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magento & ecommerce

How to Start an Online Marketplace Business

With the soar of online marketplaces over the last couple of years, it's become clear that starting one yourself can be extraordinarily lucrative. Just like any other business, launching an online marketplace requires intricate planning and strategizing. You need to take multiple steps before setting your marketplace in motion if you’re to increase your chances of long-term success. But what exactly are those steps?

In this article, we'll give you a rundown on how to start an online marketplace business. Before that, let’s take a look at everything you should know about online marketplaces for a clearer picture of how they function.

What Are Online Marketplaces?

What Are Online Marketplaces

Online marketplaces are e-commerce sites where a variety of merchants can sell products and services, not just the site owner. The most famous examples include Amazon, eBay, Etsy, and Airbnb. These are online marketplaces with large numbers of merchants (hundreds of thousands in many cases).

What Is the Difference Between an Online Marketplace and an E-Commerce Store?

The main difference between online marketplaces and regular e-commerce stores is that the latter sells products and services from just one brand, most commonly that of the site owner. Conversely, online marketplaces allow any number of merchants to sell on them, which should also attract many more customers.

How Do Online Marketplaces Work?

One of the most well-known characteristics of online marketplaces is having a unified checkout process for all merchants. In other words, customers who make purchases on online marketplaces aren't visiting different sites to finalize transactions. They can buy products and services from several merchants simultaneously in the same cart.

Whenever a customer makes a purchase, the corresponding merchant receives a notification about the purchase. After that, the merchant would ship the customer the product or products purchased.

Perhaps the greatest convenience of online marketplaces is that customers can purchase from multiple sellers in a single transaction. In those cases, the customer would receive separate packages from each of the sellers purchased from.

Another common thread among online marketplaces is that they all fill a particular niche. Even Amazon was originally founded as an online bookselling marketplace. By focusing on a single niche, online marketplaces can find more success by providing customers with a clear picture of what they can expect to find on each platform.

In this sense, you could lump online marketplaces into the sharing or collaborative economy. Numerous merchants are working together to sell their assets on a marketplace accessible to the online community.

What Are the Advantages of Starting an Online Marketplace?

You should start your online marketplace for two reasons: the chance to grow your business rapidly and the minimum capital and inventory required.

First, if you're looking to run a large-scale business in the future, launching an online marketplace can take you there. This is because an online marketplace allows you to attract a lot of merchants to sell their products on your site. The more merchants you attract, the larger your business can grow. The main challenge here is balancing supply and demand, as well as attracting high-quality merchants that will in turn attract a large number of buyers to your site.

As previously mentioned, an excellent way to build your business is to focus on a particular niche. For instance, if you’re to start an e-commerce store that sells baseball bats, you could turn it into an online marketplace by allowing other sellers to sell baseball caps, gloves, and other accessories. Over time, you can draw more and more merchants for healthy competition on the market and your network's growth.

Second, you don’t need a lot of capital to start an online marketplace. The reason for that is simple – your merchants procure all the inventory that your online marketplace will feature. You won't have to hire a lot of new employees either, since it’s on the merchants to promote and ship products.

Third, the increasing popularity of online marketplaces makes the upcoming period the ideal moment to start a platform. According to the data, about 40% of internet users have used online marketplaces to shop for products and services, and the number is bound to go up in the years to come. Therefore, starting an online marketplace now means that you'll have a much greater chance of succeeding since your platform will be accessible to an ever-greater number of people worldwide.

Here are some other advantages of starting an online marketplace business:

  • Efficiency – Despite the much higher complexity, developing an online marketplace costs about the same as starting a regular e-commerce site. Moreover, your online marketplace can attract vendors of many types, which isn't something you would get with an e-commerce store in spite of similar pricing.
  • Automation – There isn’t a lot to do on your part as the owner of an online marketplace since the platform does most of the work automatically. A good example is the payment processing that your platform does on its own.
  • Customer interest – It’s much easier to attract large numbers of customers to a platform that brings together multiple service providers and producers. Your buyers will have access to an array of options, enabling them to choose the best and most suitable without having to rely on a single merchant.
  • Analysis – The owner of an online marketplace has access to advanced software solutions for performance tracking purposes. They can track with ease the demand of each product and service available on their platform and identify the ones that generate the most demand. The owner can go on to promote the most sought-after products to cater to the demand and make more sales.

What Are the Main Types of Online Marketplaces?

There are four types of online marketplaces and, even though they work according to the same principles, there are subtle differences between them. These nuances can have a bearing on the shopping methods, the product types that are up for sale, the customers who visit the marketplace, and the services that the marketplace features.

What Are the Main Types of Online Marketplaces

Physical Products Marketplace

Some marketplaces only sell physical products. In other words, the merchants that sell on the marketplace produce or stock physical products and they are responsible for shipping these products when sold.

One of the main factors that can influence user experience is shipping and order fulfillment. Most physical products marketplaces offer one or more shipping methods that the merchants would use to deliver products. Since buyers could receive multiple packages, this can be confusing if the shipping system isn't user-friendly.

Therefore, you want to be upfront with your customers if you're going to start such an online marketplace. Make it clear that even though a customer might be making a single transaction, their products will arrive from individual sellers. They can then adjust their expectations accordingly.

Digital Products Marketplace

Digital products marketplaces trade in digital products that buyers can download to their computers or smartphones right after making a purchase. As a result, buyers don't have to wait for shipments or receive products from individual merchants.

Spaces and Property Marketplace

This type of marketplace sells or rents locations, real properties, event spaces, or rooms to customers. The most famous example of this type is Airbnb. The marketplace specializes in allowing property owners to lease properties, houses, apartments, and rooms worldwide.

However, spaces and property marketplaces come with a number of challenges. These include booking confirmations, property insurance, and government regulations that a marketplace must abide by to remain viable. Therefore, managing such a marketplace is complicated, which is why you should carefully consider if you can pull it off.

Spaces and Property Marketplace

Services Marketplace

The final type of online marketplaces is services marketplaces. These involve merchants who are willing to sell or rent their areas of expertise. For instance, a services marketplace can feature online services (e.g., website development) or in-person (e.g., restoration work or painting).

How Do You Properly Start an Online Marketplace?

Now that we've covered all the basics, it's time to delve deep into the nitty-gritty of starting an online marketplace. Here's what you need to do:

Pick a Niche for Your Marketplace

A successful startup online marketplace begins by selecting a particular niche to cater to. You should focus on choosing particular types of products and services and give consumers a clear purpose for visiting your network. Finding a niche is a crucial step in starting your marketplace that will impact all others.

To fully understand your niche, you need to conduct proper target market research. Researching your target market should consist of the following steps:   

Specifying Your Target Users

You have to know who you're creating your online marketplace for to get a better understanding of how you can meet the target users' demands. To specify your target users, you need to consider the following aspects:

  • The groups to which your target users belong (age, interests, etc.).
  • The goals of your target users.
  • The reasons and motivation behind their purchases.
  • The merchants and locations that they visit to make purchases.

That said, bear in mind that an online marketplace has two sets of users – buyers and sellers. Therefore, you'll need to consider both sides to develop a platform that connects the two of them.

Understanding Your Target Market

You'll want to get a better grasp of your target market to see if it can provide you with adequate conditions for your business vision. To do this, examine the target market's volume and size thoroughly and decide if you're better off with a larger or a smaller market. Then, you'll be able to adjust your business plan according to the general characteristics of the market. For instance, if you're looking to charge fees, you'll need to break into a broader market with enough volume to ensure your marketplace is profitable.

Understanding Your Target Market

Another area you need to analyze is the competition. More specifically, you should pay close attention to how the successful players in the same niche conduct their business. In doing so, you'll be able to discover if it’s possible to implement similar strategies. Additionally, observing your competitors will enable you to zero in on any potential shortcomings that you can address in the market, which may help you reach more customers.

If there's an existing online marketplace that directly competes with what you’re proposing, you'll have to think of a way to outperform the competition. Your options are to compete on quality, selection, prices, the number of sellers, geographic region, and anything else that may give you the upper hand.

If your idea is unique for the time being, you should also understand that someone else might be working on a similar idea. You'll eventually have direct competitors even if there isn’t any at the moment. To make sure your customers will prefer your platform, you just have to execute your vision better than your competition.

Moreover, you always need to be aware of the current trends. For example, keeping track of customer habits and emerging technologies that you can utilize will help you adjust your marketplace to address these trends.

Establishing Concrete Needs and Solving Them

The final aspect of researching your target market has to do with coming up with solutions to your buyers' and sellers' problems.

First, you need to find out about your buyers' detailed online shopping experience. Look into the areas of online shopping that they’re not satisfied with so you can work on a solution.

Similarly, determine which platforms your merchants have used so far and if they are happy with their experience. Again, detect any potential inadequacies that you can use to your advantage.

Compiling a detailed analysis of your buyers and sellers will help you reach a straightforward solution to their problems. The analysis will allow you to either reinforce or make necessary adjustments to your niche before moving on to the rest of the components, such as developing an effective marketing strategy.

Choose Your Profit Sources

So, your online marketplace will be acting as a mediator between buyers and sellers. The question is, how do you make money?

You have several options at your disposal:

Transaction Fees

Transaction fees work according to a simple principle – whenever a product gets sold on your marketplace, you charge a fee. This is quite favorable to the merchants since there are no advance payments and their only expense is the transaction fee. Therefore, many merchants will be eager to join your online marketplace if you only charge a transaction fee.

You can choose this strategy if you're looking to scale your network over a period. But you need to have high sales volumes on your marketplace to make a large amount of money from transaction fees alone.

Subscription Fees

You can also charge the merchants a fixed amount of money every month for using your online marketplace. You can even have several subscription packages, ranging from the basic and up to premium plans that may include advanced services, for which you can charge a higher rate.

To process subscription fees, you'll have to set up a payment gateway. Two of the most popular are PayPal and Stripe.

Signup Fees

You can use signup fees to get sellers to pay for accessing your online marketplace before they even get a chance to use it. This is a good option if you're looking to accept only serious sellers.

However, attracting merchants to your online marketplace with a signup fee can be challenging. The main thing you'll need to do is provide your sellers with a compelling business vision that will assure them that they'll get their money's worth.

Listing and Premium Listing Fees

The purpose of listing fees is to charge sellers for posting products on your online marketplace. It works similarly to signup fees in a way, in the sense that you'll have to convince potential sellers of the marketplace’s immense potential to make money. If not, charging a listing fee may put off prospective vendors.

As for premium listing fees, one example is charging a fee for featuring a merchant's product higher up on the marketplace's feed. The product would stand out from the rest, increasing the odds of a purchase. With that said, normally you should only charge premium listing fees if you're offering a free service.

Lead Fees

This business model is commonly found in B2B industries since a lot of value is involved. Under this model, customers list a service or product that they're looking for and sellers are charged a fee to bid for the work. This model isn't as common among online marketplaces, but it can work in some cases.

Leadership Fees

Leadership fees require your customers to pay to gain access to information about a service or product that they're interested in. For instance, your customers may want to find out more about contacts or analytics, allowing you to charge them for it. This model is especially useful if the transactions occur outside of your platform. Businesses that use this type of fee include Fiverr and Upwork.

Advertisements

Advertisements

Selling ads on your marketplace provides sellers with a simple way of promoting their products. They get greater visibility and that’s always worth paying or.

Nonetheless, managing an online marketplace and sell ads at the same time can be challenging. Namely, it can be tough to determine the right number and size of advertisements to display on your marketplace. Furthermore, many buyers are not fond of navigating through a website that contains lots of ads and they might leave your marketplace prematurely.

To implement a successful ad strategy, make sure that all your ads are personalized and tailored. In other words, your advertisements must be related to the other content on the marketplace to be relevant to visitors.

Carefully Organize Marketplace Activities

Now it's time to think of a plan for each of the vital activities on your local marketplace. Again, you'll have to think in terms of both sellers and buyers to ensure a satisfactory experience for both sides. These are the primary operations you'll have to manage:

Promoting Your Online Marketplace

Since transactions on an online marketplace are a two-way process, you'll have to think of ways to attract both sellers and buyers to your marketplace. However, all startups face this challenge of a lack of trust, if nothing else just from the fact that they are new. As such, you need to figure out how to convince merchants that they should sell on your marketplace and customers that they should use your platform to make purchases.

The main obstacle that you'll have to overcome is deciding on which group to focus on – sellers or buyers. The choice is complicated because it's hard to persuade sellers to sell on your marketplace when there are not enough customers, and it's just as challenging to get buyers to use your platform when there are not enough sellers.

Still, marketplace owners generally approach this by first working on the sellers. This is because sellers are more motivated to break into your marketplace. Their motivation lies in the desire to generate profits and, if joining your marketplace isn't too risky, sellers will be much more willing to list on your site.

You should try attracting sellers first because it will create an inventory of products. This will ensure a steady supply that is crucial if you want to attract consumers to your marketplace. Without this, consumers have no reason to visit your marketplace. Therefore, reach out to sellers first so that your marketplace can build up an inventory that will give consumers an incentive to stop by.

A good starting point for attracting sellers to your online marketplace is to contact the sellers that have already used similar platforms. Their previous experiences show that they are willing to sell online and they may be willing to do so on your marketplace if your offer is compelling. Also, seek out sellers whose products are compatible with your marketplace's niche.

To promote your online marketplace to potential merchants, here are some of the most established promotional strategies you can apply:

  • Interacting with relevant groups and utilizing graphical updates on social media
  • Paid advertisement
  • Keyword content marketing for particular products or services
  • Discounts and signup rewards

Merchant Registration

When sellers get to your website, you don’t want to make the registration process too demanding. Figure out who can join your marketplace and what information you need for the registration. Additionally, you should decide whether to include payment processing during the registration or give sellers an option to choose their payment plan later.

You should also determine how much freedom you want to give to the sellers concerning their stores. In particular, figure out to what extent sellers can manage their stores, how they look, and how buyers can reach them.

Product Management

Product Management

Once you've set up the registration process, you now need to think of a way to organize the products that your merchants offer. This is another crucial component as it will impact how your online marketplace pages look, the publishing options for the sellers, and the management features they have access to. Online marketplaces organize products in two ways:

  • Each product listed is offered by only one seller
  • One product offered by multiple sellers

Whichever method you opt for, the main thing to consider is the sellers’ ease of access. A useful way of doing that is to give them a pathway to import products or introduce onboarding services that let you arrange products on their behalf.

For instance, if the sellers are selling products on their own e-commerce stores, you should figure out how to enable them to import products easily.

Running Marketing and Content Management Operations

After your online marketplace has grown and picked up a sufficient number of sellers and buyers, you should work on figuring out how to keep them on your platform. The main strategies available are organic marketing, paid marketing, and SEO (Search Engine Optimization).

Most large companies rely on SEO to some extent to market products and services. Good SEO makes your online marketplace more visible to all internet users. To reap all the benefits of good SEO, you need to make it easy to add product listings, shareable merchant stores, and additional marketplace items on your site.

You also need to ensure that your platform has all the right seller features. This will make it easier for them to use the online marketplace. It’s safe to say that anything other than a user-friendly system will turn merchants off your marketplace.

Another crucial factor is optimizing the ability of merchants to add content to your marketplace. This includes products and featured stores, blogs, user FAQs, product reviews, and more. All of the functions of these features must be easily accessible and simple to use.

The final marketing aspect that you should consider is user-generated content (UGC) management. In other words, you can't allow just any type of content on your online marketplace. You want to make sure that every product listing is relevant and doesn't attempt to scam consumers. If you neglect UGC management and buyers end up getting bitten, you risk losing a large number of visitors to your online marketplace.

Another ground for the careful management of UGC is to avoid low rankings in search engine results. In particular, if your online marketplace contains duplicate content, your site probably won't have favorable SEO results. To prevent this, get rid of identical stock images, listings, and such on your platform. This will improve your SEO results and users will have a much easier time navigating your website.

Managing Orders

Fulfilling the order is the first thing that comes after something gets sold on your marketplace. You have to make sure that sellers deliver goods as promised, and the first step in doing so is establishing a system that notifies sellers about a purchase as soon as it happens. Speed is paramount as buyers will appreciate quick deliveries, making them more likely to return to your online marketplace.

Moreover, your system needs to provide a clear overview of each purchased item and how your buyers will receive them. Afterward, buyers should be able to track orders from the point of dispatch to the moment the order arrives. Even if delays are to take place, you still need to notify the buyers and perhaps provide them with the contact information of the relevant service that they can reach to solve problems.

Lastly, setting up protection systems for sellers and buyers is a good idea, especially if your online marketplace has grown a lot. Or else, as the owner of the site, you are only inviting disputes and lawsuits.

Shipping and Logistics

After setting up a proper order and delivery tracking system, you still have to decide who should handle shipments – you or the sellers.

If you decide to leave the shipping to the sellers, you need to set up an easy way for them to manage deliveries and specify shipment conditions. For example, you can let merchants choose between weight-, price-, or custom-based pricing. Whatever the option may be, the sellers should communicate shipment terms for all locations and carriers available.

Seller and Buyer Duties

Merchants' and Buyers' Duties

Another issue that you will be tackling throughout the operation of your online marketplace is the duties that sellers and buyers have toward each other. You have to create an environment that clearly sets out how both parties should act to ensure your network's growth. If either side fails to fulfill obligations, you can expect to see a smaller number of sellers and buyers on your website for dissatisfaction.

To keep both sides happy, you need to interact with your sellers and buyers frequently. Determine whether any side has had negative experiences with the other and take appropriate action to resolve issues. This will provide you with invaluable feedback that you can later use to improve the terms and conditions of using your online marketplace.

You should also let buyers ask sellers questions about products that they’re interested in and set up communication channels before ordering a product. As a result, any potential problems are much more likely to be resolved in direct communication, eliminating the need for you to step in. Another vital component that you should encourage is post-transaction communication, during which your online marketplace will collect more customer reviews and add transparency.

Finally, establish mass communication whenever necessary. For instance, you can inform your merchants of new features or policy changes. Similarly, notifying registered users about marketplace discounts may boost your platform’s traffic.

Choose Your Payment Method

To develop a burgeoning online marketplace, you need to include a reliable and safe payment processing method. This can be even more complicated in an online marketplace. Namely, there are multiple payment directions that you need to take into account:

  • Payments to and fro sellers (payouts, promotions, subscription, listing, and signup fees)
  • Payments to and fro buyers (payments from purchases)
  • Other payments (e.g., advertisements)

Out of all of these, you should be most concerned with the payments to and from your buyers. This is because you need to consider the three sides that are parties to it – the platform, the seller, and the buyer.

To process these payments, three options are available to you:

Aggregated Payments

Aggregated payments are useful for processing single checkout purchases. Whenever a buyer purchases products from multiple sellers, you need to collect the buyer's money and later dole them out to all the sellers involved in the transaction (payouts).

However, this system makes other aspects more demanding. For example, you now have to pay more attention to conducting regular payments to your merchants and keeping track of their finances.

Direct Payments

Direct Payments

What makes direct payments convenient for you is that your platform plays no part in processing transactions. As the name says, all payments are carried out between buyers and sellers directly, eliminating your involvement.

Nonetheless, there are several downsides to using direct payments on your platform. First, your ability to handle refunds and returns is severely limited. The same goes for your capacity to collect transaction fees.

Second, the payment method isn't that straightforward for your buyers, seeing as there won’t a single checkout process. Instead, your buyers will have to go through checkout with each of the merchants that they purchase a product from.

Finally, the method isn't that safe for both buyers and sellers, making it easier for other people to use your online marketplace for personal gain.

Parallel Payments

Parallel Payments

Parallel payments combine the benefits of both of the above payment methods without any of the drawbacks. In particular, they work according to the same principle as aggregated payments in that buyer funds are split during the checkout process and later given out to all the sellers and the marketplace. However, the significant difference here is that a payment processor processes the payment.

In this way, all the potential financial liability is transferred to the payment processor, as opposed to your marketplace.

Perhaps the only drawback to this payment method is that it's challenging to implement. However, with recent technological breakthroughs, a wide array of payment processors have emerged, giving you plenty of options. To make the right choice, consider the needs of your platform, the flexibility required, as well as the degree to which you want your marketplace to be protected against financial crime.

Lastly, factor in the cost of the payment processor and see if it fits your business model. To help you narrow down your choice, here are the four most popular Payment Service Providers (PSPs) you should check out:

  • Stripe Connect – The list of Stripe Connect customers includes Thumbtack, Postmates, Instacart, and Lyft.
  • PayPal – PayPal recently introduced a platform designed solely for online marketplaces.
  • Adyen MarketPay – Adyen MarketPay customers include Upwork, Etsy, Airbnb, and Uber.
  • Mangopay – Mangopay also specializes in providing payment solutions for online marketplaces with a range of distinct features.

Apart from these household names, you might find what you're looking for in one of these alternatives:

  • Paybase
  • BlueSnap
  • Lemon Way
  • Assembly Payments
  • WePay

Figure Out Which Features Your Online Marketplace Will Contain

The last thing you want is to incorporate countless features into your online marketplace only to see that they are entirely unnecessary. This ties directly into the previous story about Minimum Viable Products (MVPs). More specifically, you don't want to go overboard with the number of features, especially before you launch your marketplace. Instead, make sure that your platform contains basic functionality and build, depending on the feedback you receive from your initial visitors.

As your platform grows and generates more traffic, you'll be able to fine-tune the features according to your customers' needs.

Now it's time to mention all the essential features that your marketplace should have from the jump. And they’re best grouped into three categories: platform features, buyer features, and seller features. Here's what all three groups should include:

Platform Features

Platform Features

The primary function of your online marketplace features is connecting sellers and buyers. Later on, you'll have to ensure proper conditions for maintaining business operations, monitoring, and moderating all the activities that take place on the platform.

Accordingly, your marketplace needs to contain all the features that merchants will use to organize and manage their stores, list and update products, manage orders, process payments, etc.

You should also periodically make changes to the design of your marketplace without tampering with the code. This will let you introduce novelties to the marketplace in terms of new layouts for products, highlighting promotions, etc.

One of the main features that your marketplace can't do without is payment processing. As previously mentioned, you'll need to cover multiple sides of transaction processing, find a way to collect fees, pay sellers, and process any other payment types. But be careful not to include too many payment gateways as this might seem too complicated to your buyers. Instead, start with one or two reliable payment methods, and you can as more as the marketplace grows.

Another indispensable feature is logistics and shipping. Give your merchants a way to control the shipping methods. Similarly, your buyers need to know how long shipping will take and cost.

Apart from the essentials, there are many other features that you can include to boost your online marketplace:

  • Advanced reporting and analytics – After setting up basic reporting and analytics tools in the initial stages of your online marketplace, you can upgrade to professional reporting and analytics software at some point. For instance, incorporating Google Analytics is a popular option in this field.
  • Customizable stores – If you want to give your merchants the ability to make their stores more attractive, let them add colorful backgrounds or make other modifications as they see fit.
  • Several subscription plans – If you want to reserve access to certain features to premium merchants, you can include several programs in your offer. However, don't add too many programs or risk getting stuck with a complex design.
  • Mobile Apps – Once you've made the site functional and responsive, you can go on to develop a mobile app. Many users will appreciate it, though you may want to think carefully before embarking on this journey for the cost.
  • Advanced product options – At some point, professional sellers will want access to advanced features such as custom templates, product drafts, and bulk stock management.
  • Performance score and seller badges – Add this feature if your network becomes too large for you to handle manually. The reward system should include tracking your best sellers and rewarding them with benefits like lower fees or badges.
  • Holiday or vacation mode – While sellers are away, they can toggle a switch and mark their store as closed until they’re back.
  • Integrations with multiple shippers – You may wish to include a range of shipping methods for your customers. If so, you can integrate third-party shippers and provide users with more choices.
  • Multi-user accounts – This feature includes allowing several users to control a single vendor account. This is typically reserved for enterprise merchants.

Buyer Features

When designing your online marketplace's buyer features, keep in mind that buyers always look for a quick and easy way to find and buy products. The first step to ensuring that is to include a convenient search bar, product filters, and detail-packed product pages.

The design aspect that will help you attract both buyers and sellers is the products’ featured images. Since most people consider the visual side of a product extremely important, the products on your site should ideally contain appealing images. Whether buyers will even click on a product depends a lot on the product’s image quality. Although this may be out of your control, you may want to make it easy for sellers to make the pictures neat, striking, and a reliable indicator of what a product will look like in person.

Your buyers also need a simple checkout procedure. The simpler the checkout, the more likely are the buyers are to complete purchases and not stop somewhere along the line. If you want to keep your online marketplace up to date with popular trends, make sure that your checkout feature comes with a single checkout process for all merchants.

In terms of payment methods, your main consideration should be buyer preferences and the region you're serving. For instance, if you notice that the buyers in your area prefer to pay with cash, you’d have to make sure to include cash on delivery (COD) as an option, along with another payment system such as split payments.

When it comes to order management, don't focus all your efforts on optimizing the feature for your sellers. You need to provide an easy way for buyers to access and keep track of their orders. Additionally, having a feature that notifies buyers about any status changes is certain to score a lot of user-friendliness points.

Another thing that buyers highly appreciate is the ability to communicate with sellers. Therefore, give them the necessary tools to ask sellers questions before placing an order. This can be achieved on the product pages and also through contacting directly. Coupled with a feedback or review system, buyers will be far more likely to return to your online marketplace.

Seller Features

Seller Features

We've mentioned some of the main features that all sellers will want to access. These include listing products, selling, and shipping them away.

Before everything else, you need to come up with a simple yet efficient onboarding process. While it shouldn't take too long for sellers to sign up, the onboarding process should also contain all the information needed to manage sellers and their content.

However, be careful not to make your merchants submit the same information multiple times. Design your onboarding process in such a manner as to make it smooth and seamless. For instance, the ability for them to log in with their LinkedIn, Google, or Facebook account can be an easy solution.

To facilitate the signup, make sure your merchant terms and conditions are clear, the landing pages are helpful, and there's a simple way for your sellers to import and modify their catalogs.

You should also think in terms of the products that your marketplace will have. Accordingly, add useful management features for those product types. Also, don't make it tedious for your sellers to publish products on your marketplace.

More than that, you may want to allow experienced sellers to list a large number of products as fast as possible. This is usually accomplished with a spreadsheet – your developer will be familiar with it.

Then, sellers need a good marketing strategy just as much as you do. To ensure that they don't have to do all the work, allow your sellers to use essential marketing tools like product promotions and discount management.

Like buyers, sellers also need access to communication. Provide them with adequate channels to field questions from interested buyers. Include both public and private channels of communication.

Next, try to include in-app chat that will speed up the communication between buyers and sellers. In addition, push notification will help your merchants catch buyers' attention quickly and easily. For instance, they could include time-sensitive offers, such as coupons and hourly promotions, and notify their subscribers or past buyers.

Security is one of the burning issues that online sellers are most apprehensive about. Address any security concerns that your merchants might have by ensuring that your platform adheres to encryption practices like PCI DSS (Payment Card Industry Data Security Standard) compliance and SSL (Secure Sockets Layer) certificates. Sellers that don’t have to worry about their data are those that want to do business with you.

Choose a Domain Name for Your Online Marketplace

When coming up with a domain name for your platform, you should go with one that adequately conveys your business idea. It should represent what your platform stands for while being unique and catchy. Here are the other guidelines to follow when selecting a domain name:

  • Brevity – Keep the name short to make it easier to remember.
  • Relatedness – Your customers should be able to guess your domain name from your company's name.
  • Spelling – Try to come up with a name that's easy to spell and understand.
  • Typing – Stay away from names that have special keyboard combinations or worse, characters that can’t be found on standard keyboards.
  • Pronunciation – Say the name out loud to see how understandable and fluent it is.
  • Trustworthiness – Choose a domain for your website that reflects its purpose accurately. For instance, commercial companies use .com, whereas not-for-profit organizations often use .org.
  • Meaning to clients and partners – Go for a name that your clients and partners can easily relate to your business field.
  • Target language meaning – Your domain name should convey a clear meaning in your target users' language.

Choose Your Software Platform

Needless to say, you have to use an e-commerce software platform to build your online marketplace. Even if you’re to hire an agency to do it, you still have to decide on a platform and it should have the tools necessary to develop your business logic accurately.

You can choose one of two options:

  • Build your online marketplace with a popular e-commerce platform
  • Build your online marketplace from scratch

Let's see what both options entail:

Building Your Online Marketplace With a Popular E-Commerce Platform

If you need something quick and easy to use, going with an existing software platform is the way to go. Many marketplace owners go down this path because it enables them to start an online marketplace in much less time.

There's a wide variety of e-commerce platforms readily available. Some of the most popular include:

  • Magento
  • Shopify
  • WooCommerce
  • CS-Cart
  • Sharetribe
  • Yo!Kart

To delve into the specifics of your options, we'll group them into three categories:

  • Multi-vendor CMS add-ons
  • Standalone software
  • Hosted or cloud-based platforms

Multi-Vendor CMS Add-Ons

Multi-vendor CMS Add-ons

Many people just go with a standard CMS (Content Management System) such as OpenCart, Magento, or WordPress. After that, they just need to include a multi-vendor add-on to get their online marketplace up and running. Simple as this may sound, there are numerous obstacles to this type of software.

CMS platforms are usually used for standard e-commerce sites and regular websites. As such, they aren't primarily designed to power an online marketplace. Therefore, it could take a lot of time to make a CMS platform work for your online marketplace and you'll probably encounter a good number of errors along the way.

If you believe that you're up for the challenge, you can consider the following software combinations:

  • Magento, accompanied by Apptha, Webkul, CreativeMinds, or NextBits
  • OpenCart, accompanied by Waabay, PurpleTree, or MultiMerch
  • WordPress and WooCommerce, accompanied by YITH, WC Vendors, WCFM, WC Marketplace, or Dokan
  • PrestaShop, accompanied by KnowBand

Using a CMS to build your marketplace is by far the most complicated of all the existing software solutions. For this reason, you'll need to hire experienced developers well-versed in these platforms. They should be able to overcome the compatibility limitations and anything else that may spring up. You should also consider that your competition may be using the same software combination, requiring you to make frequent changes if you’re to outdo your competitors.

In conclusion, these CMS platforms work best if you're familiar with the big boys (WordPress, Magento, OpenCart, and PrestaShop) and you're eager to make advanced customizations to your online marketplace, whether on your own or by hiring developers.

Standalone Software

Unlike CMS’s, self-hosted standalone software is specifically tailored for online marketplaces. They give you access to a range of customization options as you can modify the source code directly. In addition, these platforms usually allow you to host the site yourself, giving you the ability to manage the entire online marketplace from the get-go.

The most established standalone software options include:

  • Yo-Kart
  • X-Cart Multivendor
  • CS-Cart Multivendor
  • MultiMerch Standalone

Even though the standalone software platforms are more user-friendly than CMS platforms, they still require the appropriate skill set. Just like any software, you'll have to perform regular hosting, maintenance, and updating. If you’re to go down this route, adding experienced developers to your team will be much more comfortable than learning how to do it yourself.

In summary, going with a standalone software is an excellent decision if you want to be the owner of your platform and you’re not cowed by technical knowledge.

Hosted or Cloud-Based Platforms

Hosted or Cloud-based Platforms

The final option is also the easiest to use. It doesn't require a lot of technical skills, making it an ideal solution if you're an absolute beginner and you don't care to hire seasoned developers. What is more, these software platforms also come with free trials, which means that you can test out a few to see which one fits you best.

Most people pick one of the following hosted or cloud-based software platforms:

  • Arcadier
  • Near Me
  • Marketplacer
  • Sharetribe

However, if you're looking to make advanced modifications, you won't get much headway with using these platforms. This is because the platforms don't allow you to access the code and make any underlying changes. As a result, the previous two options (standalone and CMS) are a better alternative if you have the technical knowledge necessary to make complex adjustments to the software.

Overall, hosted or cloud-based marketplace platforms are the right choice if you lack the skills needed to use the other two options and you're looking to set up your marketplace as soon as possible.

Which Pre-Made Software Should You Choose?

Since all three groups have distinct features, it's important to figure out how they might align with your needs and skills. In general, here are the main factors that you should consider when deciding on the marketplace software:

  • The type of your online marketplace – The dominant detail that you should take into account is the type of your marketplace. Namely, whether you're setting up a services, bookings, or products marketplace will dictate your choice. Normally, you won't select a software that’s designed for services if you're planning to sell products.
  • User experience – Make sure that your software provides your users with reliability and ease of access.
  • The features desired – Find a software platform that has all the tools needed to support the features that you want for your marketplace. These may include payment methods, order management, shipping, and so on. If the platform is missing some of the necessary tools, does it give you the option to access the code and address the deficiency?
  • Customer support – Determine which software option has the most dependable customer support. This can be a vital aspect since many problems are bound to arise in the development process and make you want to get a hold of customer support.
  • Your budget – While the budget is important, it shouldn't at the top of your priorities. For instance, if you start building your marketplace on a low-end platform, it's very likely that the platform won't have all the tools needed to develop the marketplace that you have in mind

Overall, going for an existing platform isn't a very complicated task from a technical standpoint. The main convenience is the option to add numerous add-ons that can optimize the features of your online marketplace. On the other hand, here's a summary of the downsides of these software packages:

  • Your competition might be using the same templates as you.
  • You might not be able to access certain customization features.
  • Regular software performance optimization is necessary.

With that in mind, let's see whether you might be better off with the other option for building your marketplace.

Building Your Online Marketplace From Scratch

Building an online marketplace from scratch will facilitate any customizations imaginable. This approach enables you to create a fully personalized online marketplace that contains as many features and rules as you require.

Still, the process can be extremely time-consuming. Apart from that, you'll need to invest much more money into coding, quality control, and the launch of your online marketplace.

If you decide to take this approach, you have a number of ways to develop your software:

In-House Software Development Team

In-house Software Development Team

When building an online marketplace from scratch, your first option is to assemble an in-house team. This will give you a chance to add team members as needed.

However, this course of action can be quite expensive since you’ll need to motivate your software developers with sufficient remuneration.

Freelancers

Another option is to outsource and hire one or more freelancers to carry out the project. This option is usually cheaper than hiring an agency or putting on your payroll professional software developers, but you still have to ensure that you get high-quality services. A reliable way of checking is to ask for references, preferably previous customers, to get an idea of how well they generally perform.

The main challenge in working with freelancers is remote collaboration. But, if this isn’t too big of a deal for you, here are some of the most popular freelancing websites that you can use to headhunt:

  • Freelancer
  • Upwork
  • Fiverr
  • PeoplePerHour
  • Communities and groups on LinkedIn, Facebook, and Slack

Software Consulting

The final option is to hire a software consultancy agency. The main benefit here is that experienced programmers will be developing your marketplace. You can ask them to come up with a fully personalized platform and the agency will use all product creation methods to deliver a satisfactory online marketplace.

Develop Your Minimum Viable Product (MVP)

Develop Your Minimum Viable Product (MVP)

After you’ve decided on how you will be developing the software, you need to direct your team to create an adequate minimum viable product (the product being your marketplace in development).

The point is to launch your online marketplace even before you believe that it is fully ready. This is so you’ll be able to access early feedback and perceive the users’ behavioral patterns as they interact with the marketplace. For instance, to keep track of your users’ engagement, you can use one of the following platforms:

  • Hotjar
  • Google Data Studio
  • Google Analytics

Contrary to popular belief, launching a product or site while it’s still in the early stages might be more advantageous than introducing a fully-fletched platform later on. The reason for that is the ability to continually make changes to the product and align it with your users’ needs. This isn’t that feasible with a finished product since making even smaller modifications would be much harder once you’ve already come up with all the features.

Another convenience of launching an MVP is the opportunity to test the inherent assumptions of your platform.

For instance, let’s assume that you want to enable buyers to filter their search for a seller according to two criteria. The primary standard is the number of products that the sellers have and the second criterion is seller ratings. However, it may turn out that most of your buyers prefer to buy from the highest-rated sellers, as opposed to sellers with most products. And since your network is still in the MVP stage, you can alter your filter settings and set merchant ratings as the primary search criterion.

In contrast, if you’ve already put all the pieces together for your online marketplace, it can be almost impossible to adjust it to your users’ needs then.

The most difficult choice about developing the MVP version of your site is figuring out which features you should include. However, once you take a look at the basic functions that the initial customers are looking for, it becomes much easier to decide which features to include in the MVP.

Furthermore, other people have performed the trial runs and research for you, and here are the features that your MVP must possess:

  • Simple social login – The login on your MVP should be simple and not take too much time. You should use social login buttons to provide your customers with ease of access in this regard.
  • Seller and buyer profiles – Come up with two interface types on your platform – one for buyers and one for sellers.
  • Search and filters – Even though your marketplace won't be packed with products initially, you still need an effective search and filtering feature to give visitors a smooth experience.
  • Messaging – The primary task of an online marketplace is to connect buyers and sellers. This isn't possible without a messaging app with which sellers and buyers can discuss transaction details. So, make sure to include one.
  • Reviews – Allow buyers to reference other buyers' experiences and see if certain sellers are more trustworthy than others.
  • Payments – Choose a payment gateway so that buyers and sellers can their transactions.

Including all of these features in the earliest stages of your online marketplace is indispensable. This will help you land your first customers. Later on, you can start adding more sophisticated features to your marketplace and improve the overall user experience on your platform and add to your revenue. Additionally, early customer interaction is what makes it possible for you to come up with ideas for adding new functionalities.

Put Together the Rest of Your Team

After you learn how you’re going to conduct your software development operations, it's time to put the remaining pieces of the puzzle together. More specifically, you need to figure out the ideal approach for sales, marketing, and other operations. Here are the main considerations for each:

Sales and Marketing

As we've already covered, you need to find a way to attract sellers and buyers to your online marketplace. To do this, you'd promote your platform to make the public aware of its market presence.

The first step is to get the marketplace going by getting the initial merchants and buyers to join your marketplace. Afterward, building brand awareness will put you on the map and scale your marketplace. Some of the most common sales and marketing strategies include:

  • Promotions
  • Partnerships
  • Email marketing
  • Paid and organic acquisition
  • Community management and social media

On top of this, you'll have to hire people who possess the skills for executing successful promotional campaigns in today’s environment. For instance, copywriting is becoming increasingly crucial as it enables marketplaces to be more persuasive in convincing people to stick around. Another helpful feature is figuring out how to assist your merchants in describing their products in a sales-friendly manner. This is how you can get your marketplace to start gaining more traction.

Guest posting is another effective marketing strategy. It’s a valuable tool that will increase your online marketplace's reputation by mentioning your brand or occupying branded search results. You’re also building relationships with other bloggers since you're letting them post on your online marketplace. Moreover, adding guest posting is a great way to boost your SEO since the backlinks in those guest posts will make your online marketplace much more visible in search results.

Other Operations

Apart from software development and sales and marketing, you'll also be in charge of running a vast array of miscellaneous operations. Some of the most important include:

  • Managing payments, products on the marketplace, and paperwork
  • Directing your team
  • Ensuring reliable customer support (answering questions, resolving technical difficulties, etc.)
  • Providing a suitable environment for the merchants

Initially, your duty will be deciding how will these operations be carried out. This means that you have to hire competent people to perform all the tasks according to their job titles. Just like with building your software from scratch, you have several options when assembling your team:

Full-Time Employees

Full-time Employees

The most common practice in all companies is recruiting full-time employees. While this might not be doable on a large scale for a new online marketplace, the strategy will ensure that all your operations are performed by committed people whose primary responsibility is precisely working for you.

If your budget allows it, recruiting full-time employees will result in many benefits for your company. First, you'll ensure consistency in your work since the same people will conduct all the work. Second, your workers will display commitment, which is what having a full-time job requires. And third, full-time workers become a part of your company’s culture, allowing you to build meaningful relationships with your employees.

However, hiring full-time employees might be tricky to pull off for a number of reasons:

  • The cost is usually high.
  • Staff management can be a problem for the inexperienced.
  • Scalability issues
  • Recruiting competent employees is demanding and time-consuming.

Individual Freelancers

Recruiting individual freelancers is on the opposite end of the spectrum. The main reason why companies hire freelancers is the lower costs and short-term commitment.

Moreover, you can find a slew of freelancers with a range of skill sets. Accordingly, you can find experts, interns, and you can also choose to hire one freelancer or a whole team of them. Another convenience is that you can easily add more freelancers if your workload demands it, or you can scale back in a downturn.

Essentially, whenever you need to complete a project quickly without learning the skill or recruiting full-time employees, freelancers will give you a way out.

Hiring Agencies

Reaching out to specialized agencies will help you unload a large amount of work to a group of people who specialize in certain areas. We've already mentioned that you can do this for your software development, but this is also a possibility in other work areas. For instance, hiring a marketing agency to run marketing campaigns will let you focus on managing your freelancers or your marketplace.

Still, you need to think carefully before hiring an agency. The top two reasons for that are the higher costs and longer commitments. In particular, you might have some trouble switching to a different agency if you notice that the one you're working with isn't adequate for you.

What Are the Qualities Your Employees Should Possess?

Since you're building an online marketplace, you ought to look for people with related experience. Namely, try hiring people who are familiar with marketplace commerce and the features required to run it. This goes for all your recruits, be they full-time employees, freelancers, or agencies. The more experienced they are, the likelier it is for your online marketplace to succeed.

You should also figure out whether your prospects genuinely believe in the future of your online marketplace. Try to determine whether they are enthusiastic about working for you since this will make them much more motivated.

Naturally, finding experienced and eager staff members will take time, but it's worth it. Conversely, if you hire inexperienced workers to save some money, subpar performance is almost guaranteed.

Should You Run Your Marketplace Operations All by Yourself?

If you don't have the funds necessary to hire people for your project, you can take the DIY route. However, this will require you to find an appropriate platform that's fully hosted and loaded with online marketplace solutions. For instance, you can operate your platform in the cloud, where most of the design and technical requirements will already be taken care of. As a result, you'll be able to focus your efforts on marketing, sales, and other operations.

Overall, running an online marketplace on your own will be extremely time-consuming. So, make sure you're ready for the grind. Also, try to get help from whatever source you can find. It can come in various forms, including services, tools, mentorship, as well as consulting.

Build Your Online Marketplace

At this point, you have all it takes to create an online marketplace. Now you need to start the very development process. However, this can go on for quite some time, especially if you plan on building your platform from scratch. To facilitate the process, here are some useful strategies you can implement:

Applying Useful Practices

Applying Useful Practices

To get your online marketplace up and running successfully, you should observe some of the best practices already present on the market. These include:

  • Using different serversYou should use separate servers for your development, staging, as well as production. Additionally, don't introduce new network updates without testing them. Otherwise, fixing any errors that may occur can be challenging and time-consuming.
  • Employ version control, issue tracking, and testing throughout your development process.
  • Ensure that your automatic backup is always ready – Whenever your online marketplace goes down, having automatic backup versions at the ready will help you get back on track at double time.

Drawing Up Detailed Guidelines

Since starting an online marketplace is a complex task, a lot of things can go wrong. Luckily, you can lower the chances of adverse scenarios by coming up with detailed guidelines. These guidelines should contain a clear description of your goals, demands, and implementation deadlines.

If your project requires a lot of technical work, you want to develop the guidelines with as much detail as possible. Lay them out for all your employees, including freelancers and agencies, to be sure that they all understand your business vision and how you want things to get done. Or else the chances of losing money and effort would be much higher.

A useful method is to split your development into several milestones. This will let you keep track of your progress more efficiently. For instance, don't include the same deadlines for your MVP deployment and soft launching. Instead, split the deadline into two and make your headway gradually. This is much more likely to create a breeding ground for success than cramming all your tasks within a single deadline or having an overly broad deadline (e.g., MVP deployment between two and six months).

Project Management

To guide your project from start to finish, you'll need some project management knowledge. Now, you don't have to display a mastery of project management, just being familiar with the basics will go a long way. This is especially important if you're working with freelancers whom you will have to manage yourself. But in some cases, such as working with agencies, there should be a project manager tasked with keeping you updated on the state of the project.

One of the most important things that you'll be dealing with as a project manager is changing timelines. The general rule of thumb is to go through your previously established guidelines and conferring with the rest of your team to make sure that the change is feasible. Without affecting the other deadlines, for example.

Finally, make sure that there's a backup plan if things take a turn for the worse, which is nearly inevitable. You'll be in charge of a great many activities and people, making it more likely that you'll run into difficulties. In that case, having a backup plan may ensure that no obstacle is insurmountable.

Deciding on the Right Launching Moment

Launching an online marketplace too early and too late are both grave errors. You need to know the exact moment when your online marketplace is ready for use. This requires you to continually track your target market and test your marketplace with real users. Accordingly, you'll be able to perceive any potential problems that may arise upon launching and amend them appropriately.

Based on the feedback and market trends, you'll have all the knowledge to modify your marketplace before you set it in motion officially. Your customers will have access to a fully-optimized platform and should be pleased with their experience.

Get Your Online Marketplace Underway

You're finally ready to launch your online marketplace. But to make sure all goes well, here's what the launch should comprise:

Planning

Start making plans for the launch of your marketplace as soon as possible. This will include talking to target users, obtaining feedback, and polishing your platform and communication. Additionally, you should come up with an exact launch timeline and the channels for marketing communication and your business. These components vary depending on your marketplace type and region, so find one that best fits your vision.

Another important part of planning for your marketplace’s launch is reaching out to your target users. With proper market research, you should already be familiar with them. At this point, you have to get the word out to those target users by contacting them through social media or ads.

Fruitful communication with your ideal users will give you insights into their interests and who you should target first. Once your MVP is developed, you'll know who you should approach to give it a test drive first.

MVP Testing

As mentioned earlier, you shouldn't wait for a long time to launch a fully-equipped marketplace. It’s much preferable to test the waters and make sure that your core features are devoid of glitches and usability issues.

To do so, launch your MVP and reach out to several merchants that will be using your online marketplace in the future. Assist them in setting up their stores and verify that all the functions are accessible and that they have no problems using the stores.

To properly test your MVP, you need to see if the checkout on your online marketplace works error-free. So, invite buyers to the marketplace and check if their interaction with sellers is smooth.

Obtaining Feedback and Making Necessary Changes

Obtaining Feedback and Making Necessary Changes

After the sellers and buyers have had enough time to test out your platform, start gathering feedback. You can do so by arranging live meetings and conducting interviews with the users. Alternatively, communicating via email or social media is also useful.

Carefully analyze all the feedback obtained to see which areas you need to improve on. Moreover, don't engage with them as if they’re just test subjects. Instead, start fostering a lasting relationship with both buyers and sellers, as it’s never a moment too soon to begin to grow your marketplace.

Launching the Final Product

After making all the modifications and reaching a sufficient number of people, you can finally launch your marketplace. Conduct a final series of testing to ensure that the platform functions correctly.

To ensure that you get off on the right foot, you should set high goals. To do this, you can apply the 10-times rule. This rule entails multiplying your revenue goal by 10, regardless of how high it is right now. The reason for that is simple – you need to display confidence that your project will be tremendously successful, thus instilling confidence in your team and boosting productivity.

If not, you might start doubting all the strenuous work that you and your team have put into developing the online marketplace. You'll only be relegating yourself to average results.

To get your mindset right, you need the right approach to your competition. Namely, you should shift your focus from competing with other businesses to dominating your field. This is how you can set the bar high and constantly strive to reach it.

To try and attract as many visitors as possible, keep reaching out to your target audience and invite them to the grand opening.

Start Growing Your Business

Start Growing Your Business

Following the launch of your marketplace, you now have to direct your energy into growing the company. Unlike other e-commerce ventures, you're supposed to satisfy two sides – sellers and buyers.

Initially, the central goal will be to grow your sellers base and making sure that they don't jump ship to a different marketplace. Knowing where to start shouldn't be too challenging now that you’ve done the market research to figure out who you're targeting. You’ve just got to find the right way to contact them, and this is usually accomplished in two ways:

  • Direct communication – Put them on mailing lists and personally invite them to your online marketplace. This works for any new product introduction. Invite users to subscribe to your newsletter and keep adding people to your lists.
  • Paid advertisement – The usual suspects these days are Google Ads and Instagram and Facebook ads. For instance, you could create an ad that describes your marketplace succinctly and takes people to a landing page.

Even if you’re not making any inroads, don't try to get aggressive with your communication and ads. Instead, invest some time into developing trust by giving examples of how much value people can expect to get from your business.

Another promotional aspect that you should work on is SEO. This will drive growth and if your online marketplace is SEO-friendly, your merchant stores, product pages, and categories should start to climb up the rankings and help bring more people in.

To build trust, reliable practices include providing users with onboarding services free of charge and giving feedback about various products. Additionally, you can allow some of the sellers to sell products for free. Get them to test your marketplace's features and see if they are the right fit. This gives your sellers a first-hand experience of your platform, which may just turn out to be the most compelling strategy.

Furthermore, you can also use influencer marketing and hire online influencers to get the word out to their social followers. There are other ways to do this besides and we’re only scratching the surface of what’s possible.

The moment sellers start arriving on your platform, start building trust immediately. Here's what you can do to retain customers:

  • Conveying a strong first impression – To create a convincing first impression, you'll have to address the look of your website, the quality of the sellers, the products on offer, the FAQ page, and the About Page.
  • A diverse inventory – Ensure that you have all kinds and brands of products on your online marketplace. Buyers will stick around on your platform more and that’s good for sales. Just don’t add too many products that buyers become lost.
  • Transparency – If your customers make a complaint, make sure to let them know that you're working on a solution. Your customers will appreciate transparency when there’s something wrong.
  • Honesty – You need to make good on whatever promise you make to your customers. Therefore, don' make any claims that you can't back up as it’s a sure way to lose customers to other platforms.
  • Allowing reviews – Don't forget to add a review feature as it will help improve your credibility. You may not have any reviews immediately following the launch but that will change soon.

To check if your marketing efforts are working, you should turn to analytics tools. For instance, many marketplace owners use Ahrefs or Google Analytics to gauge the effectiveness of their marketing strategies.

Establish Partnerships to Give You the Edge Over Your Competition

Establish Partnerships to Give You the Edge Over Your Competition

Apart from marketing, you may have to take additional steps to outperform the competition. For example, you can introduce new features and benefits that people can't find on other marketplaces. On top of polishing your services and tools, you can also enter into partnerships to get a leg up on the competitors.

For example, if your online marketplace has a lot of sellers of sports memorabilia, you could partner with ticketing companies that offer discounted tickets to games. This should help you grow your customer base to include some of your partners’ customers. There’s something in it for your partners too – they get access to your customer base.

This type of collaboration is also known as cross-promotion. As demonstrated above, it is beneficial to both parties in the partnership. The only thing to remember is that you shouldn’t work with companies that are direct competitors.

Keep Your Customers in Your Marketplace

Attracting customers to your online marketplace may not amount to much if you don't know how to keep them around. This only means that you need to devote considerable effort to ensure that your customers enjoy using your marketplace so that they will continue to use it. Here are a handful of customer retention ideas:

  • See which users display the most activity and set up personal interviews to provide them with interesting offers like discount codes.
  • Address issues the moment they arise by always gathering feedback.
  • Develop a knowledge center that includes frequently asked questions.
  • Develop tutorials and guides to help buyers and sellers navigate your marketplace.
  • Promote the best sellers by featuring them in success stories.
  • Regularly update your site to ensure a great user experience.

Apart from these, you can also throw in some perks for your visitors. For instance, referral benefits can go a long way. Along with gift cards, referral marketing can help you acquire more customers and increase the likelihood of them sticking to your marketplace.

You should also display qualities that will be well-received by your target user base. Here are several examples:

  • Be authentic – This means that your content has to be unique through and through.
  • Be real – Don't just be a faceless online marketplace. Instead, relate to your audience by sharing stories and interacting with them personally.
  • Be nice – Although it sounds obvious, some businesses aren't always respectful to their customers. On no account should you badmouth or be rude to people. You must be responsive, helpful, and generous with your attention and time.
  • Be relevant – After gathering feedback on your target users, compile your ideas in relevant blog posts, share them through an autoresponder, and you can even present solutions in a webinar.

Final Thoughts

This comprehensive guide is a great starting point for launching your online marketplace. It should help you go through the ideation, market research, development, and the other stages more easily. However, the most important thing is truly giving it your 100% and not cutting corners on any aspect of marketplace creation.

Also, the work isn't over once you've launched and grown your marketplace. You need to continually enhance your platform, introduce novelties that your customers will appreciate, and keep building powerful bonds with your target users. This will help bring a steady flow of revenue and to fruition all the hard work you've put in.

By interactivated • on June 15, 2021

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