How to Make a Marketplace Website in 2020 - Top 5 Mistakes to Avoid

Thinking about creating a marketplace? This idea has solid chances to succeed in 2020. eCommerce is on the rise, even despite the recent pandemic, so right now is a good time to come up with a solution that will meet the need of merchants to sell their goods while cutting costs, and the need of buyers to find the cheaper goods or services. Let’s start with a comprehensive guide on how to make a marketplace website step by step.

How Does a Marketplace Work?

The marketplace business model is very simple and is shown in the picture below. In a nutshell, a marketplace developer just provides buyers and sellers with a platform to meet each other. As for the monetization strategy, the marketplace creator may get a fee from each transaction or set up a listing fee for sellers.


Marketplaces Benefits and Popularity

A marketplace is a win-win option for buyers, sellers, and owners. The buyers get the opportunity to shop at better prices comparing all the available alternatives, the sellers may save on the development of their own eCommerce stores, and the marketplaces’ owners face fewer risks and responsibility since they work as a connecting chain between the buyers and the sellers.

According to the statistics - https://blog.edesk.com/resources/ecommerce-statistics/, 90% of shoppers jump to Amazon to find better deals after they have chosen a product in a one-brand e-commerce store. What is more, 46% of retailers are willing to create a partnership with other merchants to compete with Amazon on equal footing.

That is why building a marketplace is a promising idea for a startup - buyers and sellers are really ready to utilize its best features and get benefits.

Why Do Marketplaces Fail?

So, you want to build a marketplace website. Analyzing competitor mistakes is useful, and most importantly, a free practice that allows you to keep your startup from repeating them. So, here are some of the top reasons why do marketplaces fail.
No market need

42% of startups fail -

https://www.newsday.com/business/startup-launch-market-demand-1.18139200 because the market doesn't need them. This statistic is true for the marketplace as well. It may be not so easy to enter the modern e-commerce market, but with the popularity of marketplaces in mind, we can assume that somewhere there is a free place for a promising idea.

No uniqueness in the idea

Continuing the question of the market need for your startup, you need to know that the main idea of your marketplace should be unique. It doesn't make sense to create a second Amazon or Booking. You need something more specific. For example, a marketplace that allows users to choose a nanny for a child or the delivery of Indian food is more specific ideas.

No UX research

After you have come up with a unique idea to build a marketplace and made sure that your idea is really demanded, it is necessary to conduct a user experience research. If you skip this stage of building a marketplace startup - https://spd.group/ecommerce-solutions/build-a-marketplace-in-2020/, then you run the risk of creating an expensive solution weighted with unnecessary functions, exhausting your development budget, but still not meeting the expectations of your users.

User experience research, in turn, allows you to validate a concept, study mental models, analyze competitors, and study the perceptions of your target audience using observation, surveys, focus groups, eye-catching, and heatmapping.

No quality assurance system

Market demand for your idea means that your users want to buy quality products or services through your platform. Moreover, creating a marketplace, you will have to work with two categories of users at once - with buyers and with sellers. Both of these groups expect quality assurance. Here's how to do it.

The seller's rating can be formed based on the reviews of real buyers. The rating should not be lower than 3.7 out of five, for example, otherwise, the seller's profile is blocked.

Of course, sellers also want to work with honest customers. In this case, it makes sense to protect your sellers from potential customer fraud by using AI-powered anti-fraud solutions.

The mismatch between the number of buyers and sellers
In order for the cooperation between buyers and sellers to be effective, and your marketplace to generate a stable profit, it is necessary that the number of registered sellers and buyers is approximately equal. An imbalance in one direction or the other significantly affects the user experience.

With a large number of sellers and a small number of buyers, sellers will gradually begin to consider your marketplace as hopeless. With a large number of buyers and a small number of sellers, buyers may become frustrated with a too narrow choice of both products and suppliers.

How to Build a Successful Marketplace?

So, how to start a marketplace website? The first thing you need is a well thought out strategy. Below we have described all the necessary steps to create a marketplace. All you have to do is make this plan more project-specific.

1. Come up with a unique idea
Developing a unique idea can be the hardest part of your startup's implementation. Competitor analysis and creative thinking are two of the most reliable techniques for coming up with something worthwhile.

2. Validate it with the help of research

Once you've come up with an idea, you need to assess its real potential. To do this, you need to research the market, assess your strengths and weaknesses, anticipate risks, and develop a response strategy.

3. Outline the list of the necessary features

Next, it is necessary to compile a list of functions that are required for the first prototype of a multi-vendor marketplace. As a rule, these are signup forms, personal profiles of buyers and sellers, rating and payment systems, as well as a security system.

4. Think about the design

The design of the marketplace should promote a good user experience, use the right colors from a marketing psychology perspective, and not complicate the overall perception of the site.

5. Create the first prototype

The first prototype should reflect the design and functional solutions that you thought of in the previous steps.

6. Get in touch with a development vendor
At this stage, it makes sense to contact a reliable developer, discuss the technical implementation of your project, and estimate the time and cost.

7. Come up with the first MVP

According to the research - http://www.valentinalenarduzzi.it/papers/Paper_id7.pdf “MVP is a continuously evolving concept, defined by Eric Ries in 2011 as “a version of a new product, which allows a team to collect the maximum amount of validated learning about customers with the least effort.

8. Test it and get feedback from the audience

You definitely need to test your MVP and get real feedback from your target audience. Use these insights to plan your further development strategy.

9. Develop a marketing strategy

The marketing strategy for your marketplace should cover two target audiences at the same time - buyers and sellers. Think about which channels you can use to make them discover your solution and its benefits.

10. Turn your MVP into a full-fledged product

After you have tested the MVP, it makes sense to either add new, potentially demanded features, or launch the product to the market in a simplified form, planning to invest in further development after the first profit.

How Much Does It Cost to Build an Online Marketplace?

The cost to build a marketplace website will be specific and individual. A lion’s share of your development budget will depend on the location of the vendor you will be working with. The set of features and the complexity of the design will also affect the development cost. However, to wisely manage your investments in marketplace development, you should:

● partner with a company that already has experience in building a marketplace and is well-versed in your niche

● utilize Agile development principles and follow the LEAN methodology

● carefully test your MVP and create the features that are really necessary for your target audience

● strive for the simplicity in your design solution but keep usability in mind.

Conclusion

In this article, we have shared the main strategic steps towards building your marketplace, as well as the mistakes you need to avoid. A good idea plus cooperation with a reliable developer will ensure 90% success in creating any startup, and your future marketplace is no exception.

Edesk
Support support@edesk.com

How to start a successful eCommerce business? Consider creating a low-risk marketplace. Here is how to make a marketplace website and avoid the most common mistakes

This release was published on openPR.