Create a marketplace

Why create a marketplace ?

link marketplace users

According to OC&C’s report, global consumer spending on digital marketplaces reached $4.1 trillion in 2022, with $3.4 trillion coming from sales made by third-party sellers using these platforms. This marks a significant increase from the $2.4 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 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, with annual growth of 36% between 2019 and 2022. 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 guide

Whether you want to create a generalist 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. In what follows, we'll use the term “marketplace” to refer to any platform that brings suppliers and customers together, whether for buying and selling or renting products, providing or exchanging services...

Before creating a marketplace (B2B, B2C or C2C), it's important to think carefully about your idea and clearly define your objectives in terms of target market, products or services offered and key functionalities. Once you've clarified this initial idea (which certainly evolve over time), here are the steps you need to follow to create a marketplace:

build a marketplace

1) Study your target audience: how to proceed?

Target research must be conducted continuously, both before and after the creation of your 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 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.

It is important to stay in touch with your audience to understand their needs and to be able to adapt your value proposition accordingly. Ultimately, this may even help create your own community that will benefit your marketplace.

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 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). 

 

3) Set a budget: How much does it cost to create a marketplace ?

create an online 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 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 marketplace can meet them in a unique and innovative way.
  • Analyse the potential advantages and disadvantages of your 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.

Your value proposition may evolve over time and it is advisable to re-evaluate it regularly to ensure that it still meets the needs of your target audience.

5) How to choose the best online marketplace business model ?

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 !

Keep in mind that the choice of business model can have an important impact on the strategy of your 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

marketplace creation

It is important to develop an 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.

Their feedback becomes invaluable for further development, and their positive experiences can cultivate a strong community around your marketplace from the very beginning. This loyal user base then transforms into your biggest advocate as your marketplace scales and flourishes.

There are several ways to develop your marketplace, but if you don’t have the technical skills in-house, you can use a development agency that specializes in creating marketplaces like Medialem. Our marketplace builder use a 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.

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 marketplace project on social networks, focusing on those used by your target
  • 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.

To sum up, here are the 7 essential steps to create a successful marketplace :

  • Step 1 : Get your online marketplace idea
  • Step 2 : Studying your target
  • 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 : Build a marketing strategy to attract the most users to your platform

Good to know

  • The creation of a 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 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.

By opting for our custom development solution, you benefit from a fully customized platform that perfectly meets your needs. 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.

build an online marketplace

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 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.

“Really satisfied with this service which required a tailor-made development on complex functionalities. We continue to work with Medialem for our developments”
“Great job at the dev level but also on webmarketing support (SEO, Adwords, Facebook... etc). I recommend!”
K. Noureddine
Co-Founder
“Medialem is a team that listened to our needs, they were able to transform our ideas into a concrete project”.
G. Boundzit
Founder
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