Published: March 28, 2019
22 min read
Last updated: May 2, 2022
🗂 Types of Marketplace Apps
👍 Top 3 Strategy Tips for Marketplace Startups
✅ Marketplace App Development: Key Challenges & Solutions
🛠 Tech Approaches to Develop a Marketplace App
📱 Must-Have Marketplace App Features
⚙️ Tech Stack
💰 Cost to Build a Marketplace Mobile App
It won’t be an overstatement to say that the concept of marketplaces has greatly changed the face of the world economy. In his article for Forbes, Drew Hendricks explicitly says that marketplace startups are eating entire industries. Moreover, such companies often find great success and manage to change the status quo on the market.
Some marketplaces are based on the idea of involving independent sellers instead of classical businesses and completely disrupting a sphere (for example, Uber provides taxi services from private drivers instead of taxi hubs). It opens exciting opportunities for Startups that want to make own marketplace app.
A typical example of a marketpalce application (image by Aldi Baihaqi)
However, people often misunderstand the concept of marketplaces. Is Amazon a marketplace? What about Uber? Walmart? How do I solve the chicken/egg problem? Which market should I target? What is my USP and Buyer Persona Portrait?
Your main goal as a Startup is to define customers’ pain-points and build a convenient online platform (web, mobile or both) where their needs can be satisfied by many different sellers.
We think those questions are as important as the technical side of development. That’s why we dedicated a separate paragraph to the strategic points of developing marketplace apps. Let’s dive in!
If you think that your strategy is already pretty well-developed and you would like to move straight to the technical aspects, click here!
Defining your marketplace type may help you in many ways. You have more chances to develop a successful strategy if you know what, how and to whom you’re selling.
When it comes to what, there are two possible options. You can create a marketplace app that is either:
Marketplaces for goods usually come to mind first when you hear the word “marketplace.” Amazon, eBay, Etsy, Wish, Alibaba, AliExpress are just some of the most popular examples.
Here are a few tips in terms of Product Design:
Goods marketplaces are used to sell/lend different items — from furniture and clothes to electronic devices and cars (image by Amiko)
What are marketplaces for services? Think of any platform where people that are freelancers/entrepreneurs, etc. can offer services of any kind. Some examples include Uber (taxis), Rover (dog walking), SimplySurfers (surfing), Handy (cleaning), etc.
When you develop a marketplace app of such kind, pay attention to the following points:
When it comes to how, we usually talk about either a vertical or a horizontal marketplace.
That's how a vertical marketplace may look like (image by Nicolae)
Finally, depending on your customers, the marketplace may be:
However, before diving into the details of marketplace app development, let’s check a few essential strategy tips on finding your Product-Market Fit.
The inability to understand customers’ real problems has led many Startups to the dead end. Michael Seibel, the CEO of Y Combinator, perfectly explained this idea in a few sentences:
If you’ve answered yes to both questions, you’re moving in the right direction. Otherwise, you’ve selected a hard usecase and niche.
Your product should solve a problem that is both frequent and intensive (image by Emrah Avci)
These simple principles have many real-life examples: both good and bad ones.
Think of Uber as a good one. Do people often take taxis? Of course, it’s a common transportation type in big cities. Is it a necessity for many people? Also yes, since they usually take it under specific circumstances, and more often than not they are even desperate (e.g., they’re in a hurry; they’re far from the public transport routes, or it’s too late, and they don’t have any other options - you name it).
We can also remember one example from our own experience. Once, we received a request to our inbox from a Healthcare Startup. Leaving all names and details aside, their idea was to improve the way people do blood testing. If we ignore the fact that the idea itself was quite good, blood testing isn’t a frequent/desperate need (if you do get your blood work done — you do it once every 4 months or so, right?), which was exactly the reason why the startup didn’t skyrocket.
We learned our lesson from that story.
According to CBInsights, the lack of market need is the number one reason for failure, cited by 42% of surveyed startups.
How do you know that the value proposition is good? It is clear. If you can’t put it into 2-3 sentences, you should definitely rethink it. Also, it should answer 2 key questions — for whom and how exactly is it useful?
The value proposition is the primary reason why customers should buy your product or service.
Here are a few tips on how to make it seem persuasive and attractive:
Let’s compare 2 random examples for the last point.
“We provide house-building services, nails, hammers, security systems, and doors”.
“We build houses, where your loved ones will feel safe”.
Notice the difference? Sell houses and not nails.
We’ve also decided to share a worksheet that will help you to create a strong value proposition. Feel free to use it!
Many startups dream of fast success and often, it’s precisely what brings them down.
65% of startups don’t fail because of product-market fit, the lack of funding, or the inexperience of their founders. Actually, they fail mostly due to premature scaling. — Paul Ahlstrom, the co-founder of Alta Ventures
Don't rush when scaling and adding new functionality (image by Rafał Bogdan)
Even if you create a marketplace app with a solid tech side, you shouldn’t be in a hurry to scale. Yet, how do you know it’s the right moment to grow?
Limited understanding of the market need and target audience
This four-step framework was created by Steve Blank in the 1990s but it’s still relevant today. Why? Because it puts customers first.
Customer Development is a must-do for companies that are at the pre-Product-Market fit stage
The main goal is to validate assumptions about your customers. For example, what pain-points they have, what solution they would like to see, etc. Their answers will allow you to focus on creating the product which they will be excited to see and buy as soon as it’s launched.
What steps does Customer Development include? According to different authors, their number may vary from 3 to 5 but the key ideas are actually the same:
Customer interviews provide you with a better understanding of who your customers are and how you can help them (image by Aliaga Mirguseinov)
Typical questions for a Customer Interview are:
However, never ever ask how they would like this problem to be solved! It is strictly your job to find a disruptive way to do this. Always remember what Henry Ford said:
“If I had asked people what they wanted, they would have said faster horses”
🤔 Case Study: Patient Communicator
The idea behind the Startup was to create a patient portal, so, a CRM for doctors and a practice management system to change the way patients and doctors interact with each other. However, Patient Communicator failed. As one of the reasons for their failure, they’ve mentioned: “I realized, essentially, that we had no customers because no one was really interested in the model we were pitching. Doctors want more patients, not an efficient office.”
Chicken & Egg Problem — how to get first users
Separate marketing strategies and a strong value proposition
Since you want to build a marketplace mobile app that will bring together two independent parties, buyers and sellers, you need to create the right interaction strategy to reach both of them.
Buyers won’t waste their time on your app if there are no sellers, and sellers will see no reason to place their products or services without potential customers.
Think how you can solve the chicken & egg problem even before the development itself starts (image by Tom Loots)
Getting the first prospects and sellers is the task for your marketing department, however, here are a few hacks from the Stormotion Team:
Keeping a broad focus and failing to find customers
Create a new market or find a more profitable niche
Many Startups that want to create a marketplace app like Amazon, Uber, eBay, etc., truly believe that they have chances to compete with these market monsters. The truth is that they have more money, marketing resources, and an existing loyal customer base which makes them undoubted winners in almost any direct competition.
Therefore, you need to be more flexible when it comes to your USP (Unique Selling Proposition): either find a niche or create your own market. Here’s what we mean.
Create a new market
Find a niche
Take a look at Airbnb. The company managed to create a new market based on the C2C model. In fact, they managed to create value where there used to be none: the value of staying at somebody else’s house.
Alternatively, you may “reuse” already existing ideas but for your own niche which may be, for example, a smaller or more specific market.
We hope the tips above will help to avoid mistakes and develop the right business strategy as you make own marketplace app. However, what are the possible technical ways to build a marketplace mobile app? Let’s take a closer look!
That’s an important stop since technical performance means a lot to the success of your project. You won’t go far without a Product-Market fit but neither will you succeed with an app that has many bugs, a templated or tatty UI and offers poor Customer Experience.
At a higher level, all possible approaches can be divided into 2 groups:
Which one should you choose to develop a marketplace app? Let’s think!
Some Startups choose non-custom options when it comes to choosing the way of developing marketplace apps. These are either SaaS or ready-made solutions. While they’re rather fast and often don’t require any technical knowledge, don’t expect many customization possibilities and outstanding quality.
SaaS, which is also known as Software as a Service, involves online services that allow creating marketplace websites and applications with little or no development experience. Some examples are Sharetribe, Near Me, Marketplacer, Arcadier and many others which provide the same or almost the same functionality.
It is easy to set up but offers quite limited possibilities when it comes to customizing your Customer Experience and making a Product that will look fresh and unique for your specific market.
Another option is to use app builders like OpenCart, Magneto, Durpal or any similar one. They weren’t designed specifically for marketplace app development but have some extensions that let you set up a marketplace.
Such app builders can be hardly called a good option when it comes to developing marketplace apps since it’s not even their main focus. SaaS solutions will definitely be a better choice in this category.
When should you go for a non-custom or template-based approach?
It only makes sense if you need to build a PoC very quickly and the features which the template or SaaS offers you are fully covering your needs. Sometimes, a quick and dirty PoC is the key to receiving angel funding, so you can build a custom Marketplace app, which will then be customizable and scalable.
If you don’t want to use any ready-made solutions and want to provide your users with a tailor-made application, or you have already successfully pitched your PoC to investors and have raised the funding for your MVP, then, custom app development should definitely be your choice. To put it simply, custom app development basically means coding your application from scratch, tailor-made to your business model and buyer journey of your customers.
With Native (or React Native) app development you're able to create a nice-looking custom applications (image by Broto Seno)
In this case, you can either go with Native or React Native development. What’s the difference, though?
The Native approach is used when you want to develop separate applications for iOS and Android using their officially supported languages: for example, Swift or Java/Kotlin accordingly.
Moreover, later on, it’s far easier to reuse a codebase to launch a Web-Version of your Marketplace, using ReactJS.
Nevertheless, no matter what option you choose, your future application should include a basic set of marketplace app features. Let’s review them so you don’t miss anything important.
As we figured out earlier, there are many different types of marketplace apps. Airbnb, eBay, and Uber are all marketplaces but they have rather different functionalities.
But before we move to the features itself, let's clear one more thing. Due to the way marketplaces work — many independent sellers offer their goods or services to many customers — you should create a marketplace app that will be a comfortable platform for both.
You options narrow down to 2 solutions:
Build separate apps for sellers and buyers. This is a more common soulton for service marketplaces (for example, Uber has a separate app for drivers and Handy — for cleaners). However, goods marketplaces sometimes also go this way. For example, Etsy has developed different applications for buyers and sellers.
But you can also develop a single app in which users can both buy goods/services from others and place their own offers. Users either can do both things using the same account or re-login as a customer and a seller. Want examples? BlaBlaCar, Airbnb, eBay, OLX are just a few to mention.
We don't know what way you'll choose so our features list will be split in two — for customers and for sellers. However, since we describe flows the list below should fit your project anyways.
Thus, we tried to pick out the most common features that make up the backbone of any marketplace application. Let’s take a look!
Sign Up is a must-have for sellers since you can't offer your goods or services anonymosly.
How long and strict should this process be? It depends on the type of application.
In some cases, you may just ask for name and email, and let users handle everything else on their own. It works the best for “everyone sells to everyone” types of marketplaces where you can be a buyer and a seller at the same time.
At the Sign Up stage ask only for the most important info (image by Shruti Gupta)
In other cases, you may need a more strict sign-up flow.
For example, to sign up as an Uber driver you should provide not only a valid driver’s license but also proof of residency and insurance.
Etsy also asks for some additional data if the users wants to open an online shop there. You’d be asked to provide a shop name as well as countrly, language and currency to set up everything. Later you’ll also have to specify the way you’d like to receive payments.
This is a home screen for sellers where they can briefly review all the main data:
This screen requires a lot of attention to navigation. Its main aim is not only to provide some valuable data but also let the seller open a specific section.
As a rule of thimb, the Orders sections is divided into 2 subsections: Open Orders and Completed Orders. But the exact look of these screens will greatly depend on the type of you marketplace application.
At the Open Orders screen sellers expect to see some details regading their ongoing orders. This may include such information as:
Make sure your application has a convenient order management system (image by Samat Odedara ★)
Once the order is done, he goes to the Completed Orders section and can be easily reviewed later.
Also, don't forget about "Create a new Order" functionality if you're building a goods marketplace.
Chat feature is often a must-have no matter whether you want to make own marketplace app for goods or services. It's not that different from the chatting feature in any other application except for a few moments:
The Sign Up process is a basic feature that can be found on any marketplace application. We bet you’re familiar with it, so, let’s focus on a few useful tips:
Sign Up should be fast & easy (image by Sergej Nawalnew)
These three are also common marketplace app features.
Searching is quite a basic feature for any kind of marketplace app. When users open your app, they usually already have a clear request in their mind — no matter if they need to look for a special product, service, or location.
How can you improve this feature?
Sorting & Filtering is quite an essential feature since it allows to narrow down users’ requests and find the best offers among many independent sellers.
For the best possible UX, we recommend creating a custom filtering & sorting feature.
Let’s imagine you decide to build a marketplace similar to Airbnb. Logically, people will expect to see such obvious options like price, number of sleeping places, etc. in the filtering & sorting feature. However, it may be useful to think out of the box and introduce filters like “close to water,” “in the center of nightlife,” and other similar possibilities to provide your customers with additional value.
The content of this screen will greatly vary on the type of your marketplace.
If you plan to build a marketplace mobile app for goods, your Product Screen should have the following features:
A great product screen in a local marketplace application (image by Lex Valishvili)
Even if you’re building a service marketplace app, your audience still expects to see a Service Screen. Here are its peculiarities:
Another important task for your Tech Partner is to build a marketplace mobile app with a user-friendly payment gateway. Here are a few hints and tricks on how you can achieve that:
A chat is going to be useful no matter what type of marketplace app you’re going to develop.
When using marketplaces for services, people are often interested in having a direct communication channel with the seller or service provider they’ve chosen. It helps them to clarify certain details, arrange times, ask questions, etc.
What tools will help you to implement a chat function and other marketplace app features? Read on, we’ll talk about it in our Tech Stack section!
Push Notifications are one of the most obvious advantages of mobile applications over websites. It’s a powerful tool to retarget your customers and communicate with them.
How are they useful? Here are a few examples:
Push Notifications are a powerful retargeting tool (image by sarafrbrito)
What technical tools can help you to integrate Push Notifications and create a marketplace app in general? Check out the list below!
As usually, we made up a rough estimate of marketplace app development costs.
However, as we've already mentioned, "marketplace" is quite a wide concept so it's impossible to provide an accurate estimate that will cover Airbnb-like, BlaBlaCar-like and eBay-like apps at the same time. So if you want us to prepare a precise estimate for your own marketplace project, please, drop us a line and we'll help!
In this estimate we considered developing one application for both sellers and customers:
MVP Features Estimated in Hours
Using React Native
⏳ Min Hours
⏱ Max Hours
Setup Technical Foundations
🔐 Sign Up Flow
Sign up screen
Facebook sign in
Provide marketplace-related info
👤 Profile Management Flow
Link bank account
🛍 Orders Flow
Current orders screen
Post a new product/service
Push your offer to the top
💸 Get Paid Flow
Send money to your bank account
🔔 Push Notifications
Customer's Flow (such flows as Sign Up, Profile Management, Push Notifications, Chat are the same as for the Seller's Flow)
🔎 Search Flow
🛒 Buy Flow
Saved products screen
💳 Payment Flow
Choose a Payment Option
🕰 Total Hours
💸 Approximate costs
So the approximate costs to create a marketplace app are $35,000-44,000. To calculate this, we used the average hourly rate for Easter Europe - $45/hour (western companies usually charge more for the same work).
To get an accurate estimate of costs to develop a marketplace application, please, drop us a line 🙂
Well, dear friends. We truly hope that now you’re actually prepared for marketplace app development and have everything to launch your Marketplace Startup.
We really tried to cover all the key sides — from the strategy for finding your Product-Market Fit to giving some tips on how you can provide your audience with a better UX design.
However, there’s still one important thing left - you should find a Tech Partner, who will help you at all stages — developing a PoC, MVP, validating your business model, acting as an interim-CTO, scaling your Product, etc.
Luckily, you have already found us! Drop us a line using the button below and we’ll be your Tech-Partner-in-Crime for your Marketplace Product!
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