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How to Build Multi-Vendor (Peer-to-Peer) Marketplace Website like Etsy

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Yuri Musienko
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Probably, at least once a week you visit popular resources like Amazon or Etsy - after all the assortment of the items, affordable and not really prices to the average buyer. Why you should go to the retail store if you can order the same item but cheaper and besides get free shipping. Even if you are not an American, website like Amazon, Etsy, Alibaba, and Aliexpress are very flexible and allow you to deliver items to Europe, South America, and even Africa.

This is one of the reasons why marketplace websites are popular and a hugely successful. Could someone repeat their success? Or, at least become a little bit closer to them and earn decent money to become an Internet entrepreneur and leave current job. We have prepared for you a detailed article where we will discuss the benefits, monetization, technologies, marketing and, of course, investing in marketplace websites to help you. This guide is suitable for developing B2B, B2C, and C2C multi-vendor marketplace websites. So, let's begin.

1. What's the difference between a marketplace and an e-commerce website?

And what is the multi-vendor marketplace? We all remember ecommerce websites. You can register in Shopify or use a plugin for Wordpress (WooCommerce) to publish the first-second dozen products and start selling them. In fact, you are a substitute for a retail store only in the digital world. That's e-commerce definition. Wordpress won’t ever be in ecommerce trends.

When a large number of such stores and vendors appear on the Internet, each of them has a small popularity and recognizability, it becomes necessary for users to structure all information and products. By prices, categories and other filters. E-commerce multi-vendor marketplace is a simple organized and structured website in a logical and intuitive way; a list of vendors to bring additional sales to e-commerce websites and provide choice to users. Before the development, highly important to choose your own multi-vendor marketplace direction and industry.

2. Targeting, Industry and Niche

Multi-vendors marketplaces like Etsy, Amazon, and Aliexpress can be called e-commerce peer-to-peer marketplaces, where the first is aimed at hand-made products, and the second and third is aimed at PCs, clothes, shoes, and so on. Unlike the popular in the US 6PM, they include not one store but hundreds and even thousands, many of which are located in the UK, Europe, and Asia.

Don't try to take on immediately such a large piece of the pie - you have a chance to lose. In our experience and the experience of the Fortune 500, it is better to use a strategy from narrow to broad. Many startups started like this. This is a trusted cost-efficient way. The point is to focus on narrow targeting or audience to increase visitors, volume, sales and move up to the next level. Don't try the too narrow niche - you have a chance not to gain sufficient volumes and remain at the same level.

It could be handmade goods like Etsy, documents provided by teachers or professors, services and so on. It is best to decide which niche to choose - think personally about your strengths and experience. Perhaps you are a teacher for a long time and you have experience and documents that you are willing to share in order to earn a penny. An important point is that from the industry and niche, it's much easier to target the audience, do marketing and monetization, and consequently - to grow like Facebook.

3. Domain Name

The first, perhaps, for some the most obvious point but, nevertheless, important. We will not dwell on it in detail. When choosing a domain name for your marketplace, be guided by the brevity. The domain zone plays a secondary role. It is better to choose a short, concise and simple name for the multi-vendor marketplace website with the .io domain zone than the long, hard to remember in the .com. Remember that the name has to be easy to remember for people, not search engines.

4. Hosting

Right hosting depends on access of your online multi-vendor marketplace. To do this properly, firstly you have to choose technologies. The minimally acceptable for the project is VPS. You can use AWS - it's even better. The cost is from $20 per month. Performance, availability of the site and its load will be impressive.

How to Build Multi-Vendor Marketplace Website like Etsy

5. Technologies

Technologies range for the backend as wells as for the frontend is broad. Add here a long list of databases and CMS. And even an experienced web developer can get into a stun. Nevertheless, you can use the ready CMS with a set of plug-ins and run the multi-vendor peer-to-peer marketplace. Merehead does not recommend WordPress and its plug-ins (WC Vendors, Marketify etc.) or other ready-made platforms for launching own multi-vendor marketplace. Why? The answer is very simple: you can develop a platform, but its performance, optimization, and customization will be worse than hell. Previously, we discussed the importance of targeting and niche.

For a startup, it is important to do a lot of iterations and try different options to determine what the right is for your audience and what is not. Unfortunately, contrary to the erroneous view, WordPress is not suitable for such projects. Its task is blogging - and with this platform, WordPress does very well. However, in this article, we consider all possible options in cold-blood. Nevertheless, the price of a multi-vendor marketplace with a ready-made template and a typical design costs about from $3000 to $5000. If you want to use a unique graphic design, add $1200- $2500.

We at Merehead take care not only about the development but also about the future of the project and its success. Relying on 9 years of experience, we can talk our recommendations to help you to grow and choose between website or mobile app.

With Wordpress, you make a website, but its future is dull. Even within the MVP project - we do not recommend using WordPress. You better choose the minimal set of features but with the opportunity to scale and grow. Wordpress is killing it.

Frameworks for the multi-vendor marketplace. Laravel or NodeJS will be one of the best solutions. Custom development and iteration will help to achieve not only a quick response from the server but also a better user experience. MVP marketplace development takes from 3 weeks to 2 months. As a result, you can get the first registration of vendors, first money and a new portion of enthusiasm and a great desire to grow.

How to Build Multi-Vendor Marketplace Website like Etsy

There is a lot of fuss around security now. Integrity of personal data, protection against hacker attacks in large projects should be put on the first place. When choosing the technology, there must be a private and protected GIT repository, code review, a protected firewall, and no one possibility and holes for SQL-injections or XSS-attacks. In addition, with proper programming, the supplier development agency must use 2 environments. Private (for development) and public/release (available to users).

6. Design

Contrary to the erroneous opinion, the design is the first thing a user sees. Through the design, we intuitively feel to trust or not to this resource. Whether it was professionally executed or not. The template that has been downloaded by a thousand users before can seem like a good choice but, not for the multi-vendor online website marketplace.

How to Build Multi-Vendor Marketplace Website like Etsy

7. Features

With MVP multi-vendor marketplace development, it is important to choose the most optimal number of functions and pages to get the first feedbacks, registrations, money, and traction overall. We recommend having a catalog, registration, and authorization, the ability to post products, statistics, and payment. For the administrator or the owner, it will be useful to have a private system that will block sellers, see the statistics, goods and approve or decline them. This set for the marketplace will cost about $5000.

Not much different from the solution with the WordPress usage. But! You'll get a flexible and easily-scalable opportunity to work with the website, improve it and do it for people. Only in this way, you'll get first registrations and money. We’d also considered best ecommerce platforms here.

Websites like Etsy cost around $70,000, working with an agency from Eastern Europe that takes $25 per hour. The solution from a partner in the US or the UK will cost you "a pretty penny". And you can count on an investment of $250,000- $400,000.

Searching on a multi-vendors site's marketplace is very important. Imagine that you have a database, does not matter SQL or NoSQL, with 20 million items and you need to implement a live search, like in google suggestions. At least you need to use Elasticsearch. Using the methods of working with databases as with small websites - you will find a failure. The server just will be off. Work with high-loaded projects requires complex work with the database, code optimization, and database queries. When it comes to overloaded projects, it is often necessary to use several server programming languages. Python, PHP, or Nodejs to provide optimal results.

The performance and loading pages should not exceed 2 seconds for the user. And of course, the mobile responsive version should work flawlessly.

8. Monetization

There are several schemes for monetizing the multi-vendor online marketplace. Nobody forbids you to use them alone or to combine.

- Fee, Based on Item Cost

The most popular scheme and besides is fair enough. If the marketplace brought some customers to the vendor - the vendor has to share the profit. The percentage or fee is highly dependent on the industry and ranges from 3% to 20% of item cost. Do not be greedy raising your commission.

Marketplace projects are a long-term game for the future; first of all, you have to attract a decent number of vendors and customers. In this case, we recommend putting 0% commission. Agree, having a store with hundred-second items, would not you prefer to be placed on such a resource to be able to have any additional customers? I will answer - yes and immediately. For vendors, it sounds like a fairy tale, and they rush to sign up.

- Ads

Pay for clicks or impressions for advertisers. With 25,000 visitors a month and an average of 5.3 views, you get 132,500 impressions. I am sure that a lot of companies will want to use your audience to attract additional attention to their products or resources.

By the way, in this monetization scheme, you can work with both external websites and with internal vendors that are already placed in your marketplace. Both options have good monetary indicators.

- Freemium and Memberships

Your target audience is vendors with 10 up to 1500 products. In that case, why not take a fee that will depend on the number of goods. For example, vendors with up to 100 goods are free. They can try your platform, features, and results. Membership for vendors with up to 250 products costs $39 per month. Up to 1000 - $99 per month and so on.

Options with memberships and the expansion of functionality are very well shown in the job marketplaces like LinkedIn and Xing.

9. Marketing

One of the most complex and intricate items. When it comes to marketing all the options are good and all of them work. The best experience can be achieved only by combining them all together with the right monetization and attracting customers. The success is achieved many times easier. Following tactics and strategies you can use in terms of restaurant website also. So, our list of the most effective digital channels for multi-vendor ecommerce marketplace marketing:
1. SEO.
2. Email Marketing Campaigns. Inbound and outbound.
3. PPC campaigns (Adwords, Facebook).
4. Ads on 3-rd party resources.

How to Build Multi-Vendor Marketplace Website like Etsy


The most cost-effective marketing option for you multi-vendor website. But the cost of it is reduced only with time. You will get a decent result not earlier than in six months. Do not get me wrong, the first results should be in the first or second month. However, only after half a year, you can count on a very pleasant result. This is primarily due to the peculiarities of search engines. They are very wary of young projects that previously had no history in the search rankings. SEO should be neat and safe.

1. The most advantageous in the conversion rates
2. Increases website and brand visibility on the Internet.

1. Requires a lot of time
2. Monthly investments

- Email Marketing Campaigns

Having the first registrations is very important not to lose them and to keep the interest of your audience. Integrate your multi-vendor online marketplace with CRM such as Salesforce, HubSpot is vital. Email workflows increase the return at times, even for crypto exchange platforms. Campaigns can be divided into both inbound and outbound. Both options have the right to exist. Cold emails show poor results last time, but as I said earlier - we do an unbiased review, considering all possible options for you.

1. Conversion cost is one of the lowest among all channels.
2. Investments are almost unnecessary.
3. Increases brand visibility
4. Work with the audience.
1. Too hard to find and email marketing expert.

As you can see, email marketing campaigns must be and work for the benefit of your company's marketing. The cost of conversion is almost reduced to $0.00. It is almost a free way to increase sales. In addition, the only disadvantage associated with the search for a marketer is easily solved if you outsource this work. We at Merehead have increased conversions rates up to 350% using only this channel.

- PPC campaigns (Adwords, Facebook)

To have the first registration you need to send a stream of users to the website. Go through all the stages of the sales funnel and measure the results. A prerequisite for a PPC campaign is measurement. Google Analytics, Facebook Pixel are simply required to attend the multi-vendor marketplace website. Do not forget about the goals.

Proper organization of Google Adwords using stop words can reduce advertising costs and increase conversion. At this stage, it is most important to know the portrait of your client: both the vendor and the customer. Facebook and Adwords are the best representatives of this field. In the case of Facebook, you need to understand the quality content works best. Branded exciting images are simply necessary. You can either buy them, either do it yourself or hire a professional photographer. Never use free pictures - it will just kill your campaign.

How to Build Multi-Vendor Marketplace Website like Etsy

No PPC campaign is complete without landing pages. It is best to do at least 2 pages to run A/B testing. At the first stage, investments can be large, but after a month of work, all stages are set up and work goes in the backburner and by measuring various metrics.

1. Almost immediate result.

1. Investments.

Remarketing and retargeting can reduce the cost of conversion. If you have a full-time marketing expert, be sure to spend a time for a lengthy conversation with him on this topic. Without retargeting your budget can be gone permanently.

- Ads on 3-rd party resources

Very much depends on the online multi-vendor marketplace niche. Can be both super-efficient and with the lowest efficiency. Completely depends on the correct type of ad: context or banner. It is important to measure all indicators: the depth of views, user engagement, traffic and its quality (bounce rates).

Marketing is a long run; however, one cannot do without it. When you make a wonderful marketplace, which you are proud of, how to make it so that all other know about it? The answer is marketing. Never let the project run in wild, in anticipation that the project will grow itself.

Merehead does professional development of Multi-Vendor Marketplace. If you have questions, contact us for a free consultation.

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