How to Start an Online Marketplace Website

Increasing digitalization and the introduction of blockchain, the usage of artificial intelligence and the shift of business to a decentralized and free Web3 have prompted entrepreneurs to create their own marketplaces to sell goods and services. An abundance of forms - from a site where individuals display lots of hand-made, picked fruits and vegetables to platforms offering clothes and smartphones, laptops and electric cars from 100-200 manufacturers.

C2C principle - eBay's operation

How it looks like - we will describe it. Let's assume that a businessman has learned that pitahaya and mangosteen are popular in countries with temperate climates, but the price there is excessive. The founder thinks of a logistics route from the countries growing these fruits and build a marketplace website where sellers and buyers meet. In order to increase the profitability of logistics, goods in short supply in the importing country, such as pork bacon, walnuts and dried river fish, are sent from the selling country in the opposite direction.

The marketplace is an example of a C2C model, in which one consumer buys what he needs from another. Thus, every year the Chinese recycle millions of smartphones that are in relatively good condition. The price of a new model is ridiculous, in the range of $50-100, which makes replacing an old model with a new one easy and familiar. The entrepreneur has a business idea to resell them to third world countries, where the cost of a scrapped Chinese smartphone will be the same as a new one in China. The success of eBay proved the effectiveness of this approach.

B2C Marketplace - two-sided form and mini-corporation

Once it has been possible to launch C2C and expand to a million purchases in a year, they move on to the B2C business model. This variant is both easier and more serious, as it sells directly to manufacturers who are responsible for the quality of the goods sold and the provision of services. Amazon was started 30 years ago as an online bookstore. Now it is a giant corporation that sells and delivers all kinds of goods.

B2C-type platform unites manufacturers of basic and related goods. It is logical that on a marketplace for the sale of cars there will be positions with spare parts and tires, oils and other consumables. Both two-way terms and three-way terms work in this format. When a business sells directly to the consumer, it is a two-way arrangement. An example of this is the transportation operator Uber, which acts as a platform for cab drivers and passengers.

However, if two businesses interact, the situation is different. To illustrate: an agro-producer grows oilseeds, legumes and cereals. The buyer wants to buy flavored roasted and raw sunflower oil, extruded corn and buckwheat-wheat flour. Then a second firm steps in to process the raw materials and produce what the customer wants. Monobank (Ukraine) app also has elements of B2C functionality built in. In addition to providing banking services, customers are shown the partners promoted by the bank in the section of selecting and connecting the type of cache for purchases.

B2B for big and small business

B2B marketplace is the level of companies with annual revenues in the six digits. Both entrepreneurs with capital and startups with development potential can enter here. Suppose IT specialists have figured out how to automatically deliver food or orders weighing up to 10 kilograms using smart UAVs. They make an offer on a marketplace - the idea is accepted willingly by restaurants and cafes, logistics operators and chain stores.

LinkedIn, Clutch and Expedia platforms, which have millions of users, use two business models simultaneously - B2B and B2C. This technique ensures flexible assessment of customer needs and extends functionality depending on the level and availability of finances. This attracts new users and facilitates the development and expansion of business relationships.

Marketplace monetization

Monetization is based on premium features, subscriptions, listing fees in order to find performers or investors. Freemium - the principle of income generation, where some services are free, but you have to pay for Premium features. Start-ups or companies without an established reputation use it, but with the growth of trust they switch to paid membership with extended services.

The reverse is buying leads: customers are writing about the services or goods they need, and companies are sending business proposals. After signing a contract or agreement, the commission is the marketplace's income. In order to keep your finger on the pulse of the business, compare the profit received with the expected profit, in the context of the month, quarter and several years - according to the sample chart.

Safety is an important part of business. A marketplace functioning as an agent with the payment reservation function protects the rights of the seller and the buyer in the same way. The service returns money to the client if the entrepreneur has sent poor-quality goods or has not provided the required service. Likewise, a businessman is protected from the bad faith of a buyer who makes a transaction to the marketplace account during the ordering process.

There are lots of niche digital marketplaces - Fiverr and Upwork provide services for freelancers. The cost of the commission is between 5 and 20% of the contract value. Higher the rating of the customer or contractor, the lower the commission. A start-up incubator is also a good marketplace idea. Selling housing or land plots is relevant for investors. In such situations, virtual ways of showcasing are used to increase the check and trade volumes. For example, a 3D view with VR advertising in a helmet, so that the client can vividly and vividly evaluate the offer.

Full-fledged marketplace - mobile app and website

Developing a mobile application for iOS or Android is the best way to start a marketplace. C2C and B2C types of interaction start with them. In case the horizon of business goals expands, a Linux site is added to the applications. The broader the functionality, the longer the timeline. A standard mobile app on one or two platforms costs $30,000.

If we are talking about a marketplace project that needs iOS and Android versions and an MVP-type site, the amount reaches $60,000. The development time for such a variant is half a year. A large platform with many functions is developed for 9-12 months and its price is equal to $150,000. The features of expensive variants include two-level verification, blockchain-based confirmation of transactions, uploading to cart and payment, selection of delivery options and control of the process by track number, and audio-visual contacts.

Americans and citizens of 70 countries around the world use Craigslist. The platform is a complex of applications for the right queries and the site itself. True, IP-address restrictions can be overly strict, even if the potential user has not been parsing for spam mailings. But the fact that Craigslist has been running for more than 30 years is a clear example of the longevity of a working project.

Need for TMS and CRM/ERP, native code and cross-platform formatting

When creating a marketplace with logistics, if you need TMS with the functionality for handling orders and confirming transactions, transportation and settlements, how profitable the transactions are, focus on competitors. Automation of business operations will eliminate the human factor, so it is a successful solution in terms of working with CRM and ERP systems.

Code is written for native marketplaces using PHP frameworks such as Laravel with MVC patterns or Vue.js from JavaScript. Developers often suggest the option of using the Node.js platform with libraries for creating React interfaces. The simpler and clearer the interface of a cross-platform or mobile application is, at least it's better for customers. Therefore, UI/UX design should be given 80-120 hours for development and testing.

Naming and interface, geo-targeting and omnichannel buying

Considering the idea f a marketplace, don't forget about a sound and clear, memorable name, preferably one, maximum two words. A trademark and domain should be registered under this original name. See if there are no analogs in the domain zone where you plan to make registration. For a premium variant of a marketplace name (an original acronym, a sound and memorable word) you will have to pay and then patent it.

The number of categories should preferably not exceed 10-20 items. Be aware of the fact that depending on geolocation, buyers and sellers will use different channels. Therefore, geotargeting in the US will work for apps like Instagram, Facebook and YouTube. For China, the TikTok option is coming. In Europe - all together. Of course, you can't do without Google Ads.

You should make positioning based on the profile of your target audience, taking into account the "moment of impulse" or a momentary decision. A customer chooses a smartphone - make a favorable offer by matching the model with a case and protective glass, a portable and energy-consuming Powerbank, virtual and augmented reality glasses. Built-in AI automates the selection process based on the expected receipt.

Options for B2C, interaction with CRM

The app will be better if you survey your sellers about what features they would like to see. Besides forms for filling product cards and placing an order with delivery, add chat, information about discounts and the ability to do analytics in several time slices. Buyers want options for product selection, sorting and quality, secure payment by different methods, fast shipping and returns if necessary.

Communication with clients is made in a simplified form, so people can write from e-mail and messengers, call on the phone, and contact using a social network. It should be convenient for salespeople to keep a customer database in their personal offices, record actions and transactions in the CRM system, and generate reports by period.

Database connection

If databases are connected in a marketplace, the non-relational MongoDB is used more often. It stores documents in JSON format. Object-relational databases are scalable tables with structured information. JSON documents are stored in collections, assigning a unique identifier to each. ORDBMS bases are referred to object-oriented, they are characterized by high consistency and clarity with less flexibility.

PostgreSQL runs open source, free code, quickly delivers audiovisual content in parallel multiple view and record operations. Its features include online analytics, streaming for IoT, and horizontal scaling. PostgreSQL processes data in voluminous information stores using sophisticated advanced analytics algorithms. Thanks to its similarity to SQL, order processing is performed simultaneously with customer authentication and reserve estimation.

Launching MVP, a React extension for iOS and Android

The MVP needs to be created and the target audience needs to respond before a full-scale marketplace can be developed. Then, after analyzing and drawing conclusions, proceed to the expansion of complex applications with functionality that requires testing before launch. React Native tools are necessary for cross-platform marketplace projects.

If clients use smartphones, the application is developed for Google Play. If they use iPhones, it is essential to develop for iOS. Constant support and updating of functions is a necessity for the functioning and promotion of an online marketplace. In a number of marketplaces, more than half of purchases take place on a smartphone - both in the app and in the mobile version when authorizing through a browser.

Next.js and Vercel for marketplaces

Next.js is a convenient framework, as CSS and commands written in Sass are imported into JavaScript using it. Libraries, APIs, and databases integrate with it to enable the creation of simple marketplaces and complex e-Commerce platforms. At the beginning, you should prioritize the functionality and divide the steps into sprints of a certain length (1-2 weeks), based on the task description in Jira.

Release within a clear timeframe (3-6 months) takes place when bug testing and deployment is done automatically in Vercel. The cloud platform interacts well with Next.js, so it's easy to upload the next branch of code and fix bugs. Collectively, all of this ensures the success of the marketplace at the start.

Promotion strategies

While designing the application, involve sellers and suppliers in the future platform, negotiate with them the terms of cooperation. Once manufacturers are interested in the project, start promotion with contextual advertising and links. Analyze the demand for products and demand in a particular market. The developers will offer the right marketing modules. Use the methods of digital marketing:

• branding - creation of a distinctive corporate style;
• ordering advertising on news portals and readable bloggers (opinion leaders);
• motivational videos on YouTube and other video hosting sites.

Customize the platform for your target audience: if the platform was developed from scratch on a framework, the marketplace gets extended customization opportunities to increase recognition. Accelerate product bundle uploads to a specific category via API or CSV. The supplier will appreciate if the cabinet will automatically generate documents for finmonitoring. Setting up the SEO module attracts direct traffic: metadata is manually prescribed or autogenerated.

SEO-promotion with external and internal optimization, targeted advertising and email distribution, content marketing when applied in an integrated way give transitions and the desired target actions. Therefore, the more information on the Internet, the stronger the influx of customers and entrepreneurs. Of course, as long as the marketplace is convenient and reliable.

Visual, page and product loading, payment

Marketplace development options abound: if the functionality is complex, then it is built on the Django framework, and the code is written in Python. Both the seller and the client enter their personal accounts by means of a QR code. The admin monitors the validity of positions and cards, offers and the work of the functionality. The graphic part should be without "abstruse", extraordinary effects. Loading pages for more than 3 seconds sends the marketplace to the category of "red", with a negative mark.

It would be better to pay attention to the rating of sellers, filters and enable the secret shopper mode, add legal verification. Choosing payment methods implies integration with banking structures and payment operators - look at the commission, reputation, check on credit and installment functions. Statistics on prices - a service for the buyer: the developed AI will collect and show information about how the price of the product and analogs changed. Filters "compare" and "add to favorites" - additional comfort.

The API should simplify the loading of goods and interact with multiple codes. Developers provide for XML feeds and CSV files import, in extreme cases parsing positions from the online store. Do not forget about modules and plugins for importing from the seller's CMS, because manual loading is good for 10-20 items, but not 2000.

Marketplace expansion, customization and optimization

The extension of attributes in tags and descriptions, alts and fields, constructs like modules and assemblies, classes with interfaces is a guarantee that the client will find the product. It also applies to filters - a person should get the desired result in the end. Chat for interaction of three or four parties (buyer, dealer, logistician and supplier) contributes to the growth of rating and reputation. There should be a backup in case of failure. When a marketplace owner plans to place 200-300 thousand products and more on the service, the load increases. Therefore, it is necessary to:

• optimize requests;
• distribute the order of tasks on the browser and server;
• scale the system in auto mode;
• monitor CA taking into account geolocation to prevent "stagnation" of goods in warehouses;
• configure caching.

It may be necessary to connect a third-party service such as a search engine and servers in order to provide non-dynamic information. Flexibility, reliability and speed, and minimum number of failures are the "three pillars" on which a well-designed marketplace with development prospects is based. By the way, the "Python + Django" bundle is the technology of Google and Youtube, Spotify and Instagram developers. They may suit the owner of an advanced multi-vendor marketplace.

Plan for development and launch

A well-defined plan with technical specifications, task execution (from interface and functionality building to code writing and database connection), testing and deployment are behind every successful launch and implementation. A coordinated team works according to the following algorithm outlined in the diagram.

The best way to develop a mobile version is to focus on the "store in a smartphone or iPhone" rule. If the work on Frontend and Backend development is performed by different specialists, it is important that they coordinate certain elements between them. So that databases and libraries on the server interact with interface elements, the visible part and functionality of client services.

Business growth in figures and graphs

Success analytics on a regular monthly basis should include growth in the number of users and average check per user, variability of spending (minimum - maximum). Overall and net revenue is a joint effort of the economist and top management of the marketplace, which is evaluated through the lens of the customer lifecycle and customer value. Perfect business expansion and growth appears roughly as in the graph and has been developed in the perspective of 10 years.

If it looks like a sharply changing pulse - spikes are followed by sharp drops - then something is wrong. Perhaps the business model is wrong, or there are errors in geolocation settings. Bad SEO optimization, awkward UI/UX interface design and slow loading make the situation worse. If the drops happened after updates, it means that the new solutions provoked customer churn.

These issues and situations should be handled individually, turning to professional IT specialists who will choose the right framework and write the code, perform layout and testing, release the project and provide a guarantee for maintenance. As people say, victory and success have many parents, only failure is always an orphan.

That is why the proper choice of programmers, web designers and testers is the key to the success of a marketplace with a distinctive idea and marketability in a particular region or country.