How to Build a Marketplace Mobile app: Guide
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 much 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 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 our 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:
- Pay much attention to live support within the application since customers will probably have many questions regarding shipping, refunding and return policies.
- 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 the essential info about their products to encourage users to buy goods through your platform.
What are the marketplaces for services? Think of any platform where independent private people can offer their services of any kind. It may be taxis (Uber), dog walking (Rover), surfing (SimplySurfers), house cleaning (Handy), etc.
When you develop a marketplace app of such kind, pay attention to the following points:
- 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.
- 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 either about a vertical or horizontal marketplace.
- A vertical marketplace is a platform where users can buy products or services of a similar type but from different sources. Examples are TrueFacet (focuses on Jewelry niche) or 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 people sell their goods or services to private customers.
But 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, CEO at 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 often face it (the so-called toothbrush test)?
- Do they usually desperately need 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 thing in big cities. Is it an intense need? Yes, since they usually take it under specific circumstances, and sometimes 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 practice. Once we’ve 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. Despite the idea was quite good in general, blood testing isn’t a frequent need (if you do such a blood test — you do it once in 4 months, 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 a market need is a number one reason for failure, cited by 42% of polled 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 in 2-3 sentences you should definitely rethink it. Also, it should answer 2 key questions — for whom and how 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 look persuasively and attractively:
- You should be aware of what your competitors offer and make sure that your proposition is even better.
- Features of the good value proposition are uniqueness, relevancy, pithiness, and clarity.
- Avoid hype. It’s cool if you’re “the best among the best amazing wonderful one-of-a-kind marketplace” but it will only do harm to your business.
- Most important: It should clearly deliver which problem of the customer you’re solving 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”.
See 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 are dreaming about fast success and often it’s what brings them down.
65% of startups fail not because of product-market fit, not because of lack of funding, and not because of the inexperience of their founders. Actually, they fail thanks to premature scaling. — Paul Ahlstrom, 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. 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 is to put all 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 behind your back.
- Your Tech-Foundation is prepared. Scaling means reaching to 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
|🔒 Challenge||🔑 Solution|
|Limited understanding of the market need and target audience||Customer Development|
This four-step framework was created by Steve Blank in the 1990s but it’s still relevant nowadays. 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 focusing on building the Product, which they really expect to see and are going to buy as soon as it’s launched.
What steps does the Customer Development include? According to different authors, their number may vary from 3 to 5 but the key ideas are actually the same:
- You make a hypothesis (“my potential customers have such a problem...”, “the most essential features for them are…”).
- Find a few prospective customers that match your Buyer Persona.
- Hold a Customer Interview — ask the right questions to validate your ideas and hypotheses.
- 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 good questions for a Customer Interview would be:
- Which problems do you experience at what you’re doing?
- How do you currently solve this challenge?
- Would you be willing to pay to get that challenge solved?
- How much are you currently paying to solve it?
But never ever ask how they would like this problem to be solved! This is your job to find a disruptive way to do this. 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, a CRM for doctors and a practice management system to change the way patients interact with doctors. 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”.|
Challenge # 2
|🔒 Challenge||🔑 Solution|
|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 a right interaction strategy to reach both of them.
Buyers won’t waste their time in the app without sellers, and sellers will see no reason to place their products or services in the app without potential customers.
Getting the first prospects and sellers is the task for your marketing department, however, here are a few hints from the Stormotion Team:
- It all goes 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 isn’t to make big revenue but rather to build a loyal user base.
- Try to target multiple platforms (for example, with the React Native approach to developing marketplace apps). You have more chances to get sellers & buyers if your application available for both iOS and Android users.
Challenge # 3
|🔒 Challenge||🔑 Solution|
|Keeping a broad focus and failing to find customers||Create a new market or find a niche|
Many Startups that want to create a marketplace app like Amazon, Uber, eBay, you name it, 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 regarding 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. Actually, they managed to create value where there was no value before: value in staying in 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.
Romanian food delivery marketplace Oliviera managed to become a market leader and then sold itself to its European big brother — Takeaway.com.
We hope the tips above will help to avoid mistakes and develop the right business strategy as you make own marketplace app. But what are the possible technical ways to build a marketplace mobile app? Let’s review them!
🛠 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 you can succeed with an app that has many bugs, templated tatty UI and offers poor Customer Experience.
On the highest 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!
Some Startups, when it comes to choosing the way of developing marketplace apps, decide on non-custom options. 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, includes 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.
They are easy to set up but offer quite limited possibilities to customize your Customer Experience and make a Product that would 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 will make sense if you need to build a PoC very fast 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 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 succesfully pitched your PoC to investors and have raised the funding for your MVP - then the custom app development should be your choice. To put it simply, it 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?
The Native approach is used when you want separately develop applications for iOS or Android using their officially supported languages: for example, Swift or Java/Kotlin accordingly.
Moreover, later on, it’s far easier to reuse that codebase to launch a Web-Version of your Marketplace, using ReactJS.
However, no matter what option you’ll choose, your future application should include some basic set of marketplace app features. Let’s review them so you don’t miss anything important.
📱 Must-Have Marketplace App Features
As we’ve figured it out earlier, there are many different types of marketplace apps. Airbnb, eBay, Uber are all marketplaces but they have rather different functionality.
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.
Let’s take a look!
# 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.
# 1: Simplified Sign Up 🔐
Sign Up process is a basic feature that can be found in any marketplace application. I bet you’re familiar with it so let’s focus on a few useful tips:
- The Best Sign Up is the fastest and simplest one. Ask only for really important information that is needed to close the deal.
- Allow guest checkout and don’t insist on creating an account. People hate that and will probably leave.
- Autosuggest and autocomplete features will improve the UX on this screen.
- Social Sign Up allows reusing personal data from social media like Facebook or Instagram and it’s also something your users 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 a marketplace app I can remember. When users first open your app with a clear request in their mind — whether 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 user’s 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 are quite essential since it allows to narrow down users’ requests and find the best offers among many independent sellers.
For the best UX, we recommend creating custom filtering and sorting options.
Let’s imagine you build an Airbnb-like marketplace. Of course, people will expect to see such standard filtering & sorting options like price, number of sleeping places, etc. However, it may be useful to think out of the box and introduce filters like “near the sea”, “in the center of nightlife” and other similar 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, the 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.
- Break up products into categories so users can find needed items easier and faster.
In case you’re building a service marketplace app, your audience still expects to see the Service Screen. Here are its peculiarities:
- The Service Screen includes information about the seller.
- Here you may display some general info about the service provider, his competency and rating 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 on how you can achieve this:
- 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 applications and website.
- You should include as many payment methods as possible: Apple Pay & Google 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 💬
The chat will be useful no matter a marketplace app of what type 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 the details, arrange a time, ask some extra questions etc.
What tools will help you to implement the Chat 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 can they be useful? Here are a few examples:
- Encourage users with abandoned carts to finish their orders.
- Inform users about sales and special offers regarding the goods or services they usually buy or have been recently looking for.
- 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 will 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 by the means of Facebook Mobile, Twitter, Instagram SDKs.
- Auth0 can be used to provide even more authorization options — SMS-auth, passwordless email and so on.
- To introduce the chat feature we recommend using 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 $30,000-40,000. To calculate this, we used the average hourly rate for Easter Europe - $40/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 friend. We truly hope that now you’re better prepared for marketplace app development then you were before reading this article and have everything to launch your Marketplace Startup.
We’ve 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.
However, there’s still one important thing left — you should find a Tech Partner, who will help you on all stages — develop a PoC, MVP, validate your business model, act as an interim-CTO, scale your Product.
Luckily, you found us! Drop us a line, using the button below and we’ll be the Tech-Partner in Crime for your Marketplace Product!