How to Create an Online Auction Website or App like eBay and Poshmark?

Sites with the function of the auction - this is not new, but they have become popular only in the last ten years. Why? No expert will give an unambiguous answer, and all of them will agree that this trend should be used. And if you want to create your own eBay-style website auction - our instructions will help you.

• From the article you will learn the answers to the questions:


• Which niches are popular and who are your main competitors?


• What are some of the disadvantages of eBay and how to use them?


• What type of auction to choose for your project?


• Where to start and what technologies to use?


• How much does eBay-like website development costs?

Vintage items, used cars or wine: what are you going to sell?

At the time of launch in the distant 1995, eBay had no competitors. The site could experiment at every step and check what users like, and what is better to refuse. In the first case, the innovation was introduced on an ongoing basis, in the second - sent for revision. Thanks to the “custom” selection, eBay has become an excellent platform that buyers and sellers like.

But now the situation is different: there are at least 10 major competitors in the market (for example, Amazon, Etsy, Craigslist, Rakuten, eBid, etc.) and dozens of relatively small auctions that exist on the principle of "spiders in the bank." Therefore, if you want to create a site similar to eBay, you need to do everything right on the first try. And in order not to lose, first you need to study the competitors.

If you already know which niche to choose, then study the main competitors to understand:

• What business model are they using?


• What features does their site support?


• What target audience are they targeting?


• What design features and interface elements do users like, and what not?

And pay attention to the trend of growth of capitalization of projects in the niche. If the charts have a strong upward trend, you can enter this market. If the capitalization of companies falls in the last few years (and now there is no financial crisis), then something is wrong with the market and you may need to find another direction for your project.

Bad support, big commissions: what do eBay users complain about and how to use it

Ebay is the progenitor of online auctions, and because of its venerable age, it is not without some wisdom that helped it reach the heights of fame and success. However, this does not make it perfect. There are many shortcomings in eBay that can be turned to your advantage. Here are the main problems of the first of online auctions:

#1 Big commissions. eBay earns, among other things, through commissions that are charged to sellers. And since this is the most popular site, it can afford to make these commissions quite large:

• 35 cents per listing if more than 50 listings per month are posted;


• fees for updating the listing (for example, for editing text, changing the title, adding a photo or increasing categories);


• 10–15% of fees in total, while other sites charge 1–5%.

#2 No delivery assistance. Amazon has several warehouses to help its suppliers with the storage and delivery of goods. eBay is only engaged in mixing the supplier with the buyer and the financial side of the issue.

#3 Vendor discrimination. eBay focuses on those who bring money to the site, that is, to sellers and advertisers. At the same time, the bias towards buyers is quite strong:

• they have more responsive technical and informational support;


• the service does nothing with fake reviews and black PR;


• in disputable situations, the service props up customers.

There are confirmed cases where the eBay code confiscated the seller’s money for the benefit of the buyers, even when they were wrong and violated the terms of the transaction or use of the goods.

#4 Tough competition. eBay is the largest online auction that attracts a very large number of sellers, which is why the competition on the site is off the charts. And how can new sellers attract customers? That's right, just dumping prices, which is why other sellers are forced to lower prices and work on the verge of profitability.

#5 Restrictions on communicating with customers. The service limits communication between the buyer and the seller solely by contact on the lot. Moreover, only the buyer can get in touch, while the seller can only respond, and communicate outside the system is prohibited. This is very inconvenient for building a marketing policy. For example, if you put up a lot, you do not have the opportunity to notify those who previously bought a similar product from you.

How to use the disadvantages of eBay:

• At the start of the project, commissions can be reduced to a minimum, gradually increasing them with the growing popularity of the site to an acceptably low level. At first, it’s better to remove the listing fee - you need to get as many lots as possible to attract customers.


• You can organize several warehouses in large cities with the possibility of issuing goods on the spot, without resorting to delivery services. Here, in the presence of an online auction representative, it will be possible to inspect the goods to ensure its authenticity and integrity.


• A well-defined set of user and arbitration rules that are fair and equal for all parties will help circumvent eBay in terms of protecting system members.


• On the new site there will be no problems with competition, but you need to think in advance about the site's policy regarding easing the conditions for entry into the market for new sellers. For example, you can enter a guarantee when the service or the seller (with a high reputation) vouches for the newcomer, assuming obligations under the transaction in case of violations by the newcomer. Of course, such a guarantee will not be free.


• In terms of communication problems between the seller and the buyer, you can go two ways. The first is to introduce a paid subscription (function), which gives the right to communicate with past customers. The second is to introduce marketing tools, for example, the function of mass mailing of ads to past customers (or a certain group of users) without the possibility of direct communication with individual participants.

These are the most obvious examples of how to use the shortcomings of eBay to lure some of the users of this service to your website. Surely you can come up with a lot more ways if you think about it a little bit.

Profit from commissions, listings, advertising or subscriptions: what revenue model to choose?

Choosing an effective revenue model won't make you a millionaire immediately after launch, but it will create a solid foundation for becoming a leader in your niche and region. Let's take a look at how eBay monetizes its platform and see what is the best model.

Within 7 years, the company's revenue has been in the range of $2.08 billion to $2.88 billion, and in the second quarter of 2023, eBay's revenue was $2.54 billion. The stability is due to a sustainable monetization model, which is divided into categories such as:

• Listing fee model. A seller can list at least 250 items on their platform for free. After this limit is exhausted, eBay charges a $0.35 listing fee for each listing.


• Commission-based model. eBay charges a commission in the form of a fee on the final value of the item. It is defined as a percentage of the total sale amount plus $0.30 per order.


• Advertising-based model. The platform allows sellers to advertise their items on eBay. They must pay a fixed amount to place an advertisement.


• Subscription revenue model. The platform charges a fee periodically, providing some privileges, such as more listings with zero fees and a lower final cost fee. Subscription pricing starts from $7.95 to $349.95 per month.

Choosing a monetization principle is an individual process that depends on the specifics of your platform. You can combine revenue models similar to eBay or create your own.

Dutch, Scandinavian or English: what type of auction to use?

Classic English Auction. Bidding goes on a price increase until a certain maximum is reached or until the seller agrees to the price indicated by someone. The buyer puts the product (lot) up for auction, sets the minimum starting price, the time when the auction started and their duration. Rates can be raised only by a certain amount - step.

English auction can be:

• Direct. A certain starting price is assigned, which grows with the receipt of bids from auction participants. The winner is the one who makes the maximum bet.


• Reverse. In this case, there is one buyer and several sellers. The buyer sets the maximum price, the sellers are trying to reduce it, so they bought their goods.

First price auction. Closed auction, where the starting or maximum bid is not announced. Participants make hidden bets once. The one who makes the biggest bid wins. Usually they sell real estate, cars and government contracts in this way.

Second price auction, or Vickrey auction. The rules are the same as in the first price auction, only the winner pays not the amount he indicated, but the second one on top (which the other participant indicated). Usually used to sell collectible items. On eBay, there is this type of auction, but with closed bids and the ability to set a minimum reserved price.

Dutch auction. Usually used to sell large quantities of dairy products, herbs, meat, etc. in a short time. Participation is paid. The lot is set at the maximum price, which gradually decreases (by the second, by the minute, once per hour, etc.) until a buyer is found.

Dutch auction with hidden price. The seller puts the lot at the market price, a.k.a. the starting price. Viewing the starting price is paid, and each viewing reduces the price by a certain step. The one who agrees to buy goods after viewing the current price wins.

Scandinavian auction. The seller puts the lot up for auction at the lowest price, for example, for $ 1. Participation is paid, and each bid increases the price of the goods and the time of the auction. The last bet wins.

In addition to these types of auctions, there are others, for example, Japanese, double or Yankees. Which one to choose depends on the niche. For example, on eBay they use the second price auction, which is not very popular with sellers, as this reduces their profit. But it is pleasant to buyers, as they can make a huge bid (1000% more than the estimated cost of the lot), but pay only a little more than it costs.

The main question when creating an eBay-like site: It's the chicken and the egg problem. The chicken and egg problem in business is a question that describes the prioritization between supply and demand. Who should be prioritized: buyers, sellers, or both at the same time? Let's parse it out.

Recommendations for creating supply and demand on the platform:

• Occupy one of the parties. Create value for either sellers or buyers. When you achieve sufficient supply or demand, it will be much easier to engage the other side.


• Focus on a specific niche. Before becoming a global leader, eBay gained popularity with Beanie Babies baby toys. Find small groups of buyers and work with them.


• Hold events and meetups. Build a community around the platform, give customers feedback, and maintain a social media presence.


• Engage two parties at the same time. Encourage sellers to engage customers and offer incentives for doing so.

The answer to prioritize the demand or supply side depends on the platform's revenue model. If your revenue depends on sellers, create the best conditions for them. Proceed the same way with buyers.

For example, eBay emphasizes demand creation. In the first quarter of 2023, the platform had 133 million active buyers. Follow their example, or create an alternative path for yourself.

Find a balance to attract enough participants on one side. Test different models, analyze and adapt them to the market situation.

Functions and technologies: where to start developing a site like eBay?

At this stage, the first thing you need to decide on the functions of the site:

• Registration and authorization. Via social networks, phone or email.


• Manage seller listing. View and manage lots.


• Admin panel. Site management as part of the administrator and User Agreement.


• Order management. Viewing and processing information about sold lots. Here should be a tool for financial calculations.


• Search for goods. Allows buyers and sellers to search products on the service by price, size, location and other filters.


• Product card. Basic information about the product and the seller.


• Cart. Collects in one place all the winning lots of the buyer and allows you to pay for them in one transaction.


• Chat. Needed to communicate with contractors and service representatives.


• Payment. Tools to pay for goods using credit cards, digital payment services, cryptocurrency and other methods.


• Reviews and ratings. Helps to assess the integrity and reliability of the seller and customers. Must be anonymous.

WordPress, Laravel or Yii: How to Create an Online Auction

From 1,000 to 150,000 dollars: how much is website development like eBay costs

Checklist for those creating their eBay

• Select a niche (target audience).


• Examine competitors, their strengths and weaknesses.


• Select the type of auction and business model.


• Develop the concept of the site.


• Choose an approach to development.


• Develop a website design.