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.

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!

🗂 Types of Marketplace Apps

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:

• a marketplace for goods;
• or a marketplace for services.

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:

1. Pay lots of attention to live support within the application since customers will probably have many questions regarding shipping, refunds and return policies.
2. The Product Screen, its UI, and functionality will mean a lot to the success of your application. Make sure sellers are able to upload HD photos and fill in all of the essential info about their products to encourage users to buy goods through your platform.

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:

1. Geolocation functionality should work perfectly. While a new dress or book may be shipped from anywhere, people look for service providers nearby. Thus, a nice-looking in-app map is a must-have for such an application.
2. You’d have to create a background-checking strategy (due diligence) for professionals who would like to be listed within your application to minimize fraud.

When it comes to how, we usually talk about either a vertical or a horizontal marketplace.

• A vertical is a platform where users can buy products or services of a similar type but from different sources. Examples include TrueFacet (focuses on jewelry) and UrbanSitter (provides babysitting services).
• Horizontal marketplaces offer different types of products and services that have some similar characteristics. Think of Etsy (they sell products from many different categories but specialize in vintage and handmade items) or Handy (except for home cleaning, they also offer handyman services).

Finally, depending on your customers, the marketplace may be:

• B2B — when businesses sell their products or services to other businesses.
• B2C — when businesses sell their products or services to private customers.
• C2C — when private “customers” sell their goods or services to other private customers.

However, before diving into the details of marketplace app development, let’s check a few essential strategy tips on finding your Product-Market Fit.

👍 Top 3 Strategy Tips for Marketplace Startups

Tip # 1: Step into your customers’ shoes 👞

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:

• You should clearly understand who your most typical customers are.
• You should be able to state their problem in 2 sentences.
• Key metrics regarding the problem are intensity and frequency.
  • Does your audience face it frequently (the so-called toothbrush test)?
  • Are they desperate to solve it or not?

If you’ve answered yes to both questions, you’re moving in the right direction. Otherwise, you’ve selected a hard usecase and niche.

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.

Tip # 2: Make up a Strong Value Proposition 💰

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:

• You should be aware of what your competitors are offering and make sure that your proposition is even better.
• Features of a good value proposition include uniqueness, relevancy, conciseness, and clarity.
• Avoid hype. It’s cool if you’re “the best of the best, an absolutely amazing and wonderful, one-of-a-kind marketplace,” but it will only do harm to your business otherwise.
• Most importantly: Your value proposition should clearly deliver what problem you’re trying to solve and what concrete value customers will get after using your service.

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!

Tip # 3: Scale gradually 📈

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

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?

• You already have a PoC (Proof of Concept). In other words, you have already proven that you understand the pain-points of your customers and are able to satisfy them with your product.
• You have enough funding. One of the biggest mistakes you can make is to put all of your money into scaling and have no backup plan. Before growing, make sure you have some funding to rely on: either paying customers or an investor.
• Your Tech-Foundation is prepared. Scaling means reaching a wider audience and thus storing bigger amounts of data, sending more push notifications, handling more transactions, etc. Make sure your service is prepared from the tech perspective.
• Your Dev Team is ready. Do you have enough employees to tackle new tasks? Are your developers open to introducing innovations? People are your main resource.

✅ Marketplace App Development: Key Challenges & Solutions

Challenge # 1

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:

1. You state a hypothesis (“my potential customers have such a problem..., and the most essential features for them are…”).
2. Find a few prospective customers that match your Buyer Persona.
3. Hold a Customer Interview — ask the right questions to validate your ideas and hypotheses.
4. Run this cycle until you have a clear picture of who your prospective customers are, what problems they have and what solution they need and are ready to pay for.

Typical questions for a Customer Interview are:

1. What problems do you experience with what you do?
2. Do you currently have a solution to this challenge?
3. Would you be willing to pay to get this challenge solved?
4. How much are you currently paying to solve it?

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”

Challenge # 2

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.

Getting the first prospects and sellers is the task for your marketing department, however, here are a few hacks from the Stormotion Team:

• It all comes back to your Value Proposition. We recommend creating two value propositions to target buyers and sellers separately as they have different pain-points.
• Getting sellers is usually somewhat easier, so expect to pay more attention to acquiring customers. During the early stages, your main goal shouldn’t be making a big revenue, but rather building a loyal user base.
• Try targeting multiple platforms (for example, with the React Native approach to developing marketplace apps). You have more chances to get sellers & buyers if your application is available for both iOS and Android users.

Challenge # 3

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.

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!

🛠 Tech Approaches to Develop a Marketplace App

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:

• Non-custom app development.
• Custom marketplace app development.

Which one should you choose to develop a marketplace app? Let’s think!

Non-custom solutions

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.

Custom App Product development

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.

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.

Alternatively, you may choose the React Native framework to develop a marketplace app with. It allows creating a single codebase in JavaScript that can be reused for both apps and make up to 70-80% of them. To put it simply, you code once and get two applications that require small platform adjustments.

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.

📱 Must-Have Marketplace App Features

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!

Seller's Flow

# 1: Sign Up 🔐

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.

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.

# 2: Dashboard 📊

This is a home screen for sellers where they can briefly review all the main data:

• Current, recently finished and new orders.
• Unread conversations with customers.
• New reviews.
• Advanced stats regarding their business (for example, the amount of monthly income or the number of finished orders, the average income per order etc.), if provided.

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.

# 3: Orders 🛍

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:

• The product or service the user has ordered.
• The price.
• Comment from the customer.
• Some specific product-related info (for example, shipping address for goods marketplaces, in-app map with geolocation of customer or his address for services marketplaces and so on).

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.

# 4: Chat 💬

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:

• You may not think that much about making your Chat entertaining. Video messages, stickers, gifs and other stuff that works well for messengers isn’t required for marketplaces.
• Make sure that users won’t be able to make arrangements and complete orders outside of your application.

Buyer's Flow

# 1: Simplified Sign Up 🔐

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:

• The best kind of Sign Up is fast and simple. You should only ask for really important information that is needed to “seal the deal.”
• Allow guest checkout and don’t insist on creating an account. People hate that and usually leave.
• Auto-suggesting and auto-completing features will improve the UX on this screen.
• Social Sign Up allows using personal data from social media like Facebook and Instagram and is also something your users will definitely expect to see.
• Passwordless Sign Up via phone number or email is a good option, too.

# 2: Search + Sorting & Filtering 🔎

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?

• Add auto-suggestion that will be based on your users’ previous requests and popular search queries.
• If your marketplace is aimed at providing offline services (for example, cleaning, repairing, or dog walking) make sure customers see the closest options first.

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.

# 3: Product / Service Screen 🛍

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:

• Bright HD photos (you may demand from sellers to upload their products only with 2-3 photos at least).
• Comprehensive information about the product, including the size, material, price including all the taxes etc.
• Different categories of products, so that it’s easier for users to find the items they require.

Even if you’re building a service marketplace app, your audience still expects to see a Service Screen. Here are its peculiarities:

• The Service Screen usually includes information about the seller.
• Here you may display some general information about the service provider, his or her competency level, and ratings from other customers.

# 4: Payment Gateway 💳

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:

• In the light of security issues, make sure your customers’ payments are protected by all the latest means.
• The payment processor should be consistent with both your mobile application and website.
• You should include as many payment methods as possible: Apple Pay & Android Pay, PayPal, credit cards, etc.
• Don’t reinvent the wheel. Choose a payment processor which is familiar to your users: Braintree, Stripe, or any other relevant for your country.

# 5: Chat 💬

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!

# 6: Push Notifications 🔔

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:

• They encourage users with full but “abandoned” carts to finish their orders.
• They inform users about sales and special offers regarding the goods and services they usually buy/have recently looked for.
• They reach out to users when the status of their order or request is updated to improve their experience.

What technical tools can help you to integrate Push Notifications and create a marketplace app in general? Check out the list below!

⚙️ Tech Stack

• As you make own marketplace app, you will definitely need a payment gateway to accept online transactions. Apple Pay, Android Pay, PayPal, Braintree, and Stripe APIs could all be useful for this purpose.
• Our favorite Push Notification service is Firebase Cloud Messaging. Some other good options are OneSignal, Urban Airship, and Amazon SNS.
• Social Login can be introduced through Facebook Mobile, Twitter, and Instagram SDKs.
• Auth0 can be used to provide even more authorization options — SMS-auth, passwordless email, and so on.
• To introduce a chat feature, we recommend using the Sendbird SDK.

💰 Cost to Build a Marketplace Mobile App

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:

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 🙂

💡 Takeaways

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!