The world of e-commerce is growing, businesses are finding new ways to meet customer needs, and online marketplace is playing a major role in it, such as amazon, Airbnb etc.
When building an online marketplace involves planning, strategic decisions. The process includes:
- Clear concept
- Doing Market research
- Developing Business Model
Here’s a quick guide to launch a new online marketplace.
What is a Marketplace?
A marketplace is a type of ecommerce website where multiple sellers offer their products or services. Online marketplaces are like physical shopping center, where sellers sell their products.
The marketplace may vary from business to business, business to customer, customer to customer, depending on the nature of the business model.
Difference between marketplace and ecommerce websites
Ecommerce websites and marketplace may look like same but they are different from each other in many ways:
- Variety of sellers
A marketplace has products or services from different third-party sellers, having a wide range of products listed on the marketplace for the consumers. And Ecommerce website sells products and services listed by the single business
- Inventory Management
In marketplace the inventory is solely managed by the sellers. The marketplace does not manage inventory. On the other hand, ecommerce websites manage its own inventory excluding the websites which are built on drop shipping model, it is a method where products are offered without having them in stock. The product is directly shipped to the customer after purchasing from a third-party seller. - Price Competition
There are multiple sellers on marketplace so there is competition over same product’s price that are listed. On ecommerce website, the prices are set by the business and there is no price competition on the same platform.
- Revenue Model
Revenue model of marketplace and ecommerce website is different. In marketplace, the revenue is generated by charging commission or fee for each sale. While the ecommerce sites generate revenue directly from the sale of the product or services.
- Relationship with Customer
In a marketplace, customer relationship is often shared between the marketplace and sellers. Where as in an ecommerce website, the relationship is solely between the customer and the company running it. - Reviews and Ratings
Marketplaces gives the to the customers to rate and review the seller individually, helping in building trust and provide information for other customers. And ecommerce websites also allow customers to leave reviews and ratings but they are only for the products.
Choosing the Right Platform
Choosing the right platform is important, consider your needs and goals. Understanding your requirement help in finding the perfect fit.
Self-Hosted: Self-hosted solutions grant you complete control over your website but it requires technical expertise. Options include WooCommerce (with a multi-vendor plugin) and Magento (with a marketplace extension).
You can use Prestashop multi-vendor marketplace created by FME modules for creating a multi-vendor store.
SaaS Platform: They offer a user-friendly interface and are responsible for the technical aspects. However, customization options are limited for sellers.
How to Create a Marketplace
Creating a marketplace includes different steps, from defining the idea, to launching and promoting the platform.
- Defining the idea
Define the idea of your marketplace. What type of products or services will be sold? Who will you target? What’s unique about your marketplace that outshine you from others?
- Conducting market research
Market research is necessary for understanding the market, what your competitors are doing? And what are the customers looking for. You can understand it by conducting research on what your top competitors are doing for it.
- Developing a business model
Decide what your business model will be. How you will generate revenue, what will be the pricing strategy compared to your competitors.
- Defining the platform functionality
Highlight the key features and functionality your platform needs. It includes search tools, profiles, product listing, review and rating, and a communication tools.
- Building the platform
Developing a marketplace or using a platform, implement the functionality you defined when building the platform.
- Testing the platform
Before launching the website, test the website and make sure that everything is working fine. Incase of any error resolve it as soon as possible.
- Launching the platform
After everything is tested, launch the marketplace. Start it by a strategy that will attract users to test the platform and get the feedback.
- Market the platform
When everything is tested and marketplace is launched, comes the real challenge. Implement a strategy of how you will market your platform to attract more sellers and buyers.
- Collect feedbacks
Collect the feedbacks given by the customers to understand what’s working fine and what needs to be changed or improved.
Remember, the most important things when building a marketplace are well-defined idea, a user-friendly platform and a community of happy vendors and satisfied customers. With dedication and a sprinkle of creativity your marketplace can grow quickly.
