A Guide to starting online marketplaces

Creating your own online marketplaces might seem like a rewarding idea. However, if you don’t do it correctly, you are bound to be faced with challenges. The fact remains that having an online presence is considered to be a must in today’s world. This means you can’t skip creating an online marketplace. At the same time, you must be well-versed in how to build one.

This is why we are here to provide you with a guide that features anything and everything about an online marketplace. You are about to learn how to bring your online platform to life.

Defining an Online Marketplace

An online marketplace refers to a type of Ecommerce store where various merchants can sell their goods to potential customers. A current example of quality online marketplace includes Shopify, Amazon, eBay, and Etsy. Even Airbnb follows the same business model. The key is to be the bridge between businesses and customers rather than selling products and services yourself.

This is starkly different from the traditional Ecommerce model. Instead, the merchants that sell products through your platform will be using the conventional model. For instance, Shopify as a whole caters to various merchants and hence will be referred to as an online marketplace. On the other hand, a single brand operating in Shopify will be referred to as an online store.

Why create an online marketplace

You might wonder, why should you consider an online marketplace rather than a store? Admittedly, the latter will be easier to launch. While that might be true, here are the reasons why you might want to create a marketplace instead.

  • You can help become the platform for those merchants that wish to sell goods that they have access to. This is a niche that is seldom targeted and hence is still quite profitable.
  • Through this model, you can bring immense convenience to customers, who wouldn’t have to search on multiple platforms and instead have a one-stop solution. This helps in building loyalty that you can later leverage.
  • Since you aren’t dealing with the product and services on your own, you won’t have to worry about inventory. Think of how Uber has no cars and Airbnb has no hotels.

The guide to creating your Online Marketplace

One of the biggest challenges you will face when you try to create your online marketplace is the lack of guidance on it. You will find various literature about how to set up your own store via Shopify Marketplace or your website. But, you won’t find comprehensive instructions about how to create an effective marketplace.

Don’t worry. We are here to help you out. Here is how you can build an online marketplace.

Begin by building a website

The very first thing you need is an online platform to base your entire online platform on. At the end of the day, the success of your marketplace will be dependent on the quality of your online platform. Use a professional web developer to create your website. This is better than trying to do the task yourself. After all, setting up a website is not easy, and you already have to deal with various other challenges along the way.

Think of a niche

Gone are the days when you create an online platform that sells everything. Such needs are already met by various marketplaces like Shopify and Amazon. If you wish to succeed in the sector, you must come up with an unexplored yet profitable niche.

This has to be the essential step of the entire process. This is because your niche will decide how many customers will visit your platform and whether you will be able to attract merchants to it. Make sure to do comprehensive research when selecting your market.

Focus on a minimum viable product

Think of some of the most popular and successful online marketplaces of the world. The chances are Shopify, Amazon and eBay will come to your mind. Now, to reach the level of business they are doing, you need to start small. Don’t get caught up trying to replicate their current models. Instead, begin by focusing on minimum viable products.

During the initial period, focus on delivering a subset of your product to your customers. You then build on it piece by piece to fully cover your niche finally. It is always essential to start small. 

Set your financial limitations

Another thing that is easy to do when trying to create your online marketplace is to overspend. This is why it is advised that you set your budget before you begin setting up your platform. Even though you don’t have to pay for inventory, there are a lot of costs associated with starting an online platform. This includes:

  • Platform cost: Hosted online marketplace will charge you an annual fee. Or, you have to purchase hosting of your own website.
  • Advertising cost: You might not invest in inventory, but you still have to market the products of the merchants to attract customers. This requires a budget of its own. You have to allocate advertising cost for customers and merchants.

Set up your financial budget from the get-go. Make sure to stay within the limit. Don’t overspend on advertising before launching your marketplace. While awareness is important, you don’t want to run out of cash.

Focus on the outcome

The last thing that you must focus on to create an online marketplace is to focus on the outcome of having a marketplace. For instance, what are your goals and objectives pertaining to your business? What value-added services are you providing to your customers?

By answering these questions, you are bound to have a clear direction about your business. This direction is a must to have a successful online presence.

Conclusion

The online marketplace is a sector that you must look at. It is profitable if you end up creating value for customers. Follow these tips are you will be good to go.

Deliver convenience to your customers via being a bridge to your customers.