The global marketplaces industry has been steadily growing for over a decade and is projected to make up over 20% of all consumer spending by 2027, according to experts. So, if you’re thinking about building a marketplace that could become the next Amazon, now is the perfect time.
This post will tell you how to build a marketplace platform step-by-step. Our team has gained extensive knowledge from almost ten years of experience in creating marketplaces. One notable project we’ve worked on is Fuzu, a job search and HR marketplace that secured $6.6M in funding after its relaunch.
The Syndicode team has revamped the platform’s user interface and introduced innovative features that contributed to Fuzu’s growth and market expansion.
But enough about us, let’s discuss how to create a marketplace. In a nutshell, it involves eight steps:
We’ll also address common challenges and help you to estimate the costs involved.
Let’s get started!
An online marketplace is a website where multiple sellers offer their products or services to potential buyers.
To decide how to create a marketplace of the right type, let’s first see the existing classification. The main criteria for marketplace classification are based on the participants, focus, and offerings.
Let’s take a closer look at these.
Online marketplace classification by participants:
Online marketplace classification by focus:
Online marketplace classification by offerings:
Here’s a table summarizing the main types of online marketplaces:
|B2C||Companies sell to individual end-users||Amazon|
|C2B||Individuals offer services to businesses||Upwork|
|B2B||Businesses sell to other companies||Alibaba|
|C2C||Transactions occur between individual users||eBay, Etsy|
|Horizontal||Offers a wide range of products to a broad audience||Amazon|
|Vertical||Specializes in specific products or services||Airbnb, Udemy|
|Product||Primarily sells physical goods, such as clothes or books||Walmart, Rakuten|
|Service||Connects buyers with professionals for services, such as graphic design||Upwork, Fiverr, TaskRabbit|
|Project||Allows fundraising for startup projects||Kickstarter|
Building an online marketplace can offer various benefits that make it a sound business decision. Here are the key advantages of creating a marketplace:
There is no one right way to build a marketplace, but we’ve developed a framework over the years through our experience creating and maintaining marketplace websites. This framework helps us develop products that, when managed well, have the potential to disrupt their respective industries.
One of our successful projects is EvrLearn, an educational platform designed for the Swiss market. The client had no prior experience and didn’t know how to create a marketplace they pictured. The Syndicode team assisted in defining the marketplace concept and provided end-to-end development services.
Today, the marketplace is live and thriving, offering over 3,000 courses and collaborating with top Swiss universities.
Our framework for delivering exceptional products consists of eight key steps. Let’s delve into each of them.
In the world of marketplace creation, it’s crucial to understand what customers want and what drives their choices. These preferences are shaped by various factors, such as customer needs, current market trends, and pricing.
To gain traction, you must know how to build an online marketplace that strikes the right balance in terms of cost, features, and positioning to meet customer expectations in a specific market and timeframe. Otherwise, it’s just a waste of resources.
There are four steps to assess whether your marketplace is likely to be popular and, thus, worth the investment:
The target market of an online marketplace platform consists of buyers and sellers. So, to effectively plan how to create a marketplace, you need to know how to attract both those groups. This knowledge will guide your overall business and development strategy as well as your marketing plan. Here are four ways to determine your target audience:
You might be wondering how to build a marketplace like Amazon, but you certainly don’t want to create just a clone, do you? To stand out, you must offer users something exceptional. Today, customers are more demanding than ever, so it’s crucial to get extra creative in meeting their needs.
The best way to achieve this goal is by crafting a unique value proposition. To make your offerings appealing to your target audience, consider one of the following drivers:
To build a profitable marketplace website, you should plan how you’ll commercialize it. Let’s explore some of the most common marketplace revenue models.
When deciding how to create your marketplace, you should choose the functionality that aligns with the needs of your target market. However, there are some features that users generally expect to see on any online marketplace:
Those are the fundamental features needed for a successful marketplace. But how to build a marketplace website that stands out from the many others? You need to introduce killer features that cannot be found on other websites.
Based on our experience, we recommend implementing the following advanced functionality:
Below is a graph representing the top reasons people prefer shopping on Amazon. Make sure to take that into consideration when creating your marketplace website.
Collaborating with a dependable and knowledgeable development team is crucial to bringing your idea to life smoothly and within your budget. To go about choosing a partner, you should first decide how hands-on you want to be in the marketplace app development process. There are three engagement models with varying implications for both employers and workers:
Read also: The Guide to Staff Augmentation
When seeking a reliable marketplace development partner, it’s important to consider where to look for and what to look for. That said, the top popular places for hiring software development specialists are:
For more details, you can refer to our previous blog post, “Top 5 Upwork Alternatives,” where we conducted a thorough comparison of these platforms.
What to look for in a reliable software development partner? Here are the most crucial things to consider:
To streamline the development process and ensure a high-quality marketplace, development teams typically follow a well-established set of steps. At Syndicode, the product development lifecycle is structured as follows:
We follow agile development principles, breaking the project into sprints, each with a specific goal. The team goes through the steps mentioned earlier for each sprint. This approach enables us to deliver working software quickly and remain flexible and adaptive to changes in the project’s requirements.
For more detailed information on the software development process, you can refer to our earlier blog post.
For complex marketplace development projects and startups, we strongly recommend building an MVP first. This way, you can get your solution to the market quickly and easily make adjustments if your initial strategy doesn’t yield the expected results.
Now, let’s delve into the development lifecycle with more detail:
During this initial phase, our team collaborates with the client to discuss project goals and constraints and estimate the project’s scope. We gain a deep understanding of the client’s business, their target audience, select the appropriate technology stack, and create a high-level development plan along with rough cost estimates.
We have a comprehensive article explaining the goals and deliverables of the discovery phase here.
In this stage, our project team focuses on creating an architecture of the online marketplace website. We define its layout, infrastructure, user experience, and software modules. Following this, we create technical specifications based on user stories.
Next, Syndicode’s analysts create a project timeline and clarify the initial time and cost estimates.
Designers begin by crafting an information architecture for the marketplace, which serves as the foundation for creating visual concepts and wireframes. Once the client approves these concepts and layouts and the engineers confirm the technical feasibility of the proposed design, the UI design phase is initiated.
This structured approach ensures that the design aligns with the project’s goals and can be successfully implemented by the development team.
During the coding phase, the engineering team translates the plans and designs into functional code. At Syndicode, we adhere to specific code attributes, including simplicity, thorough testing, refactoring, documentation, and compliance with industry standards as specified by the client.
QA and testing
At Syndicode, testing is integrated into the coding stage to accelerate development without compromising quality. When the primary components of an application are finished and integrated, the entire product undergoes comprehensive testing before release.
Our quality assurance engineers conduct manual and automated tests to ensure that the online marketplaces we create are secure, reliable, and free from bugs. They also verify that the code is well-organized and that it meets the business requirements.
Once the testing is finalized, the code is deployed to a staging server for further evaluation by a manual tester. If everything functions as expected, the code can be merged into the master branch. After that, it is tested once again in a production environment to guarantee its stability and functionality.
Read also: Why is quality assurance important?
Before introducing your solution to the market, it’s vital to ensure that all product features operate as intended. To ensure that the created online marketplace is secure, reliable, and bug-free, Quality Assurance engineers conduct manual and automated tests.
At Syndicode, we integrate testing throughout the development process, conducting checks concurrently with development and performing an overall evaluation after the primary components of the marketplace application are assembled. This approach accelerates development while maintaining high quality.
After the launch, it’s crucial to keep the development team accessible for bug fixes and enhancements based on user feedback. Continuous monitoring and responsiveness to user input help to refine and improve the marketplace, ensuring it remains effective and competitive in the market.
Throughout a decade of creating marketplaces, Syndicode has faced numerous challenges alongside its clients. Here are some of the most common ones.
However, with effective planning and equipping your marketplace with the right features, these challenges can be overcome:
Achieving a balance between supply and demand can be difficult, particularly for new businesses. Market fluctuations and competition can further disrupt the balance between sellers and buyers in a marketplace, affecting the user experience and impeding marketplace growth.
But how to create a marketplace website and avoid this challenge? Consider implementing features like flexible fee structures, dynamic pricing, built-in analytics tools, user-friendly seller onboarding processes, and consistent technical maintenance.
The diversity of the seller base, competition, and ever-growing customer expectations can make it difficult to ensure consistent quality of goods and services on an online platform. Regular quality checks are necessary to ensure that sellers adhere to the platform’s quality policies.
Furthermore, allowing buyers to rate sellers and leave reviews for products and services can improve user experience, enabling informed decision-making. Implementing dispute resolution mechanisms can further boost satisfaction.
Online commerce is inherently dynamic, with user preferences changing as quickly as weather. To achieve success, a marketplace must remain responsive to these changes by adjusting its offerings, marketing strategies, and user experiences accordingly.
A scalable infrastructure and integrations that enhance your marketplace’s capabilities can help overcome this challenge.
The marketplace development cost is determined by two equally significant factors:
Here is a rough correlation between the location of software developers and their rates:
|Country||Average hourly rates|
To provide a rough estimate, let’s consider the development of a simple B2C marketplace. Keep in mind that this is a basic estimation, and actual costs can vary based on specific project requirements and geographic factors. You can find a more detailed breakdown in our blog post about marketplace development cost calculation.
|Functionality||Development time, h||Cost, $|
|Best-case scenario||Worst-case scenario|
|Seller and buyer profiles||140||280||7,000-14,000|
|Product listing with seller tools for management||280||420||14,000-21,000|
|Search and filter options||280||420||14,000-21,000|
|Product page with images and text descriptions||140||280||7,000-14,000|
Please note that this is a general estimate, and the actual development time may be longer or shorter depending on how exactly each of the features should be implemented. Moreover, the price may differ too, depending on your development team’s rate.
We hope that this comprehensive guide answers your question about how to build a marketplace app. Let’s summarize the key steps:
Apparently, building a marketplace can seem a challenging task. Still, things start looking very promising if you have a reliable software development company to take up your project.
Syndicode employs experienced specialists who will build a unique and powerful solution to help your marketplace business thrive. We value careful planning and transparent communication, and this approach helps us deliver products that attract millions in investments months after launch.
The first reason for building a marketplace is the diversity of revenue strategies. There are many monetization models to choose from: commission, membership, listing fees, advertisements, etc. Second, online marketplaces are known for their quick expansion. Provided that everything is working fine from the beginning, the number of buyers and sellers will be increasing rapidly. Finally, since marketplace owners do not have inventory, they are free from any issues that come with its management. The same goes for delivery or logistics. Vendors are dealing with these processes. The marketplace owner is responsible for providing an online platform that connects buyers with sellers.
To start with, Eastern European countries such as Poland, Hungary, Slovenia, and others face the rapid growth of the IT industry. It is further fueled by Ukrainian developers who relocated to these countries, having brought their skills to the market. Another important reason to build a marketplace website with an outsource web development company that employs specialists from Eastern Europe is the best value/quality ratio. Though our software developers set lower rates than their North American or Western European colleagues, the quality of their services is pretty high. Finally, 85% of Ukrainian software developers have a high level of English proficiency.
Syndicode has been building marketplaces since 2014. Over these years, we have built dozens of e-commerce platforms of any complexity for a number of industries. All of them paid off quickly and turned into profitable businesses. In addition, we have accumulated vast experience in holding discovery sessions successfully. It means that we have learned to collect the basic requirements from customers and offer them the most suitable technical solutions in a fast and convenient way. This approach allowed us to define how to build marketplaces that both meet specific customers’ demands and bring value to the end-users.
To ensure that your new marketplace is appealing to the target market, research the market and take note of competitors’ offerings. But don’t simply create a website like Amazon. Instead, take the best from it like a trendy, intuitive, and user-friendly user interface, and data security practices, and add unique features. Next, make your value proposition clear and ensure it caters to the needs of your audience. Finally, promote your marketplace through marketing campaigns, advertising, referral programs, and partnerships, leverage SEO, and, of course, collect feedback and act on it.
While both marketplaces and e-commerce platforms are used for buying and selling goods and services, there is a difference between their business models and operation modes. Thus, sellers or vendors in a marketplace typically offer a variety of goods and services in different categories. Most marketplace platforms earn revenue by charging a commission on each sale. E-commerce platforms tend to focus on a particular product category, such as electronics, fashion, or software. They generate revenue through product sales, subscription fees, or a combination of both.
While having technical skills can certainly be beneficial, you don’t necessarily need them to build a marketplace. You can hire a team of experienced developers who specialize in marketplace app development to handle the technical aspects of your project.
The cost of developing a marketplace mobile app can vary depending on factors such as the complexity of the app, the platform (iOS, Android, or both), the number of features, and the development team’s rates. Development costs for a marketplace app can range from a few thousand to hundreds of thousands of dollars.