How to Build a Marketplace Website
Let’s think back a couple of centuries ago.
To buy something from another person you most likely had to travel miles to meet them. Then, you offered a fair price or accepted the terms of the seller. Either way, it wasn’t guaranteed that you would get to buy whatever it is you needed.
Nowadays though, there’s a countless number of marketplaces where sellers and buyers from the whole world can arrange deals in a matter of minutes.
As Oberlo stated in their research, more than 2B people (which is more than ⅓ of the world’s population and 700M more than it was 5 years ago) will make an online purchase by the end of the current year.
It shows us that the demand increases every year and will be in the nearest future.
The marketplace business model has transformed world trade. If you want to be a part of this great globalization process and create an online marketplace — stay with us, we’ll show you how :)
📚 Types of marketplace websites
Marketplaces can be different in several ways — in the number and types of products and the people who trade on the platform.
Thus, defining what and how you sell might be the first thing you’d want to tackle when building a marketplace website.
Goods & Services 📺
When it comes to the definition of trade, “goods and services” is what you’ll see at every turn. This entails these two types of marketplaces:
- For goods.
- For services.
Let’s start with goods — the first thing that comes to mind when hearing the expression “website marketplace.”
Basically, the name speaks for itself. It’s a place where people trade goods (clothes, furniture, jewelry, food, and so on).
A great example of such a marketplace can be Amazon.
|Amazon Case Study|
|It’s one of the most famous and used marketplace websites in the whole world.
The company started as an online marketplace for books but now sells electronics, video games, apparel, food, jewelry, and many other goods.
When building a marketplace for goods, there are two main things worth attention.
#1: Product Screen is the showcase. HD images, a full description of the product (dimensions, price, location, availability) should be there.
#2: Live Support should be quick and accessible 24/7. Customers will often have questions about shipping, refunding & return, account problems, etc.
An online marketplace website for services is a trade space where people and companies can offer their services — whether it’s something that can be done remotely (like platform development, SMM, SEO, etc.) or services that require physical presence (cleaning, transporting, etc.)
Many of us have heard about Upwork which is a perfect example of a marketplace website for services.
|Upwork Case Study|
|It’s a freelancing platform where companies and individuals cooperate to conduct business.
The variety of services is enormously diverse. You can find anything from wedding cameramen to dog walkers, from Facebook promotion to website development, from translating two pages of text for a game to interpreting business negotiations, etc.
The monetization model is also worth attention. Users have to buy Proposals (points for freelancers to submit their candidacy) and take a 20% commission from each deal regardless of the budget.
Sounds beneficial, doesn’t it?
To start an online marketplace for services you might want to pay attention to these moments:
# 1: You should properly check your potential contractors’ background and their identity to protect your website from frauds as much as possible.
#2: Geolocation plays quite a role here. Since some services might imply “not remotely,” people may look for such services nearby.
This is an interesting one since most people never really think about it.
There are two ways to create online marketplace platforms: vertical and horizontal.
The first one implies a platform where customers can buy goods and services of the same category but from different providers.
Let’s look at Airbnb as an example. They help to rent out properties around the whole world from multiple owners and landlords.
See? The service is similar, the resources are different.
Horizontal ones aren’t the complete opposite of verticals. The products there are of different categories but with similar characteristics (like help around the house, luxurious clothes, electronic appliances).
Handy can be a perfect example of such marketplaces. They offer house cleaning and handyman services which can be generalized as help around the houses.
Forms of Trade 💸
Depending on customers that cooperate on your marketplace, the website can be:
- B2B — business model, where businesses trade with other businesses.
- B2C — business-to-customer model.
- C2C — when individuals sell goods and services to other individuals.
Let’s be more precise. There’s a B2B marketplace called chembid. They offer chemicals and plastics worldwide.
The Facebook Marketplace is one of the most famous B2C marketplaces.
The most known C2C platform on the Internet is eBay. Here every customer is a peer to another which is why this platform is also called P2P (peer-to-peer)
📈 How Do You Know Your Idea Has Potential?
Before starting to grow a business, you really need to plan your strategy and find out many things about your potential product.
These things can include:
- What pain-point does it solve?
- What’s your target audience?
- Is there an existing market for your idea?
- How do you monetize it?
Let’s follow the list and start by discussing the first aspect.
To successfully develop a new product you should understand what problems you can solve with its help.
You should also be able to state the problem in 1-2 sentences. For instance, “My idea helps people reach point B from point A fastly”.
And finally, you should be able to answer the following two questions:
- Does your audience often face it (“the toothbrush test”)?
- Do they usually desperately need to solve it or not?
These principles were derived by Michael Seibel, the CEO of Y Combinator. The answers should be “Yes” to both questions. Then it signals that you’re on the right path.
Let’s think of Booking as an example. It’s an online travel agency for reserving hotels and other places to stay at while traveling.
Do people often need places to stay while traveling? Of course they do. Is this need essential? Sure thing, otherwise they’d have to sleep under the stars.
Moreover, understanding your customers’ pain-points is a strong marketing tool. Let us explain.
Which one do you think will resonate with your customers’ needs the most?
# 1: We have an amazing offer for you today! You can order this non-stick pan for half the price! Don’t miss the chance for a clean kitchen.
# 2: Hello, Name! How are you doing?
We know that it feels a bit random :) But have you been cooking lately?
If the answer is yes, we get what it feels like when food sticks to your pan and you spend quite a while cleaning after...
In case this bothers you as well, you might want to check out this offer: it’s a non-stick pan at 50% off. Here’s the discount coupon if you need it!
Now let’s discuss.
The first thing we want to point out is that the main message should be help not sell.
You should show empathy towards and understanding of the problem you're trying to solve— it’s endearing.
Besides, asking how the customers are doing and using names instead of just “you” makes customers feel approached personally which greatly increases sales.
Target audience 🎯
Offering your services to everyone probably isn’t the best strategy. Finding the audience that most likely will be interested in your product may work a lot better for your marketing strategy.
For this exact purpose, you can try to define your Buyer Persona — a description of a person who represents your target audience’s details.
You can include:
- Education level.
- Income level.
- Used sources of information (newspapers, TV, Social Media feed, Google, etc.).
For example, if we wanted to start providing taxi services, our Buyer Persona could look like this:
- 21-45 year old men and women without cars who work in offices and have to commute there and back every day.
- They have an income above the average and can afford getting a taxi maybe 3 times per week.
- Their pain-points can be crowded public transport in the mornings, long way to the office, fatigue after hard work days (meaning they don’t want to use public transport to go back home), etc.
Depending on the product you’re planning on offering, the set of characteristics may vary.
While understanding your clients’ personas and their needs helps to successfully run marketing campaigns, NOT paying attention to such details can cost you a pretty penny.
We can look at the Coca-Cola company as a great example of a failed Buyer Persona determination.
Early in the life of this company, the creators decided to change the classic formula and at pre-tests, consumers still preferred the old one. However, there was one thing that wasn’t taken into account and couldn’t be measured — clients’ feelings towards the brand.
The Coca-Cola’s target audience didn’t want any change, and the fact that the company couldn’t determine that is the result of a poor Buyer Persona understanding. Due to that, Coca-Cola’s sales fell dramatically.
Luckily, the company responded quickly and launched the classic formula again and marketed it as “Coca-Cola Classic”.
For sure, knowing your target audience is great, but the main question is where you can get this data. Well, there are several resources:
- If you already have an offline business, you can analyze your client base.
- Google Analytics. This is a service from Google that provides demographic information (sex/gender, location, age, etc.) about your website’s users.
- Social Media resources. Facebook Audience Insights, for instance. You can find a lot of information there: education, relationship status, the language(s) they speak, topics they engage with, etc.
All that being said, defining your target audience is one of the most important steps of creating a marketplace website.
New or niche market ⚡
The competition in some markets is truly tough. So when choosing where to launch your idea, you definitely should consider that and do a little market research.
Thus, there are two most common ways to successfully enter the market:
- Create a new market.
That is, find a one where nobody brings value.
Let’s take Airbnb as an example. They created a new market using the C2C model.
They started to bring value that most people hadn't even thought existed in terms of business models — the value of living in a stranger’s place.
- Use a niche that already exists.
This implies using an existing idea but to a smaller or more specific market. It can be introducing the idea in an area where it’s not yet offered, a specific form of this idea that nobody uses, etc.
For example, think of CraftsVilla — a marketplace platform for traditional Indian clothes.
Of course, you could try to compete for the share of the existing market but there’s a problem here which impacts the global economy.
Big corporations usually have more money, they’re well known, they have strong marketing and the “word of mouth” which makes them the almost invulnerable leaders of the market they cover.
Thus, it’s really hard to become the new Amazon, Uber, Airbnb, and so on.
Monetization models 💲
Sure thing, when you start running a business, you expect it to generate income. But here’s the real question: How will you monetize your idea?
There are several ways to do it:
|💸 Monetization model||📄 Description||🔎 Example|
|Subscription||Users make a monthly/yearly payment to use your marketplace||Couchsurfing|
|Commission||The marketplace charges a percentage or fixed fee for every successful deal on the website||Upwork|
|Listing fee (pay to sell)||Sellers have to pay for every listing they add to the marketplace.
If you have a marketplace for services, you may require contractors to pay a fee for offering their services — just like a listing fee for goods marketplaces.
|Freemium||Basic features are free, and the premium ones are paid||Peerby|
|Promotion||Normally, users don’t pay to use the service but you can advertise whatever it is you want or cooperate with other companies in terms of using your marketplace as the platform for promotion (on a paid basis, of course)||Etsy|
✅ Top Features of a Marketplace Website (For Sellers)
When building an online marketplace website, you should take into account that the different features should work differently for buyers and sellers.
To know how to make a marketplace website, you should take into account that there are two options for how you can organize it:
- Create separate solutions for buyers and sellers. It’s more common for service marketplaces to use this strategy but, of course, the ones for goods also follow this way.
- Build a website for both buyers and sellers. You can either allow them to both sell their products and buy within one account or make them re-login for each type of action.
Sure thing, we can’t know what you’ll prefer. However, what we can do is separate features for sellers and buyers.
Thus, in this section, we’ll review the basic marketplace features for sellers (contractors) you might need to make your marketplace website.
# 1: Sign Up & Profiles 🔐
This is an obligatory stage since you’re not going to sell and provide services anonymously.
Try to find balance here and don’t require too much information so that it’s not repellent for users.
Nevertheless, you can consider asking something more than name and email or phone number as and when required.
That is, to check out the functionality and how it all works, name and email should be enough. However, to actually start selling or providing services, users might need to somehow (via attaching ID or driver’s license, for example) confirm their identity and provide more detailed information.
Besides, depending on the type of services the Sign Up might be more or less strict.
Let’s say your marketplace is for selling clothes. Nothing special that requires a long identification process, right? You’ll still need to ask for details like first and last name, name of the company if there’s one, maybe simple identity confirmation like a video call, etc.
But if you want to create a website for domestic help — which implies physical contact of performers and customers — that is where you should be careful.
It’s not excessive to ask for an ID photo, residency verification, and it shouldn’t concern performers only — customers should also prove that it’s safe for contractors to provide services to them.
# 2: Home Screen 📊
Home Screen is a place on any website where users can access the features and information.
For a marketplace website for sellers it can be:
- A quick access to the main features.
- A “New product” button.
- Current, finished, and new orders.
- Chats with customers.
- Detailed info about their business (number of orders for a certain period, 5 latest orders (approximately), the average income per month/order, etc.).
Consider making the Home Screen changeable, especially, the part with detailed information.
Some may not want to have finished and new orders on their Home Screens, or maybe they’d prefer to have money-related statistics instead of number of orders.
# 3: Orders Screen 📦
Typically, this feature is divided into two parts: Open Orders and Completed Orders. But what exactly will be placed on the Orders Screen depends on the type of product(s) you offer.
Information about Open Orders may contain:
- The product or service that has been ordered.
- Total price.
- Payment details.
- The location of the customer (mostly needed for service marketplaces).
- Delivery details (if needed).
- Comments and notes from the customer.
As soon as the order has been successfully delivered or service done, it should go to Completed Orders and all details can be later accessed from this section.
# 4: Product Screen 💻
This screen is a place for sellers to manage their product range.
It should allow sellers to:
- Add new products.
- Manage the delivery system regardless of whether you have your one or use facilitators.
- Access the list of current products.
- Change “In stock” or “Sold out” labels.
- Disable items.
- Review feedback from customers.
- Access product-related statistics (numbers and types of sold products during a certain period of time).
This one can also contain sorting features in it. Since one seller can offer multiple items within one account, they might want to see statistics for a particular one.
Moreover, you can add the feature “New product” here as well.
Speaking of, we’d like to give you a general note here.
Normally, the term “New product” is used on marketplace websites for goods. However, it’s also possible to add it to service ones. It’s just that typically services aren’t "offered" but they’re "looked for".
What we mean is that if somebody needs a drive home, they don’t check the list of available taxi drivers. They call for service and providers answer, right?
Thus, it’s performers who offer their services in response to customers' calls — not customers answering to performers' offers in most cases.
# 5: Chat 💬
To build a marketplace website with a great communication system between sellers and buyers, a chat function is worth adding.
Technically, chatting systems are mostly similar. You can calmly leave this one simple since a chat will serve here only as a place for communicating.
It’s not necessary to make this feature entertaining, so you don’t have to worry about adding stickers, in-website emojis, gifs, etc.
However, we’d recommend you to make sure that it’s not possible to make an agreement outside of your app for your customers’ safety and since it can be a loss of revenue for you as well.
You can also add a chatbot — an artificial intelligence that’s intended to answer simple questions and deal with little technical problems. It’ll serve you as a Customer Support and definitely improve user experience.
Besides, via chat you can provide:
- Phone support for emergencies.
- List of contacts (phone numbers, email, links to messengers like Telegram, WhatsApp, Viber, etc.)
🔝 Top Features of a Marketplace Website (For Byers)
In this section, we’ll review the main marketplace features for buyers.
# 1: Sign Up & Profiles 🔑
Since buyers have relatively less responsibility than sellers do, their Sign Up & Profiles features can be simplified.
First of all, you shouldn’t ask for too much information. Only for what’s really necessary to "seal the deal."
Besides, you should only do it when it comes to this deal. Before that, you can even renounce asking for information.
The so-called “guest checkout” is also quite a popular option. It means that buyers don’t have to create an account to close the deal. But the rationality of such an option strongly depends on the type of products provided on your marketplace.
You can also enable Social Media Sign Up. It’ll not only improve the engagement of customers but also work as a marketing tool since they could share their purchases on their pages.
# 2: Home Screen 📊
Since we’ve already discussed what it is in the previous section, let’s just stick to what it can consist of.
So, Home Screen for buyers can include:
- Quick access to main features.
- Top and new product listings.
- Current orders and their details.
- The shopping cart.
- The chat & new messages.
- Currency settings.
- Any discount coupons and/or bonuses (if there are any).
You can think of making this one changeable as well.
Additionally, you can use the buyers’ Home Screen as a place for promoting products if that’s your monetization form.
# 3: Filtering & Sorting 🔍
This feature is really important for an online store since most of the time customers either have a clear request or know approximately what they want on a marketplace app.
And most online marketplaces use it.
However, this feature may and most likely will vary depending on the type of marketplace you want to build. Thus, we’ve created lists for both goods and services marketplaces.
So, for selling goods you might add filters by:
- Size & brand (for clothes).
- New/second hand.
- Delivery options.
For services, you might want to add filters by:
- Sex/gender of the contractor.
- Types of services (if there are more than one).
However, we'd like to once again emphasize that depending on the products or services on your marketplace, these filters can be different.
Sometimes, you may need to add a whole lot of different filters to narrow down the search request as much as possible.
Let’s take any clothes marketplace as an example where the range of items is wide. The filters can be by category, price, brand, size, fabric, color, the purpose of use (business clothes, casual, beach, etc.), and so on.
# 4: Product Screen 📖
This feature is intended to deliver information about the product or service to potential customers.
If you want a marketplace platform for goods, the Product Screen can contain:
- Photos of the product. The item has to be visible from different sides, the photos should be with good lighting and of high quality.
- Detailed product description. This part includes size, material, price, delivery options, name of the seller (and maybe email or phone number), and payment options.
- Similar goods. You can offer customers a list of similar items or items from the same seller.
- Categories. Above the product, some websites have sections with categories that this item is in.
For example, if we take a knife, it can be “Home-Kitchen-Tools,” as shown in the picture.
If you want to build one for services, it can consist of:
- Personal details of performers (name, phone number,etc.).
- Hourly rate.
- Ratings and comments from previous customers.
- The providers' experiences.
# 5: Payment Gateway 💱
Every item and service has its price. Thus, to buy something, users should have a secure, reliable, and user-friendly Payment Gateway.
So when creating a marketplace website, try to make sure that it:
- Is consistent with your website and various OS options.
- Allows using all popular payment methods like a credit card, PayPal, Google & Apple Pay, etc.
- Works fast, with no delays.
- Strongly protects users’ personal data.
# 6: Chat 💬
The chat for buyers isn’t that different from the one for sellers.
However, the list of FAQs might be different as they will most likely have different questions compared to sellers.
But as for the chat between customer and seller — it’s all the same.
⚙️ Tech Stack
To make your custom marketplace more functional and convenient to use, you can integrate various APIs and SDKs to your website.
- For the Payment Gateway, you can use Braintree, Stripe, or Google Pay.
- To enable Social Media Sign Up, you can use Twitter
or Instagram SDKs.
- For the chat feature, you can use Sendbird or TalkJS.
- Another useful technology you can integrate is VR (Virtual Reality) to enable a 3D visualization of your product. A great example of such a technology can be VividWorks.
- There are some marketplace software options like Magento, Multimerch, CS-Cart, etc., that can help with multi-vendor marketplace development.
So now that you know how to create a marketplace website let’s summarize the main steps you should take up to start an online marketplace:
- Decide on what is a marketplace website type is right for you — goods or services.
- Choose a form of trade (B2B, B2C, C2C).
- Choose the features you want to add to your platform.
- Find a Tech Partner and start your journey.
Have any other questions on how to build a marketplace website? Feel free to drop us a line — we’ll find a way to help you!