Create an online marketplace
What is an online marketplace?
Marketplace refers to any platform that brings suppliers and customers together. They can be professionals or individuals who exchange goods or services in various ways (rentals, purchases/sales, auctions, bartering, donations, service exchanges…). Amazon, eBay, Aliexpress… are some of the generalist marketplaces for buying and selling that immediately come to mind. There are also many marketplaces dedicated to a specific field or with different operating modes. Here is a small list of various examples:
- Zillow, an online marketplace for real estate listings
- OfferUp, a platform for buying and selling locally
- Nordstrom, specializing in apparel
- Craigslist, the famous classifieds site
- Uber, the highly publicized transportation service connecting users and drivers
- Lyft, the popular ride-sharing service
- Airbnb, the globally known platform for rental properties between individuals
- Upwork and Fiverr, platforms connecting companies with freelancers for various projects
- Wish, known for its affordable and varied product offerings
- Booking, one of the largest online travel agencies
- Etsy, which emphasizes handmade products
- Zalando, specializing in footwear and fashion
Why create a marketplace?
In 2024, global consumer spending on digital marketplaces reached $6.3 trillion, with $3.4 trillion coming from sales made by third-party sellers using these platforms. This marks a significant increase from the $4.4 trillion in 2019. Marketplaces now account for around 60% of all e-commerce spending, underlining their dominant position in the digital economy. By 2025, online marketplaces are expected to overtake direct e-commerce spending in established categories such as apparel, travel, and books.
We’re buying more and more from online marketplaces and less and less from single-brand eCommerce sites.
This shift is also driven by the rise of new specialized models such as vertical-focused, second-hand, and local marketplaces. These specialized marketplaces have overtaken the generalists. Vertical marketplaces offer tailored experiences for specific categories, while second-hand marketplaces thrive due to growing consumer interest in sustainability and affordability. Local marketplaces, particularly in grocery and food delivery, have seen significant growth, driven by demand for fast, local delivery services.
These emerging models therefore offer new opportunities for creating marketplaces by meeting consumers’ new expectations in terms of environmental impact, sustainability and personalized experiences.
How to create a marketplace? The 7 essential steps
Whether you want to create a generalist online marketplace or one focused on a specific niche (sector, field, target, particular product types...), we'll explain here how to make your project a reality at the best price.
Before creating a marketplace (B2B, B2C or C2C) it's essential to carefully consider and define your idea. This involves clearly identifying your target market, the products or services you will offer, and the key functionalities of your platform. Conduct in-depth market research to understand user needs and competition, and ensure your business model is sustainable. These initial steps will lay a strong foundation for developing a good idea to a competitive marketplace.
Once you've clarified this initial idea (which certainly evolve over time), here are the steps you need to follow to create a marketplace:
1) Study your target audience: how to proceed?
Target research must be conducted continuously, both before and after the creation of your online marketplace. The goal is to understand your target audience on both the seeker and provider sides. What are their needs and interests? How do providers present their offers (what communication channels do they use, how do they promote their offers)? How do seekers search for these offers (keywords on search engines, social networks used, e-commerce sites or marketplaces used)?
- Identify the characteristics of your audience: determine the gender, age, geographical location, interests, buying behavior, and other characteristics of your target audience.
- Define your audience by creating “personas” that represent your target users and help you better understand their needs and interests. Providers and seekers have different needs and interests, so it will be necessary to create separate personas for each user group.
- Talk to your target audience: conduct qualitative interviews with people who fit your target audience to gather as much information as possible. Once your online marketplace is launched, talk to your users to get feedback on what already exists and suggestions on what they want.
- Stay in touch with your audience: use tracking and measurement tools to monitor your audience’s engagement and to collect data on their behaviors and interests.
- Use keyword research tools to understand the terms and phrases users are searching for in your industry.
Airbnb’s success stems from its thorough research into understanding both hosts’ and guests’ needs before launching. The founders identified that hosts wanted a safe and easy way to rent out their properties, while guests sought affordable and unique accommodations. By interviewing potential users, creating detailed personas, and continuously gathering feedback through surveys and reviews, Airbnb gained deep insights into their target audience. They used tracking tools to monitor user engagement and behaviors, allowing for continuous adaptation of their platform. This comprehensive understanding enabled Airbnb to refine its value proposition, creating a compelling, user-tailored, community-driven marketplace that effectively meets the needs of both hosts and guests.
2) Analyze your market and competition
A market study coupled with the analysis of the main players in your sector (competitors, substitute solutions, etc.) should allow you to determine if your online marketplace idea has the potential for success. Here are some elements to consider during the market study for your future marketplace:
- Study the competition in your sector and analyze their value proposition, business model, target audience, and marketing strategy.
- Evaluate the size of your market to confirm that the potential revenues you can generate seem sufficiently attractive: if you’re on a subscription-based business model, is the number of potential subscribers large enough? If you’re on a commission basis, is the potential volume of business generated large enough? In any case, are there other possible sources of revenue in relation to the business model you’re considering (see step 5)?
- Analyze the opportunities that could be exploited by your marketplace and identify the threats that could impact your project.
- Follow the trends in your sector to understand potential future developments and opportunities.
Collect as much information as possible to have a complete view of your market. You can use various sources for this, such as market studies, physical trade shows, industry data, case studies, blogs, online forums, and discussion groups on various social networks… (identify which social networks your target audience uses the most). Uber’s success as a marketplace is attributed to its comprehensive market and competition analysis before launching. By conducting extensive market research, Uber understood the transportation industry’s pain points for both riders and drivers. They studied existing taxi services, ride-sharing platforms, and public transportation options, noting the inconveniences and unreliability of traditional taxis, thus positioning themselves as a more reliable alternative.
Uber evaluated market size by assessing transportation demand in various cities and recognized the significant potential due to urban population growth and increased smartphone use. Identifying opportunities like urbanization and the sharing economy trend, along with threats such as regulatory challenges and competition, Uber followed industry trends and anticipated future developments, such as mobile app usage and service expansion.
3) Set a budget: How much does it cost to create a marketplace?
It is difficult to set a precise budget to create a marketplace website without determining the details of your project. Usually an online marketplace costs about $37,500 to build one. However, the total cost can be as low as $25,000 or as high as $50,000. An online marketplace with a low number of features (also known as a minimum viable product, or MVP) will be more affordable than one that includes all intended functionality.
Here are some things to consider when setting a rough budget:
- Platform and feature development: this may include the cost of developing the website, mobile app, integrations with third party systems, costs of developing features such as online payments, messaging systems, search filters, etc.
- Design: this includes the costs of designing the graphic charter, any mock-ups, icons, etc.
Maintenance and support: these are the costs of maintaining the site, fixing bugs, adding new features, etc. - Marketing and advertising: costs related to promoting your online marketplace, such as online advertising campaigns, collaborations with influencers, events, etc.
- Overheads: costs related to hosting the site, purchasing domain names, purchasing SSL certificates, etc.
Which solution to create a marketplace?
It’s important to note that these costs can vary greatly depending on the complexity of your project, the functionality required and the quality of the developers and designers you hire. What’s more, if you’re thinking of creating a marketplace for free with WordPress or Magento, you’ll soon be limited by the free options available. Indeed, most of these solutions are not adapted to the needs of marketplaces. You’ll need to implement a whole raft of additional modules for a fee. In the medium and long term, this is not an advantage. There are several players that offer solutions for creating a marketplace, such as Softr, Cs-cart, Syndicode, Sharetribe and Medialem. Each of them has different offerings, with varying costs and functionality. For example, Syndicode have most common project size between $50.000 and $200.000. Sharetribe offers packages between $79 and $299 per month, but with limited functionality. With Cs-cart ($295 per month) and Softr.io ($349 per month) you have to count the integration fees, a monthly user licence and the costs related to the development of the front-end which is left to the client. At Medialem, we offer rates with an optimal quality/price ratio (a good order of magnitude for a very complete MVP). If you want to know more about our rates, you can check our prices.
4) Define your value proposition: how can I stand out by creating my marketplace?
The value proposition is a key element of any project that aims to build a marketplace, as it defines what makes your business unique and what differentiates it from the competition. Like we say it before, begin by thoroughly understanding who your customers are and analyze the existing market to identify gaps or unmet needs. Your value proposition should address these gaps or offer a better solution than what’s currently available.
To define your marketplace’s value proposition:
- Identify the needs of your target audience and think about how your online marketplace can meet them in a unique and innovative way.
- Analyse the potential advantages and disadvantages of your online marketplace compared to the competition. Build on your strengths to stand out.
- Formulate a short, punchy sentence that summarizes your value proposition, so that you can communicate it easily. Example: “Connect with passionate collectors and discover unique treasures in a secure and trusted marketplace.”
- Use your value proposition as a guideline for your marketing strategy, to ensure that you communicate consistently with your target audience.
Etsy stands out in the competitive marketplace by effectively defining and leveraging its unique value proposition. Recognizing a market gap, Etsy connected independent artisans and crafters with customers seeking unique, handmade, and vintage goods. It identified the needs of independent creators who required a global platform and buyers desiring exclusive items. Analyzing competition, Etsy realized no other e-commerce platform catered specifically to the handmade and vintage niche, allowing it to differentiate itself. By focusing on community support and providing tools tailored to small sellers, Etsy built a loyal user base. Its clear value proposition, “Keep Commerce Human,” resonated with its audience, emphasizing personal connections and meaningful purchases. This strategic approach has enabled Etsy to maintain a strong, unique market position and foster a vibrant community of creators and customers.
Decide on the most suitable business model for your marketplace, taking into account the different options available and the advantages and disadvantages of each.
The choice of business model is a key element to build a marketplace, as it determines how you will generate value and how you will be paid. There are several possible business models for a marketplace, such as commission, subscription, advertising…. Here are some things to consider when deciding on your marketplace business model:
- Analyse the needs of your audience and think about how your offering can best meet their needs.
- Study the business models of your competitors and think about how you can differentiate yourself.
- Evaluate the advantages and disadvantages of each business model
- You can also test different business models !
Fiverr successfully chose and refined its business model to align with its market and strategic goals by operating on a commission-based system. Recognizing that freelancers needed a simple platform to offer services without setup complexities and that buyers wanted affordable, easily accessible services, Fiverr differentiated itself from competitors like Upwork by simplifying the process. By evaluating and opting for a commission-based model, Fiverr minimized upfront costs for freelancers and ensured its success was tied to theirs. Initially offering flat-rate services at $5, Fiverr later introduced tiered pricing to expand its market appeal and revenue potential. This careful analysis and continuous refinement helped Fiverr establish a scalable and profitable marketplace. For more details on this aspect, see our article about the business model to choose for your marketplace.
6) Develop a first version of the Marketplace website (MVP) and launch it
It is important to develop MVP (Minimum Viable Product) to start your marketplace, as this will allow you to test your market and gauge user interest in your marketplace before you spend a lot of money on development. It is also important to keep improving your marketplace over time based on feedback from your users.
The MVP approach allows you to test the waters with minimal investment. By focusing on core functionalities that deliver genuine value to early adopters, you can get your marketplace in front of real users at a fraction of the cost of a fully loaded platform. This real-world user feedback becomes the cornerstone of your development process, guiding you as you iterate and refine your marketplace based on user needs.
Zappos exemplified the successful use of the MVP approach in launching its online shoe marketplace. Founder Nick Swinmurn initially bypassed heavy investment in inventory and complex website development by simply photographing shoes from local stores and posting them online. When orders came in, he would purchase and ship the shoes directly from the stores, validating the demand for online shoe shopping with minimal upfront costs. This MVP allowed Zappos to quickly gather real-world feedback, which was crucial in refining their business model, product offerings, and customer service. By iterating based on user feedback, Zappos improved its platform, expanded inventory, and enhanced customer experience, ultimately scaling effectively to become a leader in online retail.
7) Implement actions to attract supply and demand
In 2024, marketing is an integral part of business communication strategies. Therefore, develop a marketing strategy to attract sellers and buyers to your marketplace (or more generally, offerers and seekers if it’s not about buying/selling).
Here are some actions you can take to attract buyers and sellers to your marketplace:
- Promote your online marketplace project on social networks, focusing on those used by your target like the ebay strategy.
- Implement a content strategy by publishing quality articles that interest your target audience.
- Use online advertising platforms, such as Google Ads and Facebook Ads. The latter handles advertising on Facebook and Instagram.
- Promote your value proposition to your target audience and use it as an argument to attract both offerers and seekers.
- Offer special deals for early adopters of your marketplace, such as discounts to encourage them to sign up and use your marketplace.
- Promote your competitive advantages, such as low fees, quality products, selected sellers, etc., to distinguish you from your competitors.
Acquiring suppliers and requesters is an ongoing process. The aim is to build a virtuous circle so that supply attracts demand and demand attracts supply.TaskRabbit grew its marketplace by attracting both taskers and users through strategic actions. They promoted their platform on social media, focusing on networks frequented by their target audience, and implemented a content strategy with blog posts, guides, and customer stories to educate users. Online advertising on platforms like Google and Facebook helped them reach specific demographics and locations.
TaskRabbit clearly communicated its value proposition of connecting people with skilled professionals for everyday tasks, reinforced by marketing campaigns. Offering special deals for early adopters incentivized initial use, while highlighting competitive advantages like a rigorous vetting process, insurance coverage, and a wide range of services built user trust. These strategies ensured a balanced marketplace and contributed to TaskRabbit’s growth and success in the gig economy.
To sum up, here are the 7 essential steps to create a successful marketplace:
- Step 1 : Study your target
- Step 2 : Analyze your market and competition
- Step 3 : Establish a budget to manage and create your marketplace
- Step 4 : Be innovative and define a value proposition
- Step 5 : Choose the best business model for your marketplace
- Step 6 : Develop and launch a first version of your marketplace
- Step 7 : Set up a marketing strategy to attract the most users to your platform
Good to know
- The creation of an online marketplace also implies the establishment of an appropriate legal framework in order to guarantee the protection of the users and creators of the marketplace. To do this, a few key elements must be taken into account:
- Clarify the responsibilities of each stakeholder when drafting the marketplace’s General Terms and Conditions (GTC). Be clear, transparent and fair. This will protect you in case of problems or disputes.
- Establish clear terms and conditions for fees, commissions, account termination and dispute resolution.
- Establish intellectual property protection policies to avoid copyright, patent and trademark infringement.
- Protect data and ensure the privacy and security of its users’ personal data.
- Comply with local and international tax laws regarding the collection and reporting of sales and withholding taxes.
Do not hesitate to contact a legal specialist or lawyer for further information.
Custom marketplace building
At Medialem, we offer the best custom marketplace development to meet the unique needs of each project. Our flexible and scalable platform allows us to support the particularities of each project, whether it be the business model, the matching process, the categorisation of ads or profiles, the specificity of the products or any other element on the site even if it is not a specific feature of a marketplace.
Our marketplace builder use the best modular architecture to manage all possible workflows on all types of marketplaces, so the possibilities are very varied. It can be a multi-vendor e-commerce website, an online reservation site, a directory of adverts sites with subscriptions or to build marketplaces with advanced matching processes (matching algorithm, specific processes)… It can also be a mixture of several elements and each marketplace can have very specific functionalities. In addition, you have ownership of the source code, so you are not dependent on an external solution.
Performance
Opt for a high-performance marketplace based on our experience and implemented according to your needs.
Reliability
Benefit from our experience and get an already proven platform. Build your marketplace with a reliable and maintainable site ready to support your success.
Personalization
Free yourself from the customization limits of CMS such as WordPress, Prestashop. A plugin specializing in the creation of a marketplace will also present limits, especially in terms of developments or during updates.
Scalability
Your linking platform may need to evolve for various reasons: meet user needs, add features, adapt to external requirements (legal or technical)...
Multi-skilling
Our platform adapts to all your projects (multi-vendor e-commerce, ad site, carpooling site, etc.). We build marketplaces for services or the sale of physical products, but also any type of linking site.
Price
For a transparent breakdown of our pricing, check out our detailed article on marketplace creation costs. It explores different features and their impact on the investment. This will help you get a good idea of what your marketplace might cost.
More than development
Our service is not limited to development but also includes support throughout the project. Every good project starts with a good specification. We make sure to have understood all the needs of our customers before establishing the technical specifications of the project. We bring all our expertise on marketplaces and networking platforms, webmarketing and the world of the web in general to guide and be proactive at each stage of the project. In particular, we support our clients after the launch of the marketplace on services such as growth hacking and webmarketing.
Accompaniement
Specification
Advices
Web marketing
SEO - SEA
Growth hacking
Tracking
Tools integration
Training
Marketplace creation quote
Do you want to create a marketplace like ebay, Craigslist or the future Amazon? We can organize a point to discuss your project in order to clearly identify your needs. This will be an opportunity to give you a demonstration of how our marketplace platform works.
