Have a bunch of your marketplace ideas but don’t know how to get started with a tiny budget? Of course, your initial budget validates your marketplace idea and helps you get your business off the ground. But you don’t need millions of dollars in your war chest to make it happen. All you need is the right business model and just enough capital to build a platform that caters to providers’ and customers’ needs. And if you’re successful in making your new venture appealing to the markets in the first few years, you are certainly going to reap the rewards for decades to follow.
No matter how brilliant the marketplace idea is, it boils down to the cost at some point. So if you see yourself building an online marketplace platform someday, here are a few major costing plans that you need to look at.
In this guide, we will help you understand the financial proposition of starting an online marketplace.
1. Cost of building the marketplace
- Developing a marketplace platform from scratch
A self-hosted platform always appears like the most convenient choice, simply because you get to play by your own rules by having access to the code and experimenting with developing custom features. However, supporting this website-developing approach could take away a substantial business cost.
To begin with, you need a specialised IT team for developing, monitoring, and logging. The costs related to security certificates and other day-to-day technical tasks can also be surprisingly high, which might exhaust most of what you’ve set aside for the website building project.
Building an efficient marketplace website from scratch is complicated and time-consuming, which prolongs your go-to-market time. It usually takes up to three months to build your website.
- Develop a website using online marketplace building platforms
The fastest and easiest way to start the best online marketplace platform is with a Software-as-a-Service (SaaS) platform. An off-the-shelf platform allows you to build your site without writing lengthy codes or hosting your server. While you may not be able to make room for high-level customization, the marketplace building platforms available today are equipped with AI-powered technologies that will take user experience to a whole new level. However, not every marketplace builder is the right fit for your marketplace idea; this guide will help you choose the right marketplace software.
With Yelo, you can build a marketplace platform in less than a day with no technical expertise and zero coding experience. It helps you to:
- Create a fully responsive marketplace website and app for any business with a customized brand name, logo, and domain,
- Creates a platform that can be diversified or changed based on evolving business requirements,
- Allows business mobility by making IoS and Android apps for your marketplace,
- Create a super easy and efficient admin dashboard that enables you to set notifications, set pricing, manage inventory, promotions, and referrals, manage merchants, and shows advanced business analytics insights.
2. Getting the word out
Marketing is an essential part of the costing plan. Once you’ve built your marketplace platform, the next step is to get the word out. Getting merchants and customers to start using your platform isn’t going to be child’s play, given the intense competition. The promotional strategy may vary depending on your target audience and competitors.
For instance, if we’re running a marketplace that is only relevant to a small segment of the population residing in a particular city or town, then the most feasible approach would be local ads or word of mouth. But as the platform scales, the marketing approach also diversifies with options like content marketing or running ads.
To effectively handle all promotions, your marketplace platform must have the right functionalities. For instance, Yelo enables its users to add and manage promotions and referrals using the admin dashboard. This particular feature allows you to start both global and limited promotions based on different business requirements and helps you target the right audience.
Here are some marketing strategies that you can use to promote your marketplace platform:
- Content Marketing: If you have a limited budget but need to reach a wider audience, content marketing is the most viable option. It is an effective way to generate more organic traffic. Unlike other modes of marketing, content marketing isn’t aimed at helping you get instant leads, but it is a more informative way of reaching the target users.
- Advertisements: If you can set aside a bigger budget for your promotional campaign, Google Ads and ads on other social sites makes more sense. Google ads are the best marketing strategy to tap into global markets since it will help you attract meaningful traffic for your platform.
3. Validate your marketplace
Why should marketplace owners focus on investing in creating an MVP than a full-fledged investment initially?
By building a minimum viable product, you can save both time and money. An MVP is a prototype of your business model, a basic version of your product that contains the core feature set for early adopters. You can use a significant proportion of your available capital first on getting more customers on board, and once they validate your marketplace idea, you can gradually scale your marketplace.
An MVP helps you validate your business plan at a relatively low budget. Once you start operating on the feedback you receive from buyers and sellers, you can save a substantial development cost by leveraging features that add value to the overall business model. With Yelo, you can build your MVP a day at an economical price. Yelo is also easily scalable to match your growing business.
Amazon is one of the best examples in this segment. The leading e-commerce platform did not just take a big hit a few weeks from its launch; it took almost a year to turn its first profit. The approach was simple yet effective. It started as an online marketplace for books and gradually started expanding to new categories. The MVP approach resonated with the end-users, and that’s how it grew to become the leading retailer in the whole wide world.
Ready to kick-start your marketplace idea?
Most startups fail in the initial state of flux due to the lack of capital; however, by having a competitive cost strategy for every stage of your business, you can avoid this. The key is to keep expenses minimal by choosing the right approach to build an MVP and attract customers and vendors with an effective promotional strategy.
You can only achieve this if you choose the right marketplace platform builder and cost strategies for building your online marketplace website. But remember, even after establishing an efficient marketplace website or app, your job isn’t quite done. The marketplace owners must seek constant market validation and keep making changes to adapt to the evolving business requirements.
Also, never forget the purpose of building a marketplace over your aspirations. The platform can only reach phenomenal heights if it keeps making both the end-users and providers happy, even if that comes at the expense of your revenue initially. So, no matter what the results are and how much time it takes, just be patient and keep doing the best you can to make an impact.
Subscribe to our newsletter
'Jungleworks Entrepreneur's Den' to get access to the latest industry & product insights.