In the last article, we discussed about choosing the right business model to build sustainable marketplace. Once you decide on the marketplace, you are closer to your own marketplace business. While the concept of online marketplaces sounds appealing to all, most entrepreneurs are unaware of the cost of building a online marketplace.
There are no bad business and investment opportunities,
But there are bad entrepreneurs and investors.
In the article on gig economy, we discussed how capital is one of the three important things for a business to grow. Deciding how much capital to raise would depend on the startup, operations, and customer acquisition costs. It is important to understand the cost of building the marketplace as it will also, then govern your pricing strategy. There is no way of generalizing the cost of building your own marketplace as they depend on the size and nature of your marketplace.
The First Investment
The first is cost of building the marketplace website. There are two main approaches of building your own marketplace website:
- Start building the marketplace website from scratch: This is a highly customizable option where you can have your entire marketplace designed. This would require you to either approach a single company that would develop your product end-to-end or collaborate with different companies and put together the platform. This option requires you to understand technologies to make sense of the options that are offered by the website development company. Due to concentrated efforts, the cost building with this option is very high and the go-to-market time for the marketplace is long.
- Develop your website using online marketplace platforms: There are various online marketplace platforms available that enable you to build your own website. The choice of which platform to go with depend on the use case and which technology framework would best support the requirements. Platforms like ShareTribe (built on Ruby/Rails) and Yelo (built on MEAN stack) enable you to build your own customizable marketplace website at an affordable price. Marketplaces like Airbnb and Uber are built on such technology stacks.
Our platform, Yelo helps you create your own marketplace website without any technical knowledge. The platform has an easy to use UI which helps you build your own marketplace for any business. Now build your marketplace website for selling goods, providing services, collaborating professionals and freelancer and renting spaces, all on the same platform.
Yelo helps you to:
- Create fully responsive marketplace website and app, which will be customized with your brand name, logo and domain.
- Get IoS and Android apps for your marketplace so that your customers can access the marketplace on the go.
- Control the entire marketplace with a powerful admin dashboard that enables you to set notifications, manage inventory, set pricing, manage promotions and referrals, manage merchants, and a lot more
Websites build on Yelo are completely scalable, and easy to integrate with other platforms such as delivery management, payment portals and advanced business analytics with a minimal cost of building.
Does your Marketplace have any special requirements, besides these offerings?
Yelo also offers you the option to build additional functionalities on the existing platform. So, now you never have to worry about getting your platform changed as your business expands.
Promoting Your Marketplace
Once you have selected the spend on building your marketplace website, the next cost of building your marketplace is the promotional expense. Unless people know about your marketplace, it would be impossible to start monetizing your marketplace. The choice and platform of promotion depends on your target audience and competitors. If you are a local marketplace, word of mouth and local ads make more sense than running a social media campaign. If you are trying to fight global market player, the spend would be more to attract more customers. You could manage the promotions from your marketplace. Yelo enables you to add and manage promotions and referrals using the admin dashboard. Now you can start both global or limited promotions on your marketplace, as per business requirements. The feature empowers you to categorically target your audience.
If you do not wish to spend a lot on advertisements, there are other ways of promoting your business. Content Marketing is a very effective method of generating organic traffic. Check out this amazing article by Neil Patel for more help on content marketing: https://neilpatel.com/what-is-content-marketing/
When Does The Returns On Investment Begin
The initial investment is a make or a break situation. There are always chances that the marketplace may not work or provide enough ROI as early as expected. So here are some tips:
- Never Expect A Lot: I think this is the first lesson for every business; My personal philosophy is ‘Aim High. Expect Low’. It takes a lot of hard work and luck for the any business to succeed. An online marketplace is no exception. Do not enter the space with a lot of expectations, it might not always turn out good.
- Minimum Viable Product: Instead of full-fledged investment into your marketplace website, first build a minimum viable product. This is the least you need on your marketplace to start operations. Use a major part of the available capital on getting more customers on board. Once you have business coming in, scale up your marketplace. You can build your MVP on Yelo in a day’s time at an economical price. Yelo is also easily scalable to match your growing business.
- Constant Validation: Keep a constant check on your marketplace to see if you are on the right track. Make smaller milestones; First 100 customers, First $1000, First 20 sellers, and so on. This approach will help you realize if the marketplace is turning out to be the way you wanted. Always remember, the marketplace was built to first solve a problem and then make money.
- Never Give Up Easily: Another lesson from the world of business. It is very difficult to forecast when a business would be successful. So, don’t let failures early in your marketplace business dishearten you. Keep validating your business model and if you believe that your marketplace is solving a problem, there is no reason to give up easily. It can take anywhere between 3-12 months for a marketplace to start generating any results; positive or negative. Approach investors with your idea and try to attract money into your marketplace just enough to keep you operational.
To sum it up, it is necessary to understand the costs of building your own marketplace. Be prepared to spend money into your marketplace to attain benefits with time. Start by choosing the right approach to build your minimum viable marketplace website. Attract customers by promoting your business. Try to keep your costs minimal and strive to have enough funds to be operational. Every business is like a tree; to bear sweet fruits, you need to invest time and efforts in nurturing the plant. So, do not give up easily!
If you want to know more about the costs of starting up your marketplace, check out Yelo and request for a demo and pricing today!