How to Build an Online marketplace: What Will and Won’t Work

Building an online marketplace is the toughest challenge. The marketplace business model is hot. The massive success of platforms like Uber, Airbnb, and Upwork in almost all parts of the world has proven that marketplaces will work for any business vertical.  Some examples of successful marketplaces in the respective business verticals are listed below:

Everything you need to know about building an online marketplace platform

How to build a successful online marketplace in 2021

To keep it simple, an Online Marketplace is a platform that connects buyers and sellers on the internet. Marketplaces are like malls in the non-internet world, a “multi-vendor space” where customers check out different brands and their products.

An online marketplace is a website or application where sellers can list their products/services and users can browse them; it is a mediator between companies and customers.

When is it the right time to start?

“Now, is the right time to build your online marketplace”

The technology is finally mature; the empty couch in the living room has replaced the shopping experience for many. Modern consumers and businesses have started interacting online. According to Statista, global e-commerce sales in 2018 accounted for 2.83 trillion. So if you wondering is it the right time to build your online marketplace business. Then, “Yes it is”. The “Top of the mind” fears in consumers regarding online shopping have vanished. With companies offering deliveries on the same day and options for return, the perceptions of the customers towards online shopping have changed.

Marketplaces are a great business:

The first time I came across Uber, I was amazed. The application was very user-friendly, and the design was perfect. Whenever I referred the service to someone, they fell in love with it. Many of them refrained from using the local taxi and auto service and started using Uber. After availing of this service, they recommended the same to their friends.

Many entrepreneurs these days are eager to create an “Uber for X“ or an “Airbnb for X”. That’s just normal: the success of Marketplaces like Uber, Airbnb, and the Collaborative Economy, in general, is something that cannot go unnoticed.

Here are some facts about Online Marketplaces:

– The top online marketplaces in the world sold $1.86 trillion in 2018.

– Sales on marketplace sites, like Alibaba, Amazon, eBay, and others, accounted for 52% of global web sales in 2018, according to Internet Retailer’s analysis.

– Gross merchandise sales in 2018 grew 23% last year compared with 2017

The growth of these sites in e-commerce is a reason many large retailers, including sportswear e-retailer Fanatics Inc., recently began selling on marketplaces.

Top KPIs to Measure Online Marketplace Platform’s Success

How Much Does It Cost To Build Your Online Marketplace?

How to Set a Pricing Strategy for Your Online Marketplace

Why is it better to build an online marketplace?

• Efficiency:

The cost to build your online marketplace is almost the same as starting a storefront website or app. The functionality of an online marketplace can cater to the specific needs of different vendors.

• Investment and maintenance:

In the case of building an online marketplace, you make money out of thin air. There is no investment required to invest in resources. There is less financial risk involved as unlike storefronts; the marketplace doesn’t need to spend on inventory.

• Scalability:

Marketplaces expand quickly, with more traffic coming in the platform new vendors are added. The sellers utilize the already built-in platform and get started right away. The marketing expenses for driving traffic on the website reduces as there is traffic in the marketplace. The sellers can upload the catalog of their propositions, set prices, and start selling. High-quality vendors attract more customers.

• Customer Traffic:

Customers always prefer to use an app that offers a wider range of offerings than one which doesn’t. Also, it is the mentality for the customer to compare services/products of different brands before purchase. In a marketplace, customers can find competitor products and compare them before making a purchase.

If your idea solves a big enough problem in the market, then this is the right time to execute your Online Marketplace Idea.