How to Start Your Own Online Marketplace
How to Start Your Own Online Marketplace
Despite the wide variety of existing trading platforms, such as Amazon, Etsy or Aliexpress, creating your own marketplace is a great idea, since the e-commerce market is growing at 15-20% per year. The main thing is not to make a mistake with the choice of a niche and as quickly as possible to switch from an idea to MVP. Our article will help you with this. We will tell you how to start your marketplace from scratch and show with real examples which solutions lead to success and which ones to failure.
The first thing to do after you decide to launch a marketplace is to choose a niche for your project. This may be the sale of electronics, renting child seats, selling photos, travel services, home delivery or dating (yes, Tinder is also a market place). Any product or service may become a niche for your site if the following conditions are met:
There is a critical mass of suppliers and buyers. If there are many buyers and suppliers on the market, then it will be much easier for you to provide value and be relevant than when there are few buyers / suppliers. This is due to the fact that when the market is small (or too “niche”), it is unlikely that many suppliers will want to use your platform, since in a small market all buyers usually know the suppliers personally, which means they do not need the services of your market place. Here are some examples of such markets:
Always study the price / frequency ratio of purchases, because even if you find an empty market, create an excellent website and win the love of customers, you will fail with unsuccessful combination of these indicators. As once, after two months of operation, NextMover failed - a platform where you could find a person and a truck to help with moving or transporting something.
Another option is the path of Walmart and other retail chains. They buy goods from many suppliers and keep them in warehouses and store shelves. Thanks to this, the buyer can receive the goods on hand on the day of the order or check it in person (put on, turn on, smell) before placing the order. Such sites earn on speculative value, that is, they sell goods more expensive than bought from suppliers. Expedia uses a similar speculative monetization model: the service buys rooms from hotels and sells them at a premium.
We will analyze these two and other monetization models in more detail:
When you have an agreement with suppliers, you can begin to attract buyers (not before, since there is nothing to sell). To do this, you need to run test advertising campaigns on Facebook, Instagram, Google, YouTube and other platforms. What should be successful marketing campaigns, read the article «The Best digital marketing strategies for startups», examples in the article «10 Successful digital marketing strategies for e-commerce (real cases)».
To create your own marketplace, you can choose one of three approaches: development from scratch, use ready-made templates, or resort to a SaaS solution. Each of these methods has its pros and cons.
Development from scratch. The design, user interface and most of the functionality are developed independently or with the help of a technical partner, which allows you to make the site unique and maintain flexibility in the development process and the subsequent development of the platform. It is expensive and time consuming, but it is the best choice if your project is advanced, innovative and requires a special approach.
Ready platforms. It involves creating a marketplace using open source software such as Cocorico, Mayocat or Sharetribe, or using WordPress templates. Of course, the result will not be as unique as when developing from scratch, but such an approach saves money and time. Especially if you use a WordPress theme.
SaaS solutions. SaaS means “Software as a Service”, that is, you, in essence, will use a marketplace template with limited design and functionality settings. These can be platforms like Sharetribe, Marketplacer, Shopify, Oracle Commerce, Demandware, or Near Me. The main advantages of this approach are simplicity and low start cost.
You need to launch your business idea on the market as soon as possible, while you don’t even need to create your own platform, website or application. Sometimes it’s enough to test concepts in the simplest way.
When you receive confirmation of the concept and first users, you can begin to develop your product and, which is also important, to scale it. But this must be done gradually, carefully considering every moment and moving in small steps. This approach will make it possible to further test the product and idea at the lowest cost and risk, and will also help to avoid most of the growth problems.
In Cycle.Land, they saw their mistake on time and changed development strategy. Now they rely on the referral program and move forward only after they gain leadership in the cities where they are already represented. Cycle.Land was launched in 2016 in Oxford, UK, now it is represented in many cities in Western and Central Europe, North America, Australia and East Asia.
#1. Step 1: Choose A Viable Niche
#2. Step 2: develop a value proposition
#3. Step 3: choose a business model (monetization)
#4. Step 4: develop a marketing strategy
#5. Step 5: decide on a development approach
#6. Step 6: create MVP as quickly as possible
#7. Step 7: Scale Your Project