Create a marketplace
Driven by the e-commerce surge, create a marketplace is emerging as a top project for ambitious entrepreneurs. By 2024, it is estimated that e-commerce on smartphones and tablets will account for 60% of online sales worldwide, with a volume of around 2.6 billion euros (source: Statista). And that’s not counting the many customers who will visit and compare on mobile before making a purchase on their computer.
In the USA, studies show that 78% of American consumers consider a sustainable lifestyle to be important to them. This is expressed through their purchasing habits: 60% of buyers would pay more for a product with sustainable packaging, and 42% buy eco-friendly products “very often” or “always”. If you’re looking to set up a general marketplace or a marketplace focusing on a specific niche (sector, field, target, particular product types, etc.), we’ll explain here how to make your project a reality at the best possible price.
How to create a marketplace? 7 steps to build your platform!
New technological, marketing and logistical innovations are emerging, and each has the potential to radically change the way we buy online and in the e-commerce of tomorrow. So, before creating a marketplace (B2B, B2C or C2C), it’s important to think through 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 may evolve over time), here are the steps you need to follow to create a marketplace:
1) Get your online marketplace idea
Every project starts with an idea that can turn into a real success. Before creating your marketplace website, it’s important to think through your idea and clearly define your objectives in terms of target market, the products or services offered and the key features. Don’t underestimate the power of a simple idea. Like Etsy’s vision of connecting artisans and crafters with a global audience, your initial concept can blossom into a groundbreaking innovation.
How to get a good online marketplace idea ?
For an idea to become a reality, it takes focus and preparation. However, before you define every detail, you need a spark! Here are the main points to focus on if you don’t yet have a clear idea of your future online marketplace:
- Identify a pain point that both buyers and sellers experience.
- Your marketplace website should offer a solution that benefits both parties, creating a win-win situation.
- Target a large enough market to support your online business goals and ensure a healthy pool of users.
- Validate your target audience’s interest and willingness to use your marketplace website.
- Look for fragmented markets with numerous independent buyers and sellers.
- Your marketplace website can connect these fragmented groups and create value by bringing them together.
- Design your online marketplace to encourage frequent transactions and repeat purchases.
- Foster a loyal user base by creating a positive user experience and building trust within the community.
- Look for areas where existing buying processes are inefficient or underused resources exist.
- Your online marketplace could fill a niche gap in existing platforms or address inefficiencies by creating a more streamlined solution.
Validation of your idea
Before you invest significant time and resources building your marketplace website, it’s crucial to validate your initial concept. Pre-validation involves checking your assumptions about the problem you’re solving, the solution you’re offering (the online marketplace itself), and how you’ll make money (the business model).
The key step is talking directly with your both potential sellers and buyers. Engage them online or in person, and use open-ended questions to understand the challenges they face and their current solutions. Ask them to react to a prototype of your online marketplace idea and gather feedback. This feedback loop allows you to refine your concept and ensure it truly addresses a market need. By starting small and focusing on open-ended questions, you can effectively pre-validate your online marketplace idea and increase your chances of success.
Create a marketplace:
2) Study your target
The study of your target market coupled with the analysis of the main players in your sector of activity (competitors, alternatives, etc.) should enable you to determine whether your marketplace idea has the potential to succeed.
How to define your target market of your online marketplace ?
The study of the target must be done continuously, both before and after the creation of your marketplace. The objective here is to know your target both on the buyer’s side and the seller’s side. What are their needs and interests? How do sellers propose their offers (which channels they use, how they promote their offers…)? How do buyers 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 behaviour 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. Sellers and buyers 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 behaviours 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.
Decoding the market and competition
The study of your target market coupled with the analysis of the main players in your sector of activity (competitors, alternatives, etc.) should enable you to determine whether your marketplace idea has the potential to succeed. You have to analyze the strengths and weaknesses of your competitors. Evaluate their features, pricing, user experience, and marketing strategies to understand their approach. Your analysis should guide how your online marketplace will stand out, be it through unique features, exceptional user experience, or targeted marketing strategies.
In the other side, identifying emerging trends and consumer preferences within your niche. This action will allow you to tailor your offerings.
Dont forget to evaluate the size of your market to confirm that the potential revenue you can generate seems sufficiently interesting: if you are on a subscription business model, is the number of potential subscribers large enough? If you are on a commission basis, is the potential volume of business generated large enough? In any case, are there other possible sources of income in relation to the business model you are considering (see step 5)?
Gather as much information as possible to get a complete picture of your market. You can use different sources for this, such as specialized websites, market research, physical exhibitions, industry data, case studies, blogs, online forums, discussion groups on various social networks…
3) Set a budget: How much does it cost to create a marketplace website?
It is difficult to set a precise budget to create a marketplace website without determining the details of your project. Usually a online marketplace costs about $37,500 to build. 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 an online marketplace ?
It is 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. There are several players that offer solutions for creating a marketplace, such as Mirakl, Izberg, Wizaplace, Sharetribe and Medialem. Each of them has different offerings, with varying costs and functionality. For example, Wizaplace and Mirakl offer standard packages at over €100,000 plus monthly fees, while Sharetribe offers packages between $79 and $299 per month, but with limited functionality. Izberg does not disclose its prices, but 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 is between 9.500€ and 15.000€). If you want to know more about our rates, you can check our price examples.
Create a marketplace website for free with wordpress :is it really worth it?
WordPress offers a user-friendly platform to launch your online marketplace. However, building a truly functional online marketplace extends beyond basic WordPress skills. In fact, the creation of a fully functional marketplace website requires more than just basic WordPress knowledge. You’ll likely need to integrate various plugins, themes, and even custom code to achieve the desired features. Managing and maintaining this complex system of plugins and code can become challenging over time. Additionally, complex customizations often require extensive coding, which can compromise the user experience for buyers and sellers.
For long-term success of your online business, you have to consider a dedicated marketplace platforms website. These platforms come pre-equipped with features specifically designed for online marketplaces, streamlining the process and reducing maintenance needs.With this in mind, Umiddle offers a low-cost, user-friendly alternative. You can build your online marketplace quickly and easily without limitations imposed by complex integrations and with a free trial.
By understanding the limitations and advantages of building a marketplace website for free, you can make an informed decision about the best platform for your long-term goals.
4) Define your value proposition
The value proposition is a key element of any project that aims to create 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 summarises 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 in setting up 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
- Test different business models
Keep in mind that the choice of business model can have an important impact on the strategy of your marketplace. Choosing the right model depends on your online marketplace niche, target audience, and desired user experience. Some online marketplaces combine elements from different models to create a hybrid approach that suits your specific needs. Adaptability is Key ! For more details on this aspect, see our article on the business model to choose for your marketplace.
How to choose the right payment processing providers for your online marketplace?
A well-designed payment system is vital for a successful marketplace website. It serves two key functions:
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Building Trust: By acting as a “trusted third party,” the online marketplace handles transactions, reassuring buyers that their payments are secure. This intermediation role provides a safe space for buyers and sellers to conduct business.
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Facilitating Transactions: The marketplace website offers sellers a collection service by integrating various payment tools like PayPal, credit cards, or even in-house solutions. This simplifies the payment process for both buyers and sellers, while also allowing the online marketplace to collect its commission and redistribute the remaining funds to sellers.
Since transactions flow through the platform, ensuring their security is paramount. Consulting a lawyer is highly recommended. Their expertise can help you navigate legal requirements and draft comprehensive terms and conditions that protect all parties involved in your marketplace.
6) Develop a first version of the Marketplace website (MVP) and launch it
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 specialises in creating marketplaces like Medialem. We 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-boutique e-commerce site, an online reservation site, a directory of adverts sites with subscriptions or to create platforms 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 create a virtuous circle so that supply attracts demand and demand attracts supply.
Here are the 7 essential steps to creating a successful marketplace:
- Step 1: Get your right online marketplace idea
- Step 2: Define your target market
- Step 3: Establish a budget for managing and creating your marketplace website
- Step 4: Be innovative and define a value proposition
- Step 5: Choose the business model(s) best suited to your online marketplace
- Step 6: Develop and launch the first version of your marketplace website
- Step 7: Implement a marketing strategy to attract as many users as possible 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 development
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 customised 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. Start your project 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 manage marketplaces for services or the sale of physical products, but also any type of linking site.
Price
A basic matchmaking platform starts at around 7,500€. You do not pay any additional costs (no SAAS, no subscription). Consult our article dedicated to this subject to get an idea of our prices.
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 project 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 Leboncoin, 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.
