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How to Start an Online Marketplace: Types, Costs, and Resources

26 September, 2020 Web Tech

 

Are you interested in building your own digital marketplace? But do you have a clear enough idea as for how to build an online marketplace that would outshine many of its competitors? Then the following guide is just what you need. Let's start from the basics.

 

How to Build a Marketplace Website

 

Marketplace

 

It may now seem that creating your own marketplace is not as difficult as creating some web application. To some extent, this is definitely so. Nonetheless, when we are talking about marketplaces, you need to be prepared for facing a wide range of problems that can ruin your venture from the very start.

 

You might be confronted with such questions as what model of marketing to choose and how to attract both merchants and customers. What's even more important is the question of how you will retain them. All these issues are very important and should be considered before starting your own business. There are many other problems faced by startup entrepreneurs and it is not always easy to deal with them effectively.

 

In fact, there are several steps that you should take in the process of building your own marketplace. Here are the basic ones.

 

Steps of creating a marketplace

  • Choose an online platform for your marketplace website. The options are multiple. One of them is Sharetribe. It offers a credible and cost-effective way for businesspeople to launch their own marketplaces. That's because creating it from scratch by hiring web developers is likely to cost a big fortune, while such platforms as Sharetribe will help you save substantial capital.
  • Choose an online marketplace niche. The success of renowned digital marketplaces is explained by the fact that they offer services in a particular niche. This means that the first thing you need to do is to think of what kind of industry segment you would like to work in. Without it, your website would have no target or direction to follow, so make sure you think of a specific segment that you'll stick to when creating your solution.
  • Choose a Minimum Viable Product (MVP) for your website. When you are only starting your business, we suggest that you concentrate your effort on an MVP so that you have a small part of the chosen industry segment to start from. By creating an MVP marketplace, you won't feel overwhelmed by how much you have to do. Instead, you'll stick to only one idea or concept that your entire marketplace will be based on.
  • Calculate the expenses and focus on the results. At this point, you need to think of how much it will cost to build a resource and focus on what you want to get as a result. After you establish your startup budget and find out how much this venture will cost you, it is necessary to think of what you want to achieve with the help of your marketplace. The ultimate goal of any digital marketplace is to unite sellers and buyers within one particular niche and help them sell or buy products and services. That's why you need to thoroughly think of what your aspirations regarding the marketplace are.
In this way, building a marketplace should not seem a difficult process, but you still need to consider many points before you finally succeed in your endeavors.

Cost of Building a Marketplace Website

Cost of Building a Marketplace Website

Similarly to all other e-commerce projects, the process of starting a digital marketplace is associated with certain costs. If you want to build your own online marketplace, you need to know that the ultimate cost of your project will depend on which of the following options you choose:
  • You can build your project on an existing platform such as Sharetribe that provides many readymade features. This is the quickest and by far the cheapest way of developing a marketplace.
  • You can build your marketplace from scratch but this will require both much time and considerable financial investments. However, if you choose this option, you'll get a chance to customize your website to your individual needs, which cannot be achieved using a Sharetribe platform or any other similar technology.
The major benefit of building digital marketplaces is that you do not necessarily have to build an inventory yourself and this is a great merit for the budget of startup entrepreneurs. However, there are many other elements of your business that will require substantial investments, so here is what you need to know about some of your future costs at the initial stage of your project development.

Costs of using an online platform

This presupposes making regular payments to host an online platform for your marketplace, so don't forget to include it in your budget limits. As a rule, platforms like Sharetribe require regular monthly or yearly payments for hosting purposes.

Cost of advertising campaigns for sellers and buyers

You should be prepared for considerable expenses on advertising for customers and merchants because at the initial stages of your business, you need to reach out to many of your future users in the chosen niche, and this will require significant efforts. There is no need to contribute too much into the advertising of the platform, however, before you actually launch it. Instead, it is better to focus on free advertising tools before you get your first revenue and develop your business a little further.

Verdict

Remember that when you are about to start your own business in the chosen niche, it can be rather tempting to invest substantial capital into this venture so as to make it more successful and prosperous, but keep in mind that you'll require a bit of time to develop your business and make it flourish. We suggest that you should not invest too much money at the primary stage of your project. Instead, focus on your goals.

 


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