7 Essential Steps to Follow When Starting an Online Marketplace
Online marketplaces are a hot trend now — such names as Amazon, Etsy, or eBay are on everyone’s lips. There is no wonder that more and more people want to create their alternatives to the existing e-commerce platforms.
In this blog post, I will share the step-by-step guide to building an online marketplace. I hope that with guide the process of development of a marketplace will become clearer for you.
1. Find the niche for your marketplace
Decide what goods or services will be available on your marketplace. You can either choose an all-in-one approach or narrow your focus.
I’d recommend that you take the cue from Etsy and concentrate on offering a particular product category aimed at a specific audience. This way, you will bring your customers a more personalized user experience. The thing is that users will be searching for narrowly defined goods on your e-commerce website.
2. Choose a monetization strategy
The right revenue model will allow you to generate a profit in your online marketplace.
Choose one preferred monetization strategy for a start. When your marketplace business scales, you may try to add other revenue models. Sooner or later, you will define the most beneficial combination.
The most commonly used monetization strategies are as follows:
- Commission;
- Subscription fees;
- Transaction fees;
- Premium listings;
- Advertising;
- Listing fees.
For example, Etsy charges the following listing fees:
3. Define the required features for your platform
Exceptional user experience can help you fight off your competitors and encourage users to return to your marketplace website for more purchases.
The proven way to achieve this goal is to implement the right functionality. It should allow users to take the desired action, namely to find and purchase the desired item quickly and effortlessly.
At the same time, vendors should face no issues with listing their products and promoting on your e-commerce platform.
Below you can find the list of must-have features that should be provided on your marketplace from the very beginning:
- Product page;
- Authorization and security;
- Registration for both vendors and buyers;
- Managing user profile and personal details update;
- Controlling items listing;
- Search & filters;
- Statistics;
- Ratings/reviews;
- Payment functionality.
4. Create and launch an MVP first
It would be a sound idea to launch an MVP of your e-commerce platform before investing in building a fully featured product. In simple terms, you need to release a solution with limited functionality to present it to early adopters and collect their feedback.
Their reaction will tell you whether it is reasonable to proceed to the software development stage, or it is better to give up your idea.
With the help of the MVP concept, you will get the following advantages:
- Fast release;
- Saving time and funds;
- Learning customers’ needs;
- Finding early adopters;
- Flexibility and clear focus.
5. Take care of the design
Both UI and UX design matter, as a visually appealing platform will help you stand out from the competitors. Let your marketplace evoke the emotions and feelings of your target audience. This way, you can stimulate them to make purchase decisions.
Take a look at the main design principles you should follow for offering an excellent user experience:
- Make navigation easy. The simpler it is to use a website, the happier its visitors are.
- Give the right amount of information. Avoid overwhelming your audience with excessive data. Focus on high-quality photos of selling items instead.
- Increase user engagement. Make sure each visitor knows what to do at each step of the purchasing process.
Etsy knows how to satisfy their customers with an intuitive navigation, clear marketplace idea and security guarantees.
6. Acquire vendors and buyers
Starting an e-commerce platform is not easy. Attracting users to your brand new marketplace can be even harder. The thing is that you need to acquire two equally important parties, which are supply and demand. It is the so-called chicken and egg dilemma.
There are many options on how you can address the chicken and egg problem. Let’s take a look at the most common user acquisition techniques:
- Organize workshops or educational events;
- Add handy features;
- Visit trade fairs;
- Make a deal with a celebrity;
- Take care of the quality;
- Consider producing your goods;
- Provide the most valuable market size with monetary subsidies;
- Introduce time or demand constraints.
The demand constraints on Booking.com:
7. Promote and grow your e-commerce platform
Promotion and growth are quite challenging tasks for any platform type. Below are several efficient techniques to grow your online marketplace website:
- Promotion on social networks (Instagram, Facebook);
- SEO optimization;
- Email Marketing;
- Paid Ads.
Conclusion
As you can see, the launch of an e-commerce platform is no easy feat. There are numerous things you should consider.
I hope that this comprehensive guide on marketplace development will be a good help. Armed with this valuable information, you will start a thriving marketplace business.
