How to Build a Profitable Online Marketplace

Inspired with Amazon’s success, the number of visitors of the Alibaba website, and Ebay’s revenue, many entrepreneurs worldwide start turning their heads towards the online marketplace’s potential. The idea looks attractive. However, its implementation may cost you a fortune; besides, it requires full dedication and hundreds of work hours.

We analyzed the major mistakes of eCommerce business freshmen and prepared this brief but informative guide on how to build a successful online marketplace. We will lead you through 8 significant questions with answers, explain how to develop an idea and multiply your bank account. Follow our lead and don’t miss the opportunity to join the list of industry leaders!

8 questions (with answers) about building a profitable online marketplace

Here, the whole process is covered: from the initial simple thought to viable marketplace growth. So let’s start from the very first question that should come to your mind when the idea is born:

1.   Is there a real pain to heal?

First and foremost, make sure the market really needs the product you would like to launch. There is a bunch of eCommerce products for a variety of needs; there is a huge number of marketplaces that have already failed. If you don’t want to join the list of losers, make sure that the market demands your eCommerce platform. You must offer something unique to find your place in the eCommerce world.

2. What sort of marketplace would you like to build?

This is a complex question that includes several critical elements:

Products and services

Try to define precisely what type of products or services you want to provide. This may be anything from hand-made goods to cleaning services; the point is to clarify your goal and proceed with real actions.

Business model

A few lines above we agreed that your marketplace must become successful once. To make a first tiny step towards its success, define clearly what model you would like to employ to grow your revenue. This point requires detailed research. Clearly, your revenue may depend on:

• Products or services providers who post their products on the pages of your marketplace;
• Customers who buy or use offered products and services;
• Third-party companies you advertise on your marketplace etc.

Decide what marketplace users should pay for and opt for a subscription-based, freemium, advertising-based or listing-based business model.

3. Who will build an online marketplace for you?

No matter what type of solution you plan to launch, you need to hire someone who can build a marketplace from scratch. Select one of the following options:

In-house development team

This is a nice but expensive way to build cooperation with software engineers. Recruitment, hiring and onboarding processes take too much time. And this wasted time may cost you primacy.

Freelance specialists

You can find thousands of IT freelancers on specialized websites like Upwork or Freelancer. However, this type of cooperation is risky: you never know if a person you employ won’t simply block your contact and disappear in the middle of a development sprint.

Outsourcing company

Fortunately, there is another option. An outsourcing company is an organization that works remotely but dedicates its resources, time and skills to your project. It is cheaper than in-house development and much more reliable than hiring a freelancer.

4. What tools would you like to employ?

There is an entire galaxy of software development tools you and your team can use to bring the idea to life. From specific eCommerce-oriented platforms like Magento or Demandware to pure programming languages like PHP, Ruby and JavaScript – it is up to you what to choose. But first of all, ask your engineering partner for a piece of advice:

• Your development team is more aware of innovational tools on a model software development market;
• These people have expertise in their particular field and technologies; thus, they may insist on the tools they have got used to.

5. Who are your potential competitors?

Even if it seems like your product is one-of-a-kind, it is very likely that a similar marketplace already exists. You may not know about it yet but it grows rapidly and takes your potential users away. So what to do?

• Find a competing product and try it;
• Test it and reveal its imperfections;
• Take a look at former users’ reviews and discover if they are satisfied with a product you plan to outrun;
• Study on its mistakes and improve your own idea, business model and development process.

Your rivals’ experience is a source of priceless information you should use for your marketplace improvement.

6. What about the essential functionality?

There are several features you should include in your eCommerce app:

• Products, categories and catalogues with the possibility to add detailed descriptions and HD photos;
• Great filtering to make the product search flawless;
• Automated order processing to eliminate manual work;
• Detailed reports describing the number of visitors and bounce rate;
• Integration with a CRM system;
• Customer support button accessible on each page of the marketplace.

Besides these ones, you can add more useful functionality and extend the opportunities provided by your eCommerce platform.

Discussing the functionality, we would like to advise you to keep an eye on UI/UX as well. Here are simple tips for that:

• Hire an experienced software designer;
• Keep the web pages simple and clear;
• Stick to one color scheme;
• Simplify the navigation and make it intuitive;
• See your website with your visitor’s eyes.

7. Haven’t you forgot about testing?

The significant thing is to make sure everything works and looks properly. Following steps will help you to test the solution properly:

• Ask the development team to cover their code with Unit tests;
• Hire a qualified tester to check the functionality manually;
• Hire Automation QA engineer to upgrade standard testing procedure and make its results more reliable.

At the same time, you can always devote several minutes and check if everything works according to documentation, too.

8. Are your customers satisfied with the marketplace you offer?

This is it! You have your marketplace up and running! But does this mean you have nothing to do? No, it doesn’t. You as its founder should now invest your time and energy to its improvement.

First of all, make sure your customers love it. Measure the following statistics:

• Number of active users that visit your website during a certain period of time;
• Bounce rate or the number of visitors who opened your marketplace and left it right away;
• Time people spent browsing your marketplace;
• The percentage of products that were successfully sold;
• Number of repeat purchases.

Also, employ marketing tactics, advertising and PR methodologies popular in your specific niche.

Final thoughts

And last but not least, we prepared the top 5 factors that may influence your marketplace success:

• Thorough project planning;
• The clear understanding of the requirements;
• Deep research of each field you face with during the development process;
• A continuous dialogue with the users;
• Reliable engineering partner.

Having reliable support right by your side would make everything easier. And if you need a tried and tested tip on how to find a reliable development team, just drop us a line.

Start acting today and launch a marketplace that will win users’ hearts!