The statistics and trends in the marketplace sector paint a promising picture for entrepreneurs and businesses. If you have a marketplace project in mind, you are in the right place. Whether you want to create: a general marketplace or one that focuses on a specific niche (sector, domain, target, particular types of products, etc.), we explain here how to make your project a reality at the best price.
Create a marketplace
Before creating a marketplace, it is important to think through your idea and to clearly define your objectives in terms of the target market, the products or services offered and the key features.
Once you have clarified this initial idea (which may evolve over time), here are the steps to follow to create a marketplace:
1) Study your target: what you have to do ?
The study of your target must be done continuously, before and after the creation of your marketplace. The objective here is to know your target both on the buyer’s side and the seller’s side. What are their needs and interests ? How do sellers propose their offers (which channels they use, how they promote their offers…) ? How do buyers search for these offers (keywords on search engines, social networks used, e-commerce sites or marketplaces used…)?
- Start by identifying who your marketplace is for. Consider factors like age, location, gender, income level, education, and interests. Create buyer personas to represent different segments of your audience.
- Define your audience by creating “personas” that represent your target users and help you better understand their needs and interests. Sellers and buyers have different needs and interests, so it will be necessary to create separate personas for each user group.
- When you create a marketplace, you have to study your competitors and their customers. Look at who is using competing services, what they are saying about these services, and how they interact with them. Social media, online forums, and review sites can be valuable sources of information.
- Stay in touch with your audience and use tracking and measurement tools to monitor your audience’s engagement and to collect data on their behaviours and interests.
- Use both primary and secondary research methods. Primary research could include surveys, interviews, and focus groups with potential users. Secondary research involves analyzing existing data from reports, studies, and industry trends.
Stay in touch with your audience to understand their needs and to be able to adapt your value proposition accordingly. Ultimately, this may even help create your own community that will benefit your marketplace.
2) Market and competitor analysis
The study of your target market coupled with the analysis of the main players in your sector of activity (competitors, alternatives, etc.) should enable you to determine whether your marketplace idea has the potential to succeed. Here are some things to consider when researching the market to create marketplace:
- Study the competition in your industry and analyse their value proposition, business model, target market and marketing strategy.
- Evaluate the size of your market to confirm that the potential revenue you can generate seems sufficiently interesting: if you are on a subscription business model, is the number of potential subscribers large enough? If you are on a commission basis, is the potential volume of business generated large enough? In any case, are there other possible sources of income in relation to the business model you are considering (see step 5)?
- Analyse the opportunities that could be exploited by your marketplace and identify the threats that could impact your project. Also monitor trends in your sector to understand future developments and potential opportunities.
Gather as much information as possible to get a complete picture of your market. You can use different sources for this, such as specialised websites, market research, physical exhibitions, industry data, case studies, blogs, online forums, discussion groups on various social networks (identify which social networks your target audience uses most)…
3) Planning a budget for your Marketplace
It is difficult to set a precise budget to create a marketplace without determining the details of your project. However, here are some things to consider when setting a rough budget:
- Platform and feature development: Prioritize features based on your market research and user needs. This may include the cost of developing the website, mobile app, integrations with third party systems, costs of developing features such as online payments, messaging systems, search filters, etc.
- Design: this includes the costs of designing the graphic charter, any mock-ups, icons, etc.
- Maintenance and support: these are the costs of maintaining the site, fixing bugs, adding new features, etc.
- Marketing and Customer Acquisition: budget for digital marketing, content creation, SEO, social media advertising, and potentially PR campaigns to build brand awareness and attract users.
- Overheads: costs related to hosting the site, purchasing domain names, purchasing SSL certificates, etc.
Note that these costs can vary greatly depending on the complexity of your project, the functionality required and the quality of the developers and designers you hire. There are several solutions to create a marketplace, such as Mirakl, Izberg, Wizaplace, Sharetribe and Umiddle. Each of them has different offerings, with varying costs and functionality. For example, Wizaplace and Mirakl offer standard packages at over €100,000 plus monthly fees, while Sharetribe offers packages that can cost up to $299 per month, but with limited functionality. Izberg does not disclose its prices, but you have to count the integration fees, a monthly user licence and the costs related to the development of the front-end which is left to the client. At Umiddle, we offer rates with an optimal quality/price ratio (a good order of magnitude for a very complete MVP is between $179 and $299 per month). If you want to know more about our rates, you can check our price examples.
4) How to define your value proposition for your marketplace ?
To define your marketplace’s value proposition you have to :
- Understand Your Target Audience: Begin by thoroughly understanding who your customers are. What are their needs, pain points, preferences, and behaviors? Knowing your audience helps tailor your value proposition to meet their specific needs.
- Identify Market Gaps: Analyze the existing market to identify gaps or unmet needs. Your value proposition should address these gaps or offer a better solution than what’s currently available.
- Focus on Benefits, Not Features: Customers are more interested in how your marketplace can benefit them rather than its features. Translate your features into clear benefits. For example, if your marketplace uses advanced algorithms for recommendations, the benefit could be a personalized and efficient shopping experience.
- Articulate Your Value Clearly: Your value proposition should be clear, concise, and easily understandable. It should quickly convey why your marketplace is the best choice. Avoid jargon and keep the language simple and direct.
- Test and Validate with Users: Once you have a draft of your value proposition, test it with potential users. Get feedback and be prepared to refine it. What resonates with your audience is often more valuable than what sounds good in a boardroom.
- Monitor and Evolve: As your marketplace grows and market dynamics change, be prepared to revisit and evolve your value proposition. Staying relevant to your customers’ changing needs is key to long-term success.
Remember, a strong value proposition is the cornerstone of your marketplace’s identity. It not only helps in attracting customers but also in guiding your business strategy, service offerings, and customer experience enhancements.
5) The best business model to create a marketplace: which one pick ?
Decide on the most suitable business model for your marketplace, taking into account the different options available and the advantages and disadvantages of each.
The choice of business model is a key element in setting up a marketplace, as it determines how you will generate value and how you will be paid. You have to understand the different business models whiche you can use for your future marketplace, such as commission, subscription, advertising…. Here are some things to consider when deciding on your marketplace business model:
Analyze Your Target Market:
- Conduct market research to understand what your target users (both buyers and sellers) are comfortable with and what they expect from a marketplace.
- Consider the average transaction size, frequency of transactions, and the nature of products or services offered.
Evaluate the Competition:
- Look at successful competitors in your niche. Analyze their business models and understand why they chose them. However, don’t just copy; find ways to improve or differentiate.
- Evaluate the advantages and disadvantages of each business model
- Test different business models
6) Launch a first version of your Marketplace
It is important to develop an MVP (Minimum Viable Product) to start your marketplace, as this will allow you to test your market and gauge user interest in your marketplace before you spend a lot of money on development. It is also important to keep improving your marketplace over time based on feedback from your users.
There are several ways to develop your marketplace, but if you don’t have the technical skills in-house, you can use a development agency that specialises in creating marketplaces like Medialem. We use a modular architecture to manage all possible workflows on all types of marketplaces, so the possibilities are very varied. It can be a multi-boutique e-commerce site, an online reservation site, a directory of adverts sites with subscriptions or to create platforms with advanced matching processes (matching algorithm, specific processes)… It can also be a mixture of several elements and each marketplace can have very specific functionalities.
7) Marketing strategy to attract supply and demand: best practices
In 2024, marketing is an integral part of business communication strategies. Therefore, develop a marketing strategy to attract sellers and buyers to your marketplace (or more generally, offerers and seekers if it’s not about buying/selling).
Here are some actions you can take to attract buyers and sellers to your marketplace:
- Promote your marketplace project on social networks, focusing on those used by your target
- Implement a content strategy by publishing quality articles that interest your target audience.
- Use online advertising platforms, such as Google Ads and Facebook Ads. The latter handles advertising on Facebook and Instagram.
- Promote your value proposition to your target audience and use it as an argument to attract both offerers and seekers.
- Offer special deals for early adopters of your marketplace, such as discounts to encourage them to sign up and use your marketplace.
- Promote your competitive advantages, such as low fees, quality products, selected sellers, etc., to distinguish you from your competitors.
Acquiring suppliers and requesters is an ongoing process. The aim is to create a virtuous circle so that supply attracts demand and demand attracts supply.
The creation of a marketplace also involves putting in place an appropriate legal framework to guarantee the protection of the marketplace’s users and creators. To do this, there are a few key points to bear in mind:
- Clarify the responsibilities of each stakeholder when drafting the marketplace’s General Terms and Conditions of Sale (GTCS). Be clear, transparent and fair. This will protect you in the event of problems or disputes.
- Draw up precise terms and conditions of use covering fees, commission, account cancellation and dispute resolution.
Implement intellectual property protection policies to avoid copyright, patent and trademark infringement.
- Protect data and guarantee the confidentiality and security of its users’ personal data.
- Comply with local and international tax laws regarding the collection and declaration of sales tax and withholding tax.
- Do not hesitate to contact a legal specialist or lawyer for further information.
To sum up, these are the 7 steps to create a marketplace
- Step 1: Study your target market
- Step 2: Study the market and your competition
- Step 3: Establish a budget for managing and creating your marketplace
- Step 4: Be innovative and define a value proposition
- Step 5: Choose the business model(s) best suited to your marketplace
- Step 6: Develop and launch the first version of your marketplace
- Step 7: Implement a marketing strategy to attract as many users as possible to your platform