to the circumstances. One such example is online marketplaces.

Since people couldn’t leave their house for most basic of tasks, they were forced to use online mediums. This means online marketplaces that offers doorstep delivery of stuff become quite popular among the populous.

In fact, this industry is expected to grow to $355 Billion in valuation by 2025. And following the covid pandemic and change is a lifestyle; there has been a 40% rise in a number of online marketplace users.

This clearly shows that with the right concept and a good development partner, you can create the next best online marketplace.

But this begs the question, what is online marketplace Development?

In simple words, a marketplace is a platform that enables the sellers and buyers to connect and interact with each other on a commonplace. In addition, they can sell, buy, and conduct an exchange of services effortlessly.

An online marketplace has many features that make buying, selling, and in-app communication smoother. We discuss the feature later on in the blog. Meanwhile, this is what an online marketplace is, and what it does.

With this being said, let’s look at some of the popular online marketplace platforms.

Examples of Online Marketplace Platforms

While the pandemic became a catalyst, there was still an online marketplace before the pandemic. Anyhow, here we will be looking at popular marketplaces that work as good references point for the development project. These are, as mentioned below:

a) Amazon

b) Walmart

c) Ebay

d) Etsy

e) Alibaba 

These are some of the popular online marketplace platforms that you can take as reference to build an online marketplace of your own.

Is e-commerce or eCommerce marketplace the same?

People often confuse between e-commerce mobile app development and marketplace development.  While these platforms are similar they aren’t the same. In fact, when you look closer, there are some subtle differences that separate these two platforms.

The reason behind the confusion is simple, both of these platforms deal with selling goods online. But this is where similarities end.

While eCommerce is an independent website that deals with the selling of goods from one store, an online marketplace is a platform where users can find various users selling their services.

In simple words, one can say an e-commerce store is like one shop while a marketplace is a market that has many shops or a mall, if you may.

This is the major difference between these two platforms.

 Is Amazon a marketplace or eCommerce?

Contrary to popular belief, Amazon is not an eCommerce platform. Rather it is an online marketplace platform and the best one in that.

As it turns out, there are 3 different types of online marketplaces platform, we will be discussing these below:

What Are The 3 Main Types Of Online Marketplaces?

Every business has different needs, to fulfill these needs, there are three different types of online marketplace solutions. These are, as mentioned below:

1) B2B Marketplace Platform

B2B refers to business to business. Meaning this type of online platform allows businesses to interact with each other and conduct an exchange of services effortlessly. Since the user base is restricted, this solution isn’t as popular.

One popular example of b2b marketplace is Alibaba.

2) B2C Marketplace Platform

B2C stands for business to customer. This is the most common type of online marketplace that is found in abundance on the internet.

In fact, the popular Amazon, the world’s largest and best marketplace platform, is a B2C platform. When built on the right platform, the B2C platform can help you generate millions or even billions in revenue.

3) Peer-to-Peer Marketplace Platform

Peer to Peer marketplace solution is again quite popular among clients and has a large user base. This one is also known as the Customer to Customer platform, as it provides common users to conduct an exchange of services effectively.

A popular example of a C2C marketplace is eBay.

Now, let’s look at some reasons to develop such a platform for your business.

Why Consider Marketplace Development? Reasons to Build Online Marketplace

A question that every business and investor asks before putting their money into a solution is, why should I develop a marketplace website? This is a question anyone would want to answer to as they are expecting a good return on investment.

But this is something you don’t have to worry about when developing an online marketplace.  Because there are plenty of good reasons to do so. Some of these are, as mentioned below:

1) Booming Market

With forecasted sales of more than $5 billion in 2022, and the market expected to reach $ 335 billion by 2025, it is safe to say that the online marketplace platform is booming.

Much thanks to the pandemic-induced lockdown, online marketplace platforms are growing faster than ever. With a marketplace app of your own, you can enter the market and capture market potential to generate millions or even billions of dollars.

2) Flexible

Online marketplace solutions are highly flexible. Unlike their close counterpart, eCommerce solutions, marketplaces are much more flexible and provide ease of business to both sellers and buyers on the platform.

This is one of the big reasons to hire web developers and build an online marketplace.

3) Cater Market Need

An online marketplace is an answer to the need of the market and that of customers. You see, people love shopping online, especially using online marketplaces.

You can take the success of Amazon as an example of what happens when you give the customer what they need. So, build an online marketplace of your own and cater to customer demand, allowing your business to expand.

4) True 24/7 Store

To keep an offline store open throughout the day and night is quite expensive and also impractical. This is the reason why there are an only limited store that is open 24/7 in real life.

But when you move to an online marketplace, there are no limitations. Since you don’t need to hire people to manage the store, your e-retail can offer its service and products to a user base across the globe.

5) Endless User Base

Now, this one is interesting. You see, one of the best advantages you get with the internet is that the user base is endless. And with an online marketplace platform you can open your doors to people from across the world not just the United States of America.

If the store is even able to convert a small number of these people into customers, you are going to be a millionaire.

So, these are some of the reasons to develop an online marketplace. And now, it’s time to look at some of the features that you should consider adding to the marketplace.

Features To Include In Online Marketplace

The feature plays an important role in the success of a marketplace mobile app. Therefore, whether you are looking for website development or marketplace app development,  you should pay special attention to creating a feature that is unique and caters to customer needs.

Here, we can divide it into three parts. These are the user panel, vendor panel, and Admin panel. Moving on, mentioned below are a few features that you should include in your online marketplace

1) User Panel

The features to include in the user panel of the online marketplace are, as mentioned below:

• Seamless Registration
• Easy To Navigate Buyers Page
• Secure Payment Gateway
• High Security
• Rating and Review Feature
• Social Media Integration
• Push Notification
• Customer Support
• In-App Communication

2) Vendor Panel

The features to include in the vendor panel of the online marketplace are, as mentioned below:

• Vendor profile Registration
• Inventory Management
• In-App Communication
• Payment Methods
• Order Management

3) Admin Panel

The features to include in the admin panel of the online marketplace are, as mentioned below:

• Profile Management
• Inventory Management
• Provide Customer Support
• Informative Dashboard
• Revenue Management

These are some reasons that you should include in your marketplace website and mobile application. And with this out of the way, let’s look at the process to build an online marketplace app/website.

How to Build A Marketplace App/Website?

Before you hire dedicated developers to build an online marketplace, hear us out. There is more than one way to develop a marketplace app or website. And in this section of the blog, we shall be discussing these methods in detail.

So, hang on around till the end to find out the method that best suits your project needs.  Without further ado, let’s get right into it:

1) Develop a Marketplace Through Open-Source Software

The very first way to develop a Marketplace website is with help of open-source software. There is software that will help you develop a marketplace solution much faster.

This software provides you with a bare-bone marketplace solution with basic features and design which you can edit into something you want. Consequently, it is also much cheaper when compared to other solutions on the list.

Despite all the advantages, there are some disadvantages too. In addition to increased development time, finding open-source software itself is a bit of a task.

And when you find one, personalizing it can be difficult. Moving on, creating updates to these solutions is also an issue that people have faced.

2) No-Code Marketplace Builder

No-Code is one of the trending technologies in the market. As the name suggests, with a no code marketplace builder you don’t have to write any code.

Here, you get a drag-and-drop style editor through which you can make your online marketplace in no time.

While the development time and the ease to build are impressive in this solution, we can’t say the same about personalizing. Due to the no-code nature, customization and third-party integration aren’t that simple.

3) Choose An Online Marketplace Platform

Lastly, in this online marketplace development services you can choose one of the online platforms and develop a solution of your own.

For instance, you can choose woocommerce development or Shopify. There are other sites like Wix, that help you create moderately customizable marketplace solutions.

4) SaaS Marketplace Development

As things stand, you can also avail SaaS development services to create Marketplace software for you. This is a popular option, which is much cheaper when compared to custom marketplace development,

Moreover, it also provides more customization options than the no-code solution. Thus, you can add your concept to the development without any issue. Plus, third-party API integration also becomes simpler.

Furthermore, unlike previous options, updates and maintenances for SaaS marketplace development aren’t as difficult. However, this option can be a bit expensive and time-consuming.

5) Custom Online Marketplace App Development

Finally, the much-discussed custom marketplace app development is here. This option is out of the rest because here the app is built ground up as per your idea and business requirements.

Since we are talking about app development, you choose between Android and iPhone app development.

This solution is much popular due to the ease it provides for app maintenance & support. This is one of the best and most popular options on the list.

These are the five different ways you can use to build online marketplace solutions. But this begs the question, how much does all of this cost? Let’s answer this in the next section.

How Much Does It Cost To Build A Marketplace Website/App?

The cost to build online marketplace solutions depends on various factors. Since each project is unique in its own way, there is no way to accurately predict the cost involved without knowing the project specifications.

To better understand the development cost and how it is affected, some of the factors are, as mentioned below:

Since it is not possible to estimate the accurate cost, we can give you a range in which the cost may fall. As such, you expect the online marketplace development cost to be anywhere between $20,000 and $ 120,000.

If you want a closer cost estimate, it is recommended that you consult a website or mobile app development company as they can give you a closer estimate based on your project specifications.

Conclusion

Online marketplace solutions are highly versatile and provide a good opportunity for revenue generation. In this blog, you learned everything you need to know about creating online marketplace and how much it costs.

If you want to build online marketplace of your own, it is recommended that you consult an online marketplace development company. As they can guide you better and help you with the development process.

Niketan Sharma

Niketan Sharma is the CTO of Nimble AppGenie, a prominent website and mobile app development company in the USA that is delivering excellence with a commitment to boosting business growth & maximizing customer satisfaction. He is a highly motivated individual who helps SMEs and startups grow in this dynamic market with the latest technology and innovation.