How to Build a Marketplace App: A Complete Guide
The marketplace platforms account for half of all digital purchases. Hence, creating a marketplace application may be financially rewarding. However, given the presence of market goliaths like Amazon and eBay, companies might decide that entering the sector is too difficult. Fortunately, there are still many niches left that need attention, and new possibilities appear daily.
If you have decided to create your own marketplace app, you have reached the right place. Here we will provide a streamlined process to create a marketplace application. We will also look at the types of marketplace apps, their essential features, and development cost.
Before we look at the process, let us discuss some basics.
What is a Marketplace App?
A marketplace app is a type of mobile app or web platform that eases transactions between buyers and sellers of various goods or services.
These apps bring together buyers and sellers in a single platform and create a virtual marketplace where transactions occur. It allows multiple vendors to list their products or services, and customers can browse, compare, and make purchases or bookings directly through the app.
Marketplace apps cover a wide range of industries. Some of the popular marketplace apps include Amazon, Etsy, Airbnb, Uber, and TaskRabbit, each catering to different markets and industries.
The success of a marketplace app depends on several factors, such as targeted niche, user experience, and effective marketing strategies.
Why Should You Build A Marketplace App?
eCommerce is not only a thing of the future. It is unquestionably the present as well. There has never been a better time for a company to create its eCommerce platform, given the recent acceleration in growth.
Here are some of the statistics that prove the demand for marketplace apps.
- Due to the pandemic, eCommerce increased from 16% of all worldwide retail sales in 2020 to 19%. The transition from physical storefronts to the various types of eCommerce marketplaces significantly accelerated by COVID-19. Five years’ worth of anticipated growth in eCommerce was condensed into just one year in 2020 to put a number on that.
- As per Oberlo, 48% of online shoppers directly prefer to purchase from a large eCommerce marketplace.
Applications for marketplaces are what propel the growth of mobile commerce. They provide numerous advantages to businesses that create online marketplace apps, including substantial earnings, future expansion potential, and a quick start.
Building your own marketplace app is a terrific way to tap into the rapidly expanding mobile market, which promises more revenue for all online marketplace operators.
Benefits Of Creating a Marketplace App
A marketplace app brings many benefits, making running your business easier and more profitable. Here are some of the benefits you can see:
1. More Customers: With a marketplace app, you can attract more potential customers worldwide and not just from your local area. With an app, you can showcase your products and services to people who love shopping online.
This can help you bring in more customers and ultimately increase your sales. So, having a marketplace app can be a great way to expand your reach and grow your business.
2. Easy Buying and Selling: Buying and selling things has become simpler. Both buyers and sellers benefit from this system. Buyers can easily browse through things they want to buy and purchase them with just a few taps on their devices.
And sellers can now easily reach out to customers without needing a physical store, making it more convenient for everyone involved.
3. Increased Revenue: If you build a marketplace app, connecting buyers and sellers can create more opportunities to make money. There are various ways to do this, such as charging for transactions, providing subscriptions, or showing ads. By doing so, you can increase your revenue and profitability.
4. Flexibility and Scalability: When you have an app for your business, you’re not limited to one place. You can change things as you go, add new features, and even reach new customers. It’s like having a business that can grow and change with you, so you’re never stuck in one spot.
5. Data Insights: Did you know apps can help you learn much about your customers? You can find out what they like to buy and when they prefer to shop. This information can be useful for making smart decisions for your business and keeping your customers happy.
If you want to boost your business and keep up with the times, making a marketplace app is a great idea!
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Types of Marketplaces
Every marketplace is different in one or the other way. Therefore, you need to become familiar with the types of marketplaces before building an app. Based on your marketplace, you can further decide the business model and define the target audience. So, let us get started.
By Commodity
The first way to categorize a marketplace app is based on the commodity traded. Here are some crucial options:
- Physical goods such as books, electronics, furniture, and more.
- Services like tutoring, housecleaning, etc.
- Selling products & services.
By Participants
A marketplace is also categorized based on the total number of participants involved. It can be two-sided or multi-sided.
Uber is an excellent example of a two-sided marketplace. Here, a user books a cab from the app & the driver accepts the requests based on their requirement.
DoorDash allows users the option to order food online from any place and also allows users to order food online & pick it up from the desired restaurant. Hence, it is a two-sided marketplace. If you’re looking to tap into the growing food delivery market, you may want to develop a food delivery app that connects restaurants with customers efficiently.
By Focus
The marketplace is categorized depending on the focus. It could be vertical or horizontal.
Vertical: A vertical marketplace sells products or services of a specific niche to the customers. For example, Zillow is a real estate marketplace app focused on connecting property buyers and sellers, as well as renters & landlords.
Horizontal: A horizontal marketplace provides various types of products or services across multiple categories. A well-known example is “eBay.” eBay is an online marketplace that covers a wide range of product categories, including electronics, fashion, collectibles, home goods, and more.
By Target Audience
Marketplaces have different audiences based on what you are serving them. Here is the list of audiences you can target.
B2B: It is a marketplace where businesses sell products or services to other businesses. Generally, retailers, manufacturers, and wholesale suppliers follow the B2B model.
This type of marketplace focuses on acquiring new customers and increasing sales. Businesses that use a B2B marketplace will be most successful if they automate their sales procedures efficiently for the client while also delivering an exceptional experience (CX).
B2C: Businesses that sell to customers make up B2C marketplaces as opposed to B2B marketplaces. Examples of this can be Walmart, Amazon, Newegg, and more.
The first is that a B2C marketplace seeks to boost revenues by luring as many clients as possible. Although customer experience is still important, client relationships individually give less weight. There are also significant disparities in how payments, deliveries, and prices are handled between the two marketplaces.
Peer to Peer or C2C: As the name suggests, C2C stands for the consumer-to-customer marketplace where a customer sells goods & services to other customers.
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Features You Should Include in Your Marketplace App
Below we have created a comprehensive list of essential features ensuring the platform’s success and user satisfaction. Here is the list of features designed to cater to the needs of both buyers and sellers.
Features for Buyers
- User Registration
Allow buyers to sign-up easily and create profiles to personalize their experience. - Product or Service Listings
Sellers can create detailed listings that are accessible to buyers. Every product or service list with detailed information that includes images, descriptions, pricing and availability status. - Search and Filters
Implementing powerful search functionality with filters allows buyers to find specific products or services efficiently. They can enter keywords or phrases related to what they want to buy and filter search results by price, location, category, and seller rating. - Order Tracking
A system that allows buyers to track the status of their orders, including shipping and delivery information and receive notifications for updates. - Secure Payment Gateway
Integrate a secure and reliable payment gateway that allows buyers to make smooth and safe transactions. - In-App Messaging
Provide a communication channel for buyers to connect directly with sellers and ask questions related to the products or services. - Push Notifications
Implement push notifications to keep buyers informed about special offers, order status, and relevant updates related to their preferences. - Reviews and Ratings
Include a review system for buyers to share feedback on the products or services they have purchased and rate their experience with sellers.
Features for Sellers
Seller Registration and Profiles
Simplify the onboarding process for sellers, allowing them to create detailed profiles to showcase their offerings. It should include the business name, contact details, ratings and reviews, and other important details.
Stock and Order Management
Allow sellers to streamline order processing and management to handle incoming orders efficiently. Also, by using this system, they can keep track of their inventory and update availability status in real time.
Sales Analytics
Integrate a tool for tracking and analyzing activity that offers insights to help sellers track their performance, sales, and customer behavior. With the help of this, they can make data-driven decisions to improve their business.
User Support
Provide dedicated seller and buyer support, such as a help center, chat support, or email support, to assist with any platform-related concerns or questions.
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How to Build a Marketplace App
Here is the streamlined process you need to follow to build a marketplace app.
Step 1: Research & Identify the Appropriate Marketplace Type
The first step is to research and identify the most suitable type of marketplace app for your business that we have discussed above in detail. Then do the market research to understand your target audience and analyze the competitive landscape.
Market research involves analyzing similar apps and identifying your ideal customers’ demographic, location, and behavior. Move forward to analyze competitors’ strengths, weaknesses, target audience, pricing strategy, and marketing tactics.
This allows you to identify gaps in the market and helps create a unique selling proposition for your app to stand out in the market.
Equipped with this valuable information helps you move on to the next stages smoothly.
Step 2: Choose The Monetization Model
The monetization model you choose directly impacts your app’s revenue generation and long-term sustainability. Here are some popular ways you can monetize your marketplace app.
- A fee for each transaction.
- The subscription fee for sellers for a specific period of use.
- A price for publishing a new listing or an additional charge for promoting listings.
- Selling space for advertising.
To know more about this, check out our blog on mobile app monetization strategies.
However, it’s essential to strike a balance between generating revenue for your business and
providing value to both buyers and sellers to ensure long-term success. Also, keep your monetization strategy flexible as your app evolves and grows.
Step 3: Define the Key Features of Sellers & Buyers
You must accommodate sellers and buyers who will utilize your on-demand marketplace app. Therefore, you must determine your product’s essential features for both segments before developing a marketplace app.
Start with the sellers. You might wish to incorporate the following features in your app for them:
- Order and stock management.
- In-app messaging
- Transaction oversight.
- Simple ways to integrate promotions, discounts, and limited-time deals for users.
- Tools for analytics and statistics.
- Access to social media networks.
You need to make the app’s buyer side simple and intuitive to use. They should trust your marketplace app before buying anything from it. To attract more consumers, offer support and security features.
Here are some of the essential features you should offer to the user:
- Advanced search filters include price, popularity, location, and category.
- Shopping cart.
- Wishlist.
- Track orders efficiently.
- Integrate popular payment methods.
- Simple return process.
Step 4: Emphasize on the UI/UX design
It’s time to start building the marketplace app with the following step. Designing the UI/UX of your application based on your target market, objectives, and chosen features is the first step in that process.
Follow UI/UX design principles to retain users with an appealing design and provide seamless user experience. A thoughtful user experience and a modern, fashionable user interface will help you acquire better community feedback and make a better first impression on your target audience.
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Step 5: Select the Proper Technology Stack
While developing a marketplace app, any problems you may encounter can be handled using the right technology tools. Nowadays, numerous tech solutions are available today, most of which have a wide range of frequently overlapping duties. However, selecting the best is challenging and often depends on developer preferences.
A marketplace application consists of a buyer app, a selling app, a backend component, and an admin panel for your moderators and administrators. For sellers and consumers, you can create a single app by adding two distinct profiles with various functionalities.
For users to be able to access your marketplace from desktop computers or mobile devices, you’ll typically also need a web version of it.
Let’s talk about each component of this infrastructure’s technology.
| Function | Technology |
|---|---|
| Frontend | HTML5, CSS, JavaScript, Angular, Vue, React |
| Backend | PHP, Nodejs |
| Database | MySQL, MongoDB, PostgreSQL |
| Web Server | Apache, Nginx |
| Storage | AWS, Firebase |
| Third-party services | Payment gateways, analytics tools, shopping modules, social networks, etc. |
| Mobile Development | Java, Kotin for Android, Swift, C++ for iOS. Flutter, React Native for Cross-Platform |
Step 6: Opt for MVP App Development
When it comes to developing market applications, developing an MVP app is a strategic approach that focuses on creating a functional version. It includes core features to test the idea, collect user feedback and validate the market demand.
Choosing MVP app development offers several benefits:
- It allows you to launch your app faster. This speed-to-market advantage helps you gain a competitive edge.
- MVP development is cost-effective as you have prioritized essential features while still offering value to users.
- Allows you to collect users feedback and help you refine the app’s functionality and user experience.
- It mitigates the risk of investing in a fully-developed app if you intend to create a complicated program with numerous features.
Step 7: Develop Fully-Featured Marketplace App
Once your MVP has been validated, it’s time to proceed with the development of your fully-featured marketplace app. In the development process, you can focus on the following aspects:
Consider incorporating essential features and advanced functionalities such as search filters, personalized user recommendations, and social sharing options to enhance engagement.
Focus on developing responsive design while prioritizing engaging user experience. Also, implement robust security measures so that you can build trust with users.
Thoroughly test the app across multiple devices to identify and fix any bugs or issues. Conduct quality assurance checks to ensure a stable and reliable platform.
What Are Marketplace App Monetization Strategies?
There are many ways to make money with your marketplace app. You can use various monetization strategies to generate revenue and grow your business.
1. Commission Fees: One way to earn money is by charging commission fees. Every time a seller sells something through your app, you take a small percentage of the profits. It’s like getting a reward for helping them find a buyer.
2. Subscription Plans: Another way to make money through your app is by offering subscription plans. This means users pay a regular fee, like every month or every year, to access exclusive features or benefits on your app.
It’s similar to becoming a club member, where you get special perks for participating in it.
3. Premium Features: If you want to provide your users with additional benefits, you can offer them premium features at a price.
These could be advanced search filters, more storage space, or special tools to enhance their buying or selling experience. Your users will pay for these upgrades, and you will earn some extra money.
4. Advertising: Have you ever noticed those ads suddenly appearing while using your favorite app? Well, did you know that you can make money from them? That’s right! You can sell space on your app to businesses that want to advertise their products or services to your users.
And each time someone clicks on one of these ads or buys something because of it, you earn some money. It’s a simple way to monetize your app and generate some income.
5. Sponsored Listings: When you search for something on an online marketplace platform, you might have noticed some products that appear at the top of the search results or on the homepage.
These products are called sponsored listings. It’s similar to how advertisements work, where sellers pay to display their products more prominently on the website. This gives their products more visibility and a higher chance of getting sold.
6. Transaction Fees: To monetize your app, you can charge transaction fees for every sale made on your platform. Unlike commission fees, which are based on a percentage of the sale amount, transaction fees are a fixed rate charged per transaction.
Every time someone uses your app’s payment system to make a sale, they will be charged a small fee.
So, whether you’re taking a cut of the sales, offering premium perks, or showcasing sponsored listings, there are many options to turn your marketplace app into a profitable business!
What Are The Challenges Faced While Building a Marketplace App?
As a business owner, building a marketplace app can bring numerous benefits, but it also comes with challenges. So here are some of the challenges that a business owner faces:
1. Competition: It can be difficult to get people to use a new app when there are already big companies like Amazon and eBay that everyone knows about. These companies have many customers already, so getting noticed and attracting new users is hard.
2. User Acquisition: One of the biggest challenges in creating an app is getting people to download and use it. To do this, you’ll need to spend time and money on marketing and promotion to make people aware of your app and attract an initial group of users.
This can be expensive, so it’s important to have a well-planned strategy in place.
3. Balancing Supply and Demand: For a mobile app marketplace to succeed, it needs to balance the number of things sold or services offered and the number of people who want to buy them.
Finding the right balance between getting people to sell their stuff and making sure that enough people want to buy it can be tricky.
4. Trust and Safety: If you want your marketplace app to work well, you must ensure that buyers and sellers feel safe and secure. People must trust that they can buy things and get what they paid for without problems.
To achieve this, it’s important to have strong checks to verify people’s identities and policies that protect buyers.
5. Managing Quality: To keep users returning to your marketplace platform and doing business, ensuring that the listings are top-notch and everyone has a good experience is important.
This means keeping an eye on the listings and ensuring they’re all good, solving any problems, and dealing with any issues quickly so your platform stays well-respected.
6. Technical Complexity: If you want to create a marketplace app, there are some technical challenges you need to tackle. These include building a platform that can handle a lot of users, making sure people can pay for things easily, and ensuring everything works well on different devices and systems.
Hiring dedicated developers and other technical experts with the right skills is important to solve these challenges.
7. Regulatory Compliance: Different industries and places have different rules and laws when selling things online. These rules can be related to things like how you protect people’s information, how you pay taxes, and how you treat your customers. Following these rules can take a lot of time and might need help from a lawyer.
8. Monetization Strategy: Finding the best way to make money from your marketplace app can be difficult. You have to ensure you earn enough revenue while making your users happy. It’s important to try different ways of making money and adjust your strategy based on what your users tell you.
By overcoming these challenges proactively and strategically, you can increase the chances of building a successful marketplace app that meets the needs of both buyers and sellers.
How Much Does it Cost to Build a Marketplace App?
The cost to build a marketplace app starts from $15,000 and goes up to $80,000.
The difference in the cost depends on various factors like complexity, features & functionalities, developer location & experience, development approach, and more.
The app development cost will vary depending on your budget and the development approach. To know how the estimated cost of the mobile app is decided, check out the blog on app development cost.
What Are The Future Trends Of The Online Marketplace In 2024?
As we look toward the future of online marketplaces in the year 2024, some really interesting trends could change how we shop and sell things online. These trends are quite exciting and can potentially transform the online marketplace.
1. AI and Chatbots: Have you ever talked to a robot or a chatbot? Get ready to do so, as they are becoming more common on marketplace platforms. With the help of artificial intelligence, these chatbots can help you find what you need faster and provide personalized recommendations.
This means you can expect a better and more efficient online shopping experience. With AI and chatbots, you’ll be able to get the help you need without having to wait for a human representative to assist you. So, get ready to chat with robots and enjoy a more personalized and faster shopping experience.
2. Personalization: Online shopping will become more personalized to each individual’s unique tastes and preferences. This means online marketplaces will better recommend products and offerings specifically customized to you and your preferences.
No more generic shopping experiences; everything will be personalized to your liking.
3. Vertical Marketplaces: As online shopping becomes more popular, it’s clear that smaller, more specialized stores are the way of the future. Instead of big, all-encompassing stores, we’re seeing more stores focusing on specific types of products.
For example, you might find a store that only sells vintage clothes or one that only sells eco-friendly home goods. These specialized stores make it easier for shoppers to find exactly what they’re looking for and for sellers to reach their intended audience.
4. Omnichannel Selling: In today’s world, shopping and selling have become more convenient. With the rise of omnichannel selling, online marketplaces are integrating seamlessly with offline channels like physical stores and social media platforms. This means you can easily shop and sell across multiple channels without hassle.
You can do it all easily if you prefer shopping online or in a physical store. And if you’re a seller, you’ll have more opportunities to reach customers and grow your business. Omnichannel selling is all about making things easier for buyers and sellers, and it’s the way of the future.
5. Voice Commerce and Smart Assistants: Have you ever wished you didn’t have to type out long messages or search for things online? Well, with voice commerce and smart assistants, you won’t have to! These amazing technologies allow you to speak out loud and have your orders placed simply or your questions answered.
You can even get personalized recommendations and suggestions, all with just the power of your voice. It’s like having your own personal shopping assistant, but even better! This technology is making shopping more accessible and convenient for everyone, and it’s just the beginning of what’s possible with voice-activated technology.
6. Social Shopping: Shopping just got much easier with social shopping! Now, you can browse and purchase products without leaving your favorite social media platforms.
With features like shoppable posts and live streams, finding and buying the things you love is easier. You can do it all from the comfort of your feed! This means you can get your shopping done quickly and easily. It’s like having a virtual mall right at your fingertips.
7. Mobile Shopping: With the increasing number of people using smartphones, shopping through mobile devices is expected to grow rapidly by 2024. Online shopping websites will focus on making their platforms easy to use on mobile devices, which will help users effortlessly browse and purchase products while on the go.
This trend is set to revolutionize the online shopping experience and make it more convenient for people to shop anytime, anywhere.
8. Search by Images: Here is a new feature available. It’s called “Search by Images”. This feature will make it much easier to find products without typing out long search queries. Simply take a picture of the product you’re interested in, and the AI will take care of the rest.
You won’t need to spend time typing out long phrases or searching through results pages. Instead, this smart technology will work for you, making it faster and easier to find what you need.
9. Live Shopping: In the upcoming years, online shopping will be even more exciting. You can attend live shopping events from the comfort of your own home. Online marketplaces will host these events, allowing you to watch demos, ask questions, and make real-time purchases.
Imagine shopping for your favorite products while interacting with experts and other shoppers in real time. It’s going to be a game-changer! These live shopping events are expected to become popular in 2024.
10. Augmented Reality: Online marketplaces will get even better in the future because of some exciting new technology trends. One of these trends is called “augmented reality”. This means we’ll be able to use our phones or other devices to see what products would look like in our space before buying them!
It’s like trying something on before you buy it, but you might buy online for all sorts of things. It will be a whole new way to shop and interact with products! With these advances, online marketplaces will be more convenient and fun.
Conclusion
In conclusion, building a successful marketplace app requires careful planning, thorough research, and a user-centric approach. With the help of this guide, you can develop high-quality products and be able to address customers’ wants efficiently.
If you have decided to build a marketplace app, don’t hesitate to contact us.
Guru TechnoLabs is a leading eCommerce app development company. We have a highly-skilled team of developers who have experience building mobile apps for multiple industries worldwide. Hence, we can understand your project needs and provide you with a suitable marketplace app.
Frequently Asked Questions
An online marketplace is a platform that connects service providers with potential clients or consumers and vendors.
An online marketplace can be profitable using several business models, such as freemium, listing fees, subscriptions, and advertising. The majority of marketplaces mix a few to create their unique revenue strategy.
You can find the right marketplace type by conducting market research, analyzing competitors, and defining your target audience and niche. Consult our experts as they guide you with the solution that aligns best with your business goals.
Creating a marketplace app can take quite a while - anywhere from a few months to a year or more. The time it takes depends on how big and complicated you want the app to be, what technology you're using, and how many people are working on the project. So, each app's exact time can be quite different.
If you're considering building a marketplace app, keep a few things in mind. First, consider who your app is for and what they need.
It would help if you also considered whether there's a demand for your app and how much competition there is. Another important factor is how you plan to make money from your app. You'll also need to choose the right technology to build your app and ensure you meet any legal requirements.
To ensure a secure payment gateway for your marketplace app, use encryption and tokenization to protect sensitive data, ensure your app is PCI compliant, and consider using fraud detection algorithms. By taking these steps, you can help ensure that your customers' payments are processed securely and without issues.
To keep users engaged with your marketplace app, offer personalized recommendations, incentives, loyalty programs, social features, and interactive content. These strategies will encourage users to come back and use your app repeatedly.
There are different ways to create a marketplace app. You can either build it in-house using your development team or hire a third-party vendor to do it for you. Alternatively, you can use a low-code or no-code platform to make the app with minimal coding required.
If you want to create a marketplace app, here are some things you should do. First, figure out who your target audience is. Then, decide what kind of marketplace you want to make.
Identify what features you want to include and design the look and feel of the app. Choose the technology to build the app, then start developing it. Finally, decide how you're going to make money from your app. By following these steps, you'll be on your way to creating a successful marketplace app.
