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How to Create a Multi Vendor Marketplace: 7 Steps - From an Idea to a First Sale

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Yuri Musienko
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As the success of sites such as Amazon, Uber, and Airbnb shows, the future belongs to aggregator sites that bring sellers and buyers together on one platform to conclude peer-to-peer trading deals. Next, we describe how to use this trend for personal gain by building our own successful multi-vendor trading platform.

Step 1: Niche and Competitor Analysis

So, you decided to create a marketplace. To do this, choose a niche, name, business model, technology stack and developer. To do this correctly, you should spend some time researching the market: trends, target audience, competitors, technologies and the like. This is important because without such a study it is impossible to validate your project.

The first step should be the determination of the value proposition for your potential users - the choice of what to sell. There can be two options: all at once or a specific type of product. It’s best to first select a specific niche and expand your listing as you grow in popularity, as Amazon once did (starting with books and ending with everything for everyone).

In order to choose a niche product for sale, you need to analyze competitors - both multi-vendor and conventional trading floors. This will help you understand which niche is free or least competitive. Here are your main competitors:

How to Build a Multivendor Marketplace

You decide which niche to choose. It can be anything, the main thing is that you understand this at least a little and there is a large target audience. Moreover, the more highly specialized the niche is, the better, as this will simplify website promotion. For example, it can be men's clothing, if narrowed - men's suits, more narrowed - suits for boys. Another example is electronics, if narrowed smartphones, and more narrowed - Chinese inexpensive smartphones.

Step 2: Name and domain name of the site

When you decide what the name of your site should be, imagine that it is a sign that you should place above the entrance to your store. This sign meets users and tells them what you are selling, what is the mission of the company and how you are promoting the product and / or service. What was that?

The answer to this question is no less important than the coding or promotion of the platform, and earlier it was solved quite simply: the name of the site duplicated the name of the main product. However, now almost all such domain names are occupied, so companies either invent new words, like Spotify did, or change the words a little, like Twitter and Google did, or combine two words or more into one name, like YouTube and Facebook did. But how to create your successful business like Facebook or YouTube from scratch.

Use these tools to find an interesting site name:

  1. Domain Name Generator.
  2. Lean Domain Search.
  3. Domain Hole.
  4. Wordoid.
When you have several applicants for the title of "Best Domain Name of All Time", do not rely on super-creativity. Often this harms the business, as strange names scare away users and do not give an idea of what kind of site it is, what it does, and why you go to it. The bet should be placed on the sharpness, brevity and ease of perception. At the same time, do not use numbers, they are the most difficult to remember, and also do not use hyphens and non-standard domain zones.

You can register the selected domain name on the websites GoDaddy, Domain.comDreamhost, Name.com, Bluehost, Namecheap. They have the largest user bases and available domain names. Prices are approximately the same everywhere - from 10 to 300 dollars per year, depending on the domain zone.

Step 3: Concept, Functions and Design

Website concept. A document that spells out all the key parameters of the site that being developed: goals and objectives, nature of activity, market and competitor analysis, design concept, positioning and marketing policy, semantic core and more. The emphasis in the concept is on general points, since the document should become a support for further development. The project overgrows with details as development progresses.

Basic and additional functions

How to Build a Multivendor Marketplace functions

Deeper integration with social networks.Additional functions for buyers:

  1. Pop-up notifications, reminders.
  2. Product comparison and recommendations.
  3. Gift certificates.
  4. Wish List.
  5. Additional functions for sellers:
  • Advanced listing, inventory and finance management.
  • Tools for analyzing customer behavior.
  • Tools for creating a store page.
  • Marketing tools.

Website Monetization. If you are not a state or a public organization, then you are creating a multi-vendor site for profit. There are several ways to do this:

  1. The system charges a fixed commission or percentage for each successful trading transaction conducted through your website.
  2. Buyers and sellers make monthly / annual payments for using the site. On some sites, only one of the parties pays.
  3. Listing fee. The seller pays for the placement of goods. The size of the fee, as a rule, depends on the category of goods (clothing, electronics, drinks, etc.).
  4. Basic functions on the market are free, and premium ones are paid.
  5. This can be an advertisement of third-party services (other sites) or an advertisement of internal goods (the first position in the listing, a catchier ad, an offer in recommendations, etc).
UX/UI site design. The design of the marketplace is the first thing a user pays attention to when entering your site, therefore it should be attractive and memorable, and if you have chosen a highly specialized niche, then this niche should be relevant. To develop such a design, it is best to hire specialists who know exactly what such a portal should look like. This approach will save you time and save you from many mistakes.

Step 4: Website Promotion Methods

Unlike traditional online stores, where there is only one seller, multi-vendor platforms are focused on two types of users: sellers and buyers. This means that you need to solve the chicken and egg dilemma - how to attract buyers without sellers or how to attract sellers without buyers.

Search for sellers. Experts advise starting with suppliers, because it is an investment for them, and it is a waste of time for them. There are several ways to search for sellers:

  1. Contact sellers in other markets. This strategy was used by Airbnb. They searched for short term rental listings on Craigslist and suggested that they advertise on their site.
  2. Use Google, aggregator sites, and business directories. Start with the Yellow Pages and Yelp if you are targeting the North American market, or just look for suppliers on Google. This approach was used at Etsy.
  3. Find sellers on social networks. If you have chosen a highly specialized niche, it will be easy for you to find sellers in the corresponding groups of social networks Facebook, LinkedIn, Instagram. You can also find seller accounts on Twitter and YouTube.
Having found sellers, give them a lot of attention and time to explain the advantages of your site, help with filling out profiles and ads. Also do not forget to offer discounts, promotions and bonuses for the right to be among the first sellers on your multivendor trading platform.

Search for buyers. Here you can use traditional approaches with contextual advertising on Google, social networks and relevant websites. Just do not forget about promotions, discounts and bonuses. There should be a lot of them at the start.

Step 5: Three Development Approaches

Development from scratch. It requires a lot of time, money and effort, but allows you to realize unique ideas. In addition, development from scratch gives you complete control over copyright, which is important if you decide to implement white label solutions created on the basis of your site.

How to Build a Multivendor Marketplace Approaches

Ready platforms. Creating a multi-vendor market using open source software such as Cocorico, Mayocat or Sharetribe. The result will not be as unique as when developing from scratch, but the cost of time and money will be significantly reduced.

How to Build a Multivendor Marketplace Sharetribe

SaaS-solution. It implies the use of the Sharetribe, Oracle Commerce, Demandware or other software platforms for the simple and quick launch of the trading platform. This approach is reminiscent of creating an account on social networks with minimal settings for its uniqueness. But it’s quick, simple and you don’t need to think about the technical side of the issue.

How to Build a Multivendor Marketplace SaaS-solution

Step 6: Planning and Budget

Planning is the basis for the successful implementation of any project, as this regulates the development process and allows you to form an estimated project budget. Normally when planning you need to:
  1. Write a business plan. It consists of a brief and detailed description of the project, marketing strategy, risk analysis, budget and potential benefits.
  2. Develop specifications. All information about the site and its development with a focus on the technical component and user experience - from user story to security risks.
  3. Design wireframes. Visualization of user screens, transitions between them and fields for content. UI / UX designers are usually involved in frame design.
  4. Make a budget. The project manager, designers, and software engineers study specifications and frameworks to evaluate the estimated development time of each function and the labor costs required.

Step 7: Prototype, MVP and Development

Prototype. This is a sketch or simplified model of your marketplace, implemented on paper, in a digital image or in HTML. The prototype will help you understand how your multi-vendor trading platform will ultimately look like, which is important if you need to interest partners and / or investors.

Minimum viable product (MVP). The main idea of MVP is to transfer the product to the target audience as soon as possible in order to test it on real processes for relatively little money. After starting MVP, you should study user reviews and use them to make various site improvements - from design changes to adding new features.

Website development. After starting the project, you need to create a feedback system that will allow you to analyze user experience and actions in order to improve the site based on these data. Usually they use Google Analytics, A / B testing, focus groups and questionnaires for this. In addition, you need to organize technical and reference support services, which will also greatly help with the development of your multi-vendor trading platform.

How to Create a Multi Vendor Marketplace: 7 Steps - From an Idea to a First Sale key takeaways:
  1. Step 1: Niche and Competitor Analysis
  2. Step 2: Name and domain name of the site
  3. Step 3: Concept, Functions and Design
  4. Step 4: Website Promotion Methods
  5. Step 5: Three Development Approaches
  6. Step 6: Planning and Budget
  7. Step 7: Prototype, MVP and Development
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