Statistics show that over 80% of global shopping happens online. On the B2B side, 63% of e-commerce business flows through marketplaces, according to Forrester.
Despite a decline in worldwide e-commerce sales in 2022 as compared to previous years, online marketplaces still have the largest share of online purchases worldwide. Moreover, the sales rate is still expected to increase by 5% in 2023 from its pre-pandemic level and is projected to stabilize in the following years.
So how much does it cost to build an online marketplace website in 2023? To answer this tricky question, we have prepared a detailed guide to the step-by-step process of marketplace development.
In this post, we’ll go through the main factors affecting the final cost of a completed solution. To be more specific, we will explore software developers’ hourly rates depending on location. In addition, you will learn how to choose the right tech stack.
What about mobile? How much does it cost to develop a marketplace app? Well, we will cover the costs of mobile app development for the marketplace and help you to decide on its features, too.
We believe that this guide will shape your expectations regarding building a custom marketplace.
Syndicode’s experience in building online marketplaces
Unlike off-the-shelf solutions, building an online marketplace from scratch gives you more control over features. Thus, you can reduce the marketplace website development cost for your project and scale as soon as you’re ready. What’s more, a custom solution provides a unique CX that reflects positively on ROI.
Syndicode has substantial experience in turning ideas into revenue-generating marketplaces. Our approach is based on careful planning, clear communication, smart technology choices, and extensive quality control. Our ideas have proven very effective for our clients.
For instance, Hlprs is a platform for hiring house servicemen. The Syndicode team has built a 100% automated marketplace for them and eliminated a large part of manual work. Thanks to our use of heavy-weight technologies, the company’s order flow has grown by 1000%, and order processing has become three times faster.
Another example of our successful cooperation is Fuzu, a known African startup. Working on the website functionality, we used best Finnish practices. As a result, Fuzu gained 70,000 unique users in a year and is currently the largest job offers provider in East Africa.
Syndicode engineers have developed a principally new UI for the admin dashboard that simplified the employees’ day-to-day work. We also came up with a unique technical solution to enable ten existing platform integrations and leave room for more.
One more favorite is Movinga, a relocation service. We delivered them full-stack development services, including the web app architecture, adaptive UX/UI design, and API backend. With Syndicode, the company launched its MVP from scratch in just 9 months. Further, our automation solution reduced customer support costs by 93%. Eventually, Movinga exited for €15 million.
What do you need to know about marketplace website development cost calculation?
So, how much does it cost to build a marketplace website from scratch? The answer will depend on the type of marketplace and its required features, as well as potential risks and uncertainties.
For reference, a sample project we will discuss in further detail may cost around $140K in a normal scenario and close to $200K if any issues arise. The estimated project time is between 2,500 and 3,500 hours, correspondingly.
These are the fundamentals of software development regarding cost estimations:
- Initial estimates can be imprecise. They largely depend on the project’s details that are worked out during the Discovery session. Custom development often requires building something to better understand the required effort and make more accurate estimates.
- Cost isn’t the most important factor when choosing an IT vendor. Well-established software development processes and clear communication can ultimately prove to be more cost-effective than a cheaper option.
- Software development is a creative process, and there is usually no one right way to implement the functionality. All code is crafted by hand and requires skill and creativity to find the best solution in terms of performance and resources.
The Cone of Uncertainty concept perfectly illustrates how precision depends on the amount of research and planning:
As you can see from the graph, the importance of the discovery phase is tremendous in marketplace development. Not only does it help to provide a realistic answer to questions such as “How much does it cost to build an online marketplace?” and establish the project timeline, but it also ensures payability, reducing the room for error and cutting time to market.
Types of online marketplaces
When building an online marketplace, it’s crucial to decide on the type that will best suit your goals. Each marketplace type is better suited for a specific audience, and the number and complexity of essential features can vary, which will affect the marketplace website development cost. Additionally, the chosen type will offer different monetization strategy options.
Hence, marketplace classification is a major component of the answer to the question, “How much does it cost to build an online marketplace?”
Depending on the intended nature of the seller-buyer relationship and your target audience, your online marketplace can be one of the following:
- B2B marketplaces sell products or services in bulk and are usually operated by a third party. Their idea is to automate the selling/buying processes and improve deal transparency. Common monetization models include commissions, subscription fees, or listing fees. Example: Alibaba, eWorldTrade.
- B2C marketplaces provide an opportunity for businesses to sell directly to customers. They are popular since customers can find a variety of goods in one place. Like B2B, B2C marketplaces are usually monetized through commissions, subscription fees, and listing fees. Example: AliExpress, Booking.com, Bonanza.
- P2P or C2C marketplaces connect individuals to share products and services in exchange for money or other products and services. They aim to help people make optimal use of resources through second-hand buying or rental. This marketplace type can be monetized through paid promotions and advertisements, and the cost to develop a peer-to-peer marketplace can exceed average numbers. Example: Etsy, Uber, BlaBlaCar.
- eCommerce marketplaces enable businesses and individuals to sell their products and services to multiple buyers. The buyers can be individuals or companies. Given the broad audience, this type of marketplace is popular, reflecting the eCommerce marketplace development cost. Example: Amazon, OLX, Poshmark.
- M-commerce or mobile marketplaces are digital stores designed with the mobile-first approach in mind. They aim to simplify mobile shopping. Monetization happens due to commissions, subscription fees, freemium plans, listing fees, and lead fees. Example: Upwork, Jumia, Sephora.
- Crowdfunding marketplaces let members raise funds from the masses for a particular project. Possible monetization strategies involve commissions and transaction fees. Example: Kickstarter, Indiegogo, GoFundMe.
- Auction platforms encourage sellers to compete for the product or service by bidding. Auctions are an excellent way to get the most competitive price for an item. Auction marketplaces earn money through transaction fees. Example: eBay, Honcho, Artsy.
By business model
A business model defines the structure your marketplace will use to attract buyers and sellers and the means of getting revenue. It also determines the necessary functionality and affects the marketplace website development cost. Online marketplace business models are categorized into three groups:
- Vertical marketplaces are focused on niche products and services instead of selling everything to everyone. Being dedicated to a specific category, you experience less competition, improve the quality of products and services, and provide better personalization. Example: Airbnb, StockX, TrueFacet.
- Horizontal marketplaces sell products across different categories to different buyers. They offer a one-stop shop catering to different customer needs. The main advantage of a horizontal marketplace is its wide audience which drives more transactions. However, the competition in this type of marketplace can be fierce. Example: Etsy, OLX, Poshmark.
- Global marketplaces allow the exchange of goods and services regardless of users’ geographical location. A global marketplace has the broadest audience hence the revenue potential. You can also diversify your business’s markets by going global. However, you should be ready for legal constraints and language barriers. Example: Amazon, eBay, Upwork.
Tech Stack for Online Marketplace Development
You have determined your marketplace type and monetization model. Naturally, your next question will be as follows: how much does it cost to build a marketplace website of chosen type? To provide you with some information, we will discuss the tools necessary for its development. Tech stack constitutes a significant part of a marketplace website development cost.
An adequately chosen tech stack allows the implementation of the desired functionality while keeping the cost of developing an online platform to a minimum. At Syndicode, we carefully select a custom tech stack for each project to make software that best fits our client’s needs. We emphasize loading speed, ease of scalability, and updating. Our team also ensures the shortest time-to-market possible, thus reducing the marketplace development cost.
A marketplace website tech stack consists of back-end and front-end.
- Back-end tech stack
- Front-end tech stack
To create a robust UI, we choose between ReactJS and Vue.js technologies. Each has its benefits and drawbacks that we juggle to handle specific tasks.
For quality assurance (QA), we combine manual and automation testing tools. This way, we can perform tests on different environments from the very beginning of the project. It helps improve software quality, timely detect bottlenecks, and evaluate software behavior.
How much is an hour of work for a marketplace developer in different parts of the world?
Now, let’s return to the question, “How much does it cost to build a marketplace website?” Apart from the chosen marketplace type and website features, the location of your tech team also affects the marketplace website development cost.
In the table below, we’ve outlined the average rates of web developers worldwide. Thus, US developers are the highest-paid in the world. They are great at coding and programming and, for this reason, are readily hired locally.
Programmers from Western Europe have solid skills and used to be in high demand for outsourced software development projects. However, the price for their services rose significantly last year, making businesses search for other options.
Eastern Europe has hit the top 20 list of the world’s best developers and has been recognized as the top choice in numerous rankings. Eastern European developers are highly expertized and show great performance.
Indian rates remain the lowest, while Indian developers’ skills are considered a matter of luck. Furthermore, the language barrier can be an issue. Also, India is twelve hours ahead of the center of the U.S., which further complicates communication.
Software engineer’s hourly rate in different countries in 2023
|Country||Average hourly rates|
Sample cost estimate for a basic B2C marketplace website
“How much does it cost to build a marketplace website like Amazon?” is a frequently searched question on Google. Although the exact cost of Amazon’s software isn’t publicly available, we can estimate the cost of building a marketplace website that performs its basic functions.
Not taking into consideration all the additions to the original Amazon website, at its core, it is a B2C horizontal marketplace where customers can find any kind of product.
The functional decomposition of such a website would look like the following.
|Guest visitor authorization & authentification||Registration by phone|
|Log in via phone|
|Home page||Header, banner & footer|
|List of latest ads for selected/default location|
|Search/Browse ads||Search by keyword|
|Search results: list of ads matching search query|
|Filters||General filters (price, category, location)|
|Ad details page||View ad images|
|Display the list of recommended ads|
|View ad information|
|Authorized user authorization & authentification||Log out|
|Ad details page||Show contact|
|Report an ad|
|Number of views count|
|View transaction history|
|Ad management||View list of ads|
|Create/edit an ad||Fill in general information when creating an ad|
|Upload images when creating an ad|
|Edit an ad|
|Prioritize an ad||“How it works” page|
|Approach 1: search results list of premium ads matching search query|
|Aproach 2: Raise the ad to the top of the list|
|Select a prioritization approach|
|Notifications||Notification set up|
|Ad is waiting for payment (deep link to an ad)|
|Ad was edited by admin|
|Successful payment (for a new ad)|
|Admin authorization & authentification||Log in|
|Ad management||View list of reported ads and reasons|
|View list of ads pending review|
|Create/edit an ad|
|Delete an ad|
|Close an ad and Autoclosing after X time|
|Approve an ad|
|Decline an ad and specify the reason|
|Sort ads by status|
|Payment management||View the list of balance charges pending confirmation|
|View the list of reviewed ads pending payment confirmation|
|Confirm payment received for an ad|
|Confirm payment received for ad prioritization|
|View list of prioritizations pending payment confirmation|
|Confirm payment received for a balance charge|
|Basic analytics||View the total amount of money earned|
Now that we have identified the necessary functions that the system must perform and broken them down into sub-functions that can be developed and tested separately, we can work with the development team to estimate the time required for implementation.
Our project also contains non-functional requirements, such as localization, since the platform will be in two languages.
Furthermore, we need to factor in time for the platform’s architecture design, UI/UX concepts, project setup, and database creation. Given that software development is a creative process, we must also allocate time to discuss different solution variants with project stakeholders.
In summary, the estimated resource plan for our marketplace will look as follows.
|Normal scenario, h||Worst-case scenario, h||Rate/hour, USD||Total, USD|
There you have it—an estimate for the time and cost required to develop a basic B2C marketplace. Keep in mind that this is a simplified version that only meets the minimum usability standards expected by modern users. For a more complex and feature-rich marketplace, the cost will be higher accordingly.
How much does marketplace mobile app development cost?
Eight out of ten people shop online using a mobile device. So, if you want to be competitive, building a marketplace application is out of the question. But how much does it cost to develop a marketplace app?
Just like with the question, “How much does it cost to build a marketplace website?” there is no one answer. Marketplace apps vary in size, type of products, how they promote themselves, and so on. All these determine the necessary functionality for the app and the number and complexity of features.
Further, your marketplace’s audience consists of buyers and sellers. They perform different functions, and thus, you have to build a marketplace app with separate interfaces. A buyer profile will give access to the product catalog, inventory management, pricing, bidding, shipping tools, and the ability to create their returns policy (or accept the platform’s terms).
A seller profile should have search functionality, recommended items, review and compare tools, add-to-cart opportunities, and access to payment options. Depending on your marketplace type, you will need additional features like reviews and ratings, push notifications, social media integration, etc. They will add up to the final marketplace app development cost.
Core features of a marketplace application and website
As you already know, the answer to the question, “How much does it cost to develop a marketplace app?” and/or website lies in the type of marketplace, its purpose, and your needs. However, certain functionality is essential for an app to perform like a marketplace. Here are the core features that also make up the marketplace app cost:
- Registration and sign in
A means for newcomers to start using your platform and for registered users to list products and services or search for them. The simplest and hence the cheapest method is the manual input of email and password with further confirmation through a link in an email.
You may choose multi-factor identification, which increases security but requires more work in terms of development. Or you may simplify the registration process for a user by implementing a social login function, which requires integration with Google and social platforms.
This is where users list information necessary to use the marketplace. For a seller, it’s their business name, product listings, shipping and payment information, etc. For a buyer, it’s personal details such as name and shipping address, a wish list, and a list of previous orders.
To add personalization, you may enable profile photo uploading, a bio section, or even an opportunity to change the design of a user’s personal page. Depending on how many things a user can do in their profile, the marketplace development cost will go up or down.
- Item listing
The list of products visible to users that sellers can add to or delete from. In other words, a seller’s virtual storefront, where users can browse goods from the same company. The item listing design and what exactly a seller can do with it determine the marketplace app cost.
Thus, you may demand the opportunity to upload videos with automatic formatting, change the listing view, add breadcrumbs for better navigation, include social sharing buttons, and more.
Makes navigation through the item listing easier, letting buyers review specific items or categories. The search field’s intelligence, number, and complexity of filters influence the marketplace app development cost.
For instance, you can go with a basic search field with filters or equip it with autocomplete that will guess the user’s intent and offer more specific suggestions for their query. A faceted search software will provide even better UX and increase the price of development.
- Product page
Provides extensive information about the product. Since customers can’t touch the item as they would in an offline store, you should build a marketplace app featuring high-quality visuals and detailed descriptions.
Again, you may want to add videos, GIFs, or even 3D models of a product so customers can turn it around before buying. Complementing your product pages with other features like customer reviews, live chat, or related products will boost customer engagement and raise the marketplace app cost.
- Shopping cart
Contains the products chosen by a buyer but not purchased yet. Here, a customer can change the number of items, delete them, view shipping options, prices, and related info. The shopping cart may have different functionality, which affects an e-commerce app development cost.
For example, a shopping cart can come in a mini version or a full page — or both. Then the checkout process can be displayed on a single page or take a user through a step-by-step procedure. Help elements and live support availability also increase the development price.
Here, buyers check out the available payment options, choose payment gateways, add card information, etc. Usually, marketplaces offer several payment methods: PayPal, Google Pay, Apple Pay, American Express, etc. The integration of each costs extra.
- Administrator panel
An admin panel is necessary for a business owner (you) to customize marketplace settings like shipping and payment methods, policies, etc. You should also be able to edit categories and search filters. How much you can do as a marketplace administrator defines the final marketplace app cost.
For example, an admin can just manage the marketplace content or have access to statistics. User content can go straight to publish or first be moderated. The same is true for user registration. The number of admins also affects the complexity of the admin panel architecture, thus increasing the development cost.
This option lets buyers review and choose suitable delivery options. There are many ways to connect your marketplace to a shipping solution, which is one more reason why marketplace app development cost varies.
Also, you can choose a shipping integration that shows carriers’ rates in real-time or deliver locally. For the latter, you’ll need a geolocation feature that will determine a customer’s location to then help with shipping cost calculation. All this will add up to the final sum.
Killer features of a marketplace app
How much does it cost to build an online marketplace application having all the cool features?
We get you, core features ensure the basic functionality of your marketplace app, yet you need something else to stand out from the competition. To get a piece from the online marketplace industry’s pie, you should develop a unique growth-driver feature. And that’s one more factor to consider when researching how much it costs to develop a marketplace app.
Here are some ideas to get you started:
- AR technology
AR is the trending feature letting customers evaluate the item’s look before purchase. The feature is viral among furniture manufacturers, suppliers, and retailers. However, it can substantially increase the marketplace app cost for development.
- Voice search
More than 30% of internet users performed a voice search. This feature hasn’t been disseminated through marketplaces yet, so you can use it to get ahead in the competition.
- AI/ML-based features
AI and ML technologies can help automate the process of matching promotions to the right customer profiles, deepening personalized experiences across all touch points.
Visual search has matured substantially over the past few years, with the market for AI image recognition projected to achieve a $3.56 billion growth by 2026. Adding an image search feature to your marketplace will encourage customers to spend more time shopping and adding more items to their carts.
- Social shopping
In 2023, brands will switch from social media marketing to full-fledged selling by linking promotional content with an e-commerce store. This way, consumers can watch and interact with materials showcasing products and shop at the same time through a chat function or reaction buttons.
This feature might somewhat increase your marketplace app cost, but companies that have already leveraged it report having conversion rates of nearly 30%. Moreover, social – or live – shopping may gain traction with B2B clients, too, as B2B mobile ordering has increased by 250% since 2020.
- New payment options
The cryptocurrency market size has been growing at a 12.5% annual growth rate showing the increasing demand for payment means.
Buy now, pay later (BNPL) apps have gained popularity in 2023, with over 60% of consumers reporting to have used them at least once. The same report shows that more than half of respondents actually prefer BNPL services to credit cards, so that’s another feature to consider adding to your online store.
How much does it cost to develop a marketplace app from scratch?
The cost of custom marketplace app development varies depending on the complexity of the mobile app, just like with desktop solutions. Let’s take a look at how the functional decomposition changes if we decide to develop a cross-platform mobile app instead of a website.
For simplicity, let’s assume that the required functionality remains the same. Both mobile applications and websites rely on a backend system that manages data and handles user requests. So, we will still need backend developers in our project, but instead of the frontend part, we’ll need a mobile development specialist to integrate the app with the backend system and optimize it for performance.
In addition, the difference in tools and techniques used for mobile and web development may contribute to a change in scope and price.
|Normal scenario, h||Worst-case scenario, h||Rate/hour, USD||Total, USD|
The answer to “How much does it cost to develop a cross-platform app for a marketplace?” can be found in the last cell of the “Total” line in the cost estimation table. If you’re interested in the mobile app development process, we’ve outlined it step-by-step in an earlier blog post.
How much does it cost to develop a marketplace app for one platform? It varies depending on the desired functionality and design. Typically, a native iOS or Android app will cost around 60% of the price of a cross-platform app.
The reasoning behind the pricing revealed
So, the answer to the question, “How much does it cost to build a marketplace website?” can be as follows. Generally, the cost of marketplace development varies based on industry, target audience, and marketplace type. The considered features are an example of a basic website and marketplace app’s functionality.
The development cost for a custom marketplace development project can start from $135,000 to $190,000 and higher, depending on the marketplace website development components. For a mobile marketplace application, the price starts from $160,000 to $420,000 and higher, depending on the required features.
The preliminary research and decision-making process might seem overwhelming. The Syndicode team offers full-cycle custom software development services to unburden its clients. Our case studies and 100% positive client reviews demonstrate our expertise in building automated marketplace systems that optimize investments and expand business reach.
The answer to how to create a marketplace website is simple. There are five basic steps: Come up with an idea and validate it A viable marketplace idea should solve a problem for both the customer and the seller. At Syndicode, we always start with business analysis to understand current issues in the industry and identify potentials. Decide on your marketplace type and business model Knowing your marketplace type will help you define the potential buyer base, choose the most appropriate monetization strategies and avoid extra investments in website and app development. Determine the functionality of your future marketplace Depending on your goals and budget, you can go with the minimal set of features or expand them to maximize your competitiveness. Remember that the chosen functionality set defines the final marketplace website development cost. Choose a tech team to implement your project A wise choice results in higher marketplace website quality, less need for maintenance, shortened time to market, and reduced costs. Launch your marketplace and start achieving your business goals To ensure the successful launch of your new online marketplace, you should test it to eliminate any chance of malfunction. Don’t forget about marketing to encourage users’ flow from the very first days.
The times for custom marketplace development vary. Depending on the marketplace type, business model, and features, creating a marketplace website from scratch may take four to six months. In the case of a complex marketplace platform like Amazon, the web development process may take twelve months or more. This time involves information collection, business analysis, planning, design and prototyping, coding, and testing. At Syndicode, we start by presenting the methodology and work processes chosen for your project. This ensures everyone is clear about deliverables and the estimated development time frame.
To answer the question, “How much does it cost to build a marketplace website?”, we need to know the desired complexity of the platform and your tech partner’s location. Thus, if outsourcing your marketplace building to a development team from Eastern Europe, the estimated marketplace website development cost starts from $135K–$190K for a basic solution and may be higher for a fully featured product. The cost of building a marketplace website increases if done by engineers from Western Europe: expect to pay around $200K–$290K for a simple solution. And US developers’ charges will start from $300K–$475K since their rate is three times as high as one of the Eastern European software companies. If you’re curious how much it costs to develop a marketplace app, the price tag for this depends on the app’s functionality. Again, depending on where your software development team is located, marketplace app development costs for a simple solution can go from $160K–$420K and more.
Syndicode is a software development company specializing in building custom marketplaces from scratch. We do a full-cycle development, starting with brand identity, to design and development, to the fully featured product and its maintenance. The accumulated experience allows us to approach each new project with a clear plan and established processes. We believe that effective communication is the pillar of quality marketplace development. Therefore, we hold a discovery session at the beginning of the work to collect all the information about your industry, business, and vision. Next, we perform business analysis to assist you with ideas that best fit the current market. By 2023, we have created over 140 successful solutions. Many of our marketplace projects have paid off in six months after launch. After working with us, our clients have increased their revenue flow, removed handicaps for business growth, and started providing an enhanced UX to their customers.