Creating a marketplace website lets entrepreneurs harness eCommerce by connecting multiple sellers with a wide range of buyers. This comprehensive guide outlines 9 steps to launching and running a successful online marketplace.
We discuss how to choose between a vertical or horizontal marketplace model, determine your revenue strategy, and register your domain. We also delve into the importance of organizing product listings, testing your website for user experience, and choosing effective marketing strategies to attract sellers and buyers alike.
Table of Contents
1. Choose Your Marketplace Niche
The first step in creating a marketplace website is to choose your marketplace niche. This involves deciding between a vertical or horizontal marketplace model.
A vertical marketplace model focuses on a specific product range, and caters to niche markets. Examples include Etsy, which specializes in handcrafts, and Mercari, which specializes in pre-owned items. The vertical model allows for a deep understanding of the market, and enables tailored services and a curated product selection.
A horizontal marketplace model offers a wide range of products across various categories. Platforms like Amazon and eBay exemplify this model, as they appeal to a broader audience by providing diverse product selections. This model benefits from scalability and the potential to attract a larger customer base.
Your choice between vertical and horizontal models dictates your marketplace’s target audience, product selection, and marketing strategy. Consider your market knowledge, resources, and goals when choosing.
2. Determine the Revenue Model
The second step is to determine the revenue model. There are 3 common revenue models.
The first is the listing fee model. The listing fee model charges sellers a fee to list their products or services on your platform. This model generates steady income and encourages quality listings. The second is a seller commission model. This means you earn a percentage of each successful sale made through your marketplace. It aligns your success with that of your sellers. The third revenue model is an advertising fee. This involves offering sellers enhanced visibility through listing bumps or featured listings for a fee. This model benefits from additional revenue streams and allows sellers to stand out.
Your chosen revenue model significantly influences the marketplace’s features, offerings, and overall structure. It determines how you generate income, and also impacts your approach to attracting sellers and buyers. Carefully consider which model best aligns with your marketplace’s goals, target audience, and market dynamics.
3. Attain a Web Hosting Service
The third step is to attain a web hosting service. A web hosting service is responsible for hosting all your marketplace’s data, including product listings, user information, and transaction records. It ensures that your website is accessible to sellers and buyers online around the clock.
The hosting service you choose directly impacts your site’s performance, reliability, and scalability. Consider factors such as uptime guarantees, customer support, and the ability to handle high traffic volumes, especially during peak shopping times. Your hosting solution must also provide robust security features to protect user data and transactions. It’s important to select a hosting service that aligns with your marketplace’s size, expected growth, and technical requirements to ensure a smooth and efficient online operation.
4. Register a Domain Name
The fourth step is to register a domain name. A domain name is the web address where users are able to access your marketplace website. It’s a key part of your online identity, and makes it easy for customers to find and remember your site. The domain name must reflect your marketplace’s brand and be easy to spell and pronounce.
There are 2 ways to register a domain name.
The first is via a web host. Many web hosting services offer free domain name registration as part of their hosting plans. This option saves you money and also simplifies the process by keeping your domain name and hosting under one account.
The second is via a domain registrar. Opting for a dedicated domain registrar provides you with a broader array of name options and a wider range of prices. This gives you more flexibility in choosing a domain name that best suits your marketplace. Note that you need to connect the domain name to your hosting account if you register your domain name with a domain registrar separate from your web hosting service.
5. Develop Your Marketplace Website Functionalities
The fifth step is to develop your marketplace website functionalities. This is important to facilitate interactions between sellers and buyers efficiently. There are 11 functions to take care of:
User Profile
The user profile function allows both sellers and buyers to create accounts on your platform. It also enables them to manage listings, purchases, and personal information securely.
Admin Panel for Sellers
The admin panel provides sellers with tools to manage their product listings, track sales, and analyze performance metrics, which helps them optimize their sales strategies.
Product Listing
Product listings enable sellers to showcase their products with detailed descriptions, prices, and images. They make it easier for buyers to browse and select items.
Wishlist
A wishlist allows buyers to save favorite products for later. It enhances the shopping experience by keeping track of items they are interested in.
Cart
A cart facilitates a seamless checkout process by letting buyers collect multiple items for purchase. It streamlines transactions on the platform.
Shipping
The shipping feature offers buyers the option to choose their preferred shipping method from those offered by sellers. This adds flexibility and convenience to the buying process.
Payment Gateway
A payment gateway integrates secure payment options for buyers to choose their preferred method to pay sellers. This guarantees safe and efficient transactions.
Messaging
The messaging feature enables direct communication between sellers and buyers. It allows for inquiries, negotiations, and enhanced customer service.
Search
The search function allows users to quickly find specific products or sellers using keywords. This improves the usability and efficiency of the marketplace.
Sort
The sort function offers sorting options such as price, rating, featured items, bestsellers, and new arrivals. It helps buyers easily find products that meet their criteria.
Filter
The filter function enables users to refine product searches based on various criteria like category, brands, seller, condition, and ratings. This makes it easier to navigate the vast product offerings in a marketplace.
The goal of adding these functionalities is to encourage engagement and transactions on the platform.
6. Structure Your Marketplace Website
The sixth step is to structure your marketplace website. Clear, navigable web pages are essential for providing a positive user experience. There are 6 key pages to include:
Homepage
Acts as the gateway to your marketplace.
About
Offers insight into your marketplace’s mission, history, and team.
Support/Help
Provides users with resources for assistance, including FAQs, contact information, and guides on how to use the marketplace effectively.
Product Listing
Displays products with detailed descriptions, pricing, images, and reviews. This page must also include options for customers to add items to their cart or wishlist.
Seller Profiles/Directory
Showcases individual sellers or brands on your platform, including their product range, ratings, and reviews.
Policies
Consolidates important legal and procedural information, such as Terms of Service (ToS), privacy policy, shipping, and returns policies.
A well-structured website not only enhances user experience but also supports SEO efforts.
7. Organize Product Listings
The seventh step is to organize product listings. This enables customers to find what they’re looking for with ease. Create separate pages or sections for these 5 categories:
Department
Categorize products into departments such as Electronics, Fashion, Outdoors, and Sports. This improves the shopping experience by segmenting products based on their nature and use.
Deals
Highlight special offers, discounts, and clearance items on a dedicated ‘Deals’ page. This attracts bargain hunters and encourages purchases.
International Shipping
Create a section for products available for international shipping. This caters to a global audience, and makes it clear which items are eligible to be shipped across borders. This expands your marketplace’s reach.
New Arrivals
Feature the latest products added to your marketplace under ‘New Arrivals.’ This keeps the content fresh and encourages repeat visits.
Featured
Showcase selected products, sellers, or brands in a ‘Featured’ section. Use this space to promote bestsellers, top-rated items, or products from sellers with outstanding service.
Organizing product listings in these ways encourages exploration, discovery, and transactions on your marketplace website.
8. Test and Review Your Marketplace Website
The eighth step is to test and review your marketplace website. There are 4 things to do before launching. First, test the entire seller journey from signing up and listing products to fulfilling orders and using the admin panel. Second, simulate the buyer journey. Sign up as a buyer, browse products, go through the checkout process, and use the messaging system.
Third, test your marketplace on different devices (smartphones, tablets, and laptops) and browsers (Chrome, Firefox, and Safari). Make sure it works flawlessly and appears correctly.
Fourth, ensure that your SSL certificate is properly installed and active to secure your website and protect user data. An SSL is a Secure Sockets Layer certificate that encrypts data transferred between a user’s browser and a website, ensuring secure and private communication.
9. Launch Your Marketplace Website
The ninth and final step is to launch your marketplace website.
First, introduce your marketplace website as the initial version, often referred to as a ‘Minimum Viable Product’ (MVP). This version must include all the core functionalities that allow users to buy and sell effectively. The goal is to go live with a functional, user-friendly platform that meets the basic needs of your target audience. Next, update and build out your marketplace. You need to closely monitor user behavior, analytics, and feedback before making any changes.
When you have your feedback and user analytics, plan and implement updates to your marketplace. Prioritize updates that enhance user experience, security, and platform performance. Incorporating user feedback into continuous development not only improves your marketplace but also shows your community that you value their input. This approach contributes to building a loyal user base.
What Is a Marketplace Website?
A marketplace website (a.k.a. online marketplace) is a niche type of eCommerce website where multiple sellers list their products or services for sale to a wide range of buyers. It acts as an intermediary between sellers and buyers, and facilitates transactions of goods and services across various categories. This strays from traditional eCommerce websites that only represent a single vendor. A marketplace website enables consumers to compare products, prices, and sellers all in one place. This enhances the shopping experience by providing convenience and variety.
What Is the Difference Between Marketplace and Traditional eCommerce Websites?
There are 4 differences between marketplace and traditional eCommerce websites. They are revenue models, variety of sellers, inventory management and product pricing.
Revenue Models
A marketplace website generates revenue through fees charged to sellers, such as listing fees, commission fees, or advertising fees. A traditional eCommerce website earns revenue from the sale of products or services directly to consumers.
Variety of Sellers
A marketplace website facilitates transactions between multiple sellers and buyers, and offers a broad variety of sellers and products. A traditional eCommerce website is operated by a single vendor, and sells products from one source.
Inventory Management
A marketplace leaves the seller in charge of managing their own inventory and setting their own product prices. A traditional eCommerce website’s inventory and product pricing are managed by the website’s owner.
Product Pricing
A marketplace website allows sellers to set their own product prices, which foster competition and diversity. A traditional eCommerce website offers a more controlled shopping experience since product prices are set by the website owner.
What Types of Online Marketplaces Can I Start?
There are three types of online marketplaces you can start. They are B2B, B2C, and C2C.
B2B (Business-to-Business) marketplaces provide a space for companies to buy and sell products or services in bulk, often at wholesale prices. Alibaba and Amazon Business are examples of B2B marketplaces.
B2C (Business-to-Consumer) platforms cater to the end-users’ needs, and offer a wide range of products from different brands and retailers. Amazon is a prime example of a B2C marketplace.
C2C (Consumer-to-Consumer) platforms provide a space for users to sell pre-owned items, handmade goods, or unique finds directly to other consumers. C2C marketplaces foster a community atmosphere, with users both buying and selling within the same ecosystem. eBay and Etsy are examples of C2C marketplaces. They’re akin to online boutiques as they offer a more curated shopping experience.
Each type of online marketplace serves a distinct market segment.
Can I Build a Marketplace Website by Myself?
Yes, you can build a marketplace website by yourself if you have the time and technical expertise. It is still recommended to hire web developers to build and maintain your marketplace website if you’re aiming to launch an auction site or a platform with complex functionalities. Professional developers ensure a quicker launch and more resilient build compared to a DIY approach. This provides a stronger foundation for your marketplace’s growth and user satisfaction.
What Do I Need to Create a Marketplace Website?
You need 4 things at minimum to create a marketplace website:
Domain Name
A domain name is your website’s address on the internet, which helps users find your marketplace online.
Hosting Service
A web hosting service stores your website’s files, and makes it accessible to users worldwide. Choose a reliable hosting provider to handle your marketplace’s expected traffic and data needs.
Payment Gateway API
A payment gateway API is crucial for processing transactions securely. It allows buyers to make payments and sellers to receive funds through various payment methods.
Messaging API
A messaging API with chat and email functionalities is essential for seller-buyer communication. It facilitates inquiries, negotiations, and support.
Integrating a Content Management System (CMS) is advisable if your online marketplace plans to include a blog for content marketing. A CMS is software that allows you to easily manage and publish content.
What Is the Cost of Creating an Online Marketplace?
The cost of creating an online marketplace typically ranges from RM36000 to RM450000. It largely depends on whether you opt for a DIY approach or professional web design and development services.
The main costs for those opting to build the marketplace themselves include hosting services (RM216 to RM27000 annually), domain name registration (RM3.15 to RM63 annually), and paid components such as themes, apps, or plugins (RM0 to RM4950 each). SSL (Secure Sockets Layer) Certificates are available for free but paid versions cost up to RM15660. Professional web design and development significantly increase the budget. A fully custom solution runs between RM270000 to RM450000.
Key cost factors when hiring professionals include UX/UI development. There’s also the integration of third-party services like payment gateways, messaging APIs, and shipping options. A robust database is also crucial for managing seller and buyer data, product listings, and transactions.
What Type of Hosting Is Recommended for Online Marketplaces?
VPS, dedicated, and cloud hosting are 3 types of hosting recommended for online marketplaces.
VPS hosting offers independent server-like environments within a physical server. It’s suitable for marketplaces that are scaling up. Dedicated hosting involves renting an entire server. It offers maximum control, performance, and security. This type of hosting is ideal for large marketplaces with significant traffic and high data security needs. Cloud hosting utilizes a network of virtual servers for high scalability and reliability. This option is perfect for marketplaces with high and variable traffic since it’s scalable and operates on a pay-as-you-go basis. There are many fantastic ecommerce hosting providers to choose from that offer these types of hosting.
What Do I Do After Creating a Marketplace Website?
There are 4 things you do after creating a marketplace website. First, attract sellers by offering a user-friendly platform with competitive advantages, such as lower fees or a specific target audience. Utilize industry contacts, social media, and digital marketing strategies to reach potential sellers. Second, invite or hire users to test the platform’s functionality and identify any bugs or usability issues. Third, refine and improve the platform based on user feedback to better meet community needs and encourage retention. Fourth, focus on marketing with strategies to attract more users. Develop a comprehensive marketing strategy that includes SEO, content marketing, social media, and paid advertising.
Where Can I Learn More on Building Online Marketplaces?
You can learn more on building online marketplaces by checking out Bitcatcha‘s comprehensive guides and brand reviews.