What is an Online Marketplace? Learn Everything You Need To Know

Online shopping has experienced an unprecedented boom in popularity as more and more people choose it over traditional brick-and-mortar stores. Roughly 79% of Americans purchase online, according to a recent study.

What is an Online Marketplace? Learn Everything You Need To Know

So, it's unsurprising that more and more would-be business owners share your dream of building an online marketplace similar to eBay and Amazon. Here, we'll show you how to set up an online marketplace from scratch. You will learn all you need to know to begin your journey right now, from making a marketplace MVP to starting and growing your business.


What exactly is an online marketplace?

Online marketplaces are virtual stores where buyers can peruse and buy various products. If you have never been to one, picture an outdoor market where vendors from all over the world set up shop, displaying multiple goods for sale. Buyers are free to peruse the displays before making a final decision. The experts project that e-commerce annual sales will hit $8.1 million by 2026.

Online marketplaces differ significantly from multi-vendor stores in that vendors sell their wares on your platform in exchange for the exposure and revenue your brand guarantees. In contrast, a multi-vendor store requires you to buy products from multiple labels and take responsibility for each sale individually.


Types of online marketplaces 

You should be aware that there are various kinds of online marketplace:

1. Based on the focus

  • Horizontal: A horizontal marketplace features many vendors selling diverse goods and services. Here are a few examples: Amazon and eBay.
  • Vertical: One kind of market is the vertical marketplace, which caters to a particular product or service. Examples are Etsy, which sells handmade items; Upwork, which offers freelance services; and Udemy, which offers online courses.

2.  Based on the target audience

  • B2C marketplaces: These online venues allow companies to sell their wares to consumers in a one-to-one setting. Amazon and Walmart.com are two examples.
  • B2B marketplaces: Businesses can buy and sell goods and services with one another in B2B (business-to-business) marketplaces. Amazon Business, Tradekey, and Alibaba are a few examples.
  • C2C marketplace: C2C marketplaces allow users to transact business directly with one another rather than going through a middleman. Websites like Etsy, eBay, and Craigslist are examples.


Based on the geographic reach

  • Local marketplace: Marketplaces on a local level: online venues that bring together vendors and consumers in a certain region. Nextdoor and TaskRabbit are two such examples.
  • Global marketplace: Online marketplaces that serve buyers and sellers worldwide are known as global marketplaces. Here are a few examples: Amazon and eBay.


Key Benefits of Creating an Online Marketplace

Many advantages can accrue to owners of online marketplace once they go live. You may anticipate the following advantages:

  • Affordable  running expenses

Online marketplaces typically have cheaper overhead than conventional brick-and-mortar stores. Since third-party sellers on the platform handle inventory management, there's no need for physical stores.

  • Various sources of income

Owners of online marketplaces can make money in various ways, including through advertising, subscription models, transaction fees, premium listings, premium memberships, or partnerships with supplementary services. A steady flow of money can result from this.

  • Expandable company

Businesses that operate in online marketplaces can expand rapidly. Market owners stand to gain both in terms of user base and revenue as their platforms continue to grow and draw in more buyers and sellers.

  • Global influence

Independent small businesses can reach a wider audience than they could in a brick-and-mortar store thanks to online marketplaces.

  • Customer curiosity

Because of the variety of goods and services offered, online marketplaces have become a one-stop shop for shoppers. More people are drawn to this variety.

  • Passion among investors

Investors are also interested in multi-vendor online marketplaces. Investors are intrigued by their capacity to adapt to evolving consumer demands and generate revenue through different channels. Additionally, larger companies or investors may find successful marketplaces to be attractive acquisition targets.


How to Develop an online marketplace?

There are several critical stages to building an online marketplace. Let's look at the main aspects of making an online marketplace that supports multiple vendors.

1. Select a niche

Identifying a market niche is the initial step in developing an online marketplace with multiple vendors. Your marketplace will prioritize these products and services. 

Instead of trying to compete with giants like Amazon, it's better to focus on a niche that interests you or one where you notice the demands of modern consumers are unmet. 

There are a number of things to think about when deciding on a niche:

  • How large is the potential customer base for the goods and services that your online marketplace plans to sell?
  • How fierce is the rivalry in this specific market segment?
  • Is this niche a promising one for future growth?
  • How lucrative is this niche? 
  • How will your marketplace stand out from the rest?


2. Do some market research.

Conducting thorough market research is the next step after deciding on a niche to target in your online marketplace. As part of this process, you should verify your niche selection, research your competitors, learn your target audience, and stay abreast of industry trends.

Analyze your rivals in the chosen market segment. Compare and contrast their features, pricing tactics, and customer feedback.

To learn about the niche market's expectations and problems, conducting interviews or surveys with prospective users is a good idea. Industry trends and new technology may affect your market, so it's important to keep up with the latest news.


3. Establish a business model

To successfully monetize your marketplace, you must have a sustainable business model. Here are some of the most common ways that online marketplace make money.

  • With every transaction that occurs on the marketplace's platform, a small percentage is taken as a commission. Commission rates usually range from five percent to twenty percent, though they can be as high as thirty percent.
  • Premium subscription tiers on marketplaces can provide extra perks to sellers and buyers alike, and these tiers can be priced accordingly. Benefits such as reduced transaction fees, advanced analytics, and priority listings are common with these subscriptions.
  • Sellers may be required to pay a listing fee to have their wares featured on certain online marketplaces. Etsy is one example of an online marketplace that implements a listing fee for vendors.
  • Businesses looking to reach a specific demographic can purchase ad space on certain online marketplaces.


4. Construct a minimum viable product 

The acronym for "minimum viable product" is MVP. It is a stripped-down product version that early adopters can use to test the waters and give input on improving the final product. If you want to ensure your app meets user needs before spending much money on development, the minimum viable product (MVP) method is a good bet.

Launching a minimum viable product (MVP) is also considerably faster than releasing a full-fledged product. This is a great opportunity to start making money from your product sooner rather than later.

Here are some important things to keep in mind when you start building your multi-vendor e-commerce marketplace website:

A. Website address

Your domain name is the address that people will use to locate and visit your marketplace website; examples include infostride.com and amazon.com. Think about these things when you're picking a domain name.

  • Try to think of a name that is simple and easy to remember.
  • Your domain name must convey the nature and purpose of your marketplace.
  • Make sure your domain name stands out and isn't too similar to others.
  • Do not use hyphens or numbers.
B. Website hosting

The infrastructure and resources needed to make websites and web applications accessible on the internet are provided by web hosting. It entails putting various forms of content, such as databases and website files, on dedicated computers called servers. 

These servers are set up to transmit web content to browsers when people visit websites; they are connected to the internet. Cloud hosting, shared hosting, virtual private server (VPS), dedicated servers, and other varieties of web hosting are available.

When choosing a web host for your online marketplace, it is important to consider your present and future demands. When deciding on a hosting solution, it's wise to get input from your development team to ensure it meets your marketplace needs.

C. Software for managing content

In the digital marketplace, digital content can be easily created, managed, and organized with the help of a content management system (CMS). It is the foundation of the marketplace and facilitates the efficient management and presentation of content, including product listings, descriptions, images, and more, for administrators, sellers, and users.

You have the option of developing your own content management system (CMS) from the ground up or using an MVP-friendly CMS like WordPress, Shopify, Joomla, or another similar platform.

Use a content management system (CMS) like WordPress or Shopify if you're on a tight budget and need something up quickly. An ideal strategy would be to use a hybrid approach, launching with an MVP-friendly content management system (CMS) to save time and then switching to a custom CMS when your market grows and more specific needs arise. 


5. Get your marketplace up and running and test it

Testing and public launch of your marketplace are the next steps after setting up your minimum viable product (MVP). Quality assurance is essential to fix any problems and make sure the user experience is smooth. 

Also, get some people to try out the app in beta so you can hear their thoughts on improving it. You should start planning to launch your marketplace once you are sure your MVP is stable and fully functional. Based on early user feedback, consider doing a soft launch to improve your offering.


6. Expand Your Company

Focus on growing your business and expanding your user base once you have launched your marketplace MVP. A well-rounded marketing plan with digital, social media, and content marketing tactics can entice vendors and consumers. Another option is to form partnerships with other companies operating in your sector so that you can promote each other's goods and services.

Keeping tabs on your results will allow you to fine-tune your marketing approach. You should also keep asking your customers for their opinions to improve your marketplace. In the end, building and expanding an online marketplace is a never-ending process that calls for persistence, flexibility, and a promise to provide worth to everyone involved.


Future of Online Marketplaces

Online marketplaces are becoming more dependable and functional thanks to the innovative algorithms and updates developed by tech innovators around the world. This sector is currently experiencing rapid growth. The business-to-business e-commerce market is expected to reach over $1.2 trillion by 2022. Additionally, 67% of businesses agree that e-commerce is critical to their growth.

We believe that incorporating game-changing technologies, such as AR and VR, will shape the future of online marketplaces. Both technologies have been overlooked and have not yet been implemented.

Virtual reality (VR) can potentially increase sales in the jewelry and clothing industries by letting customers virtually try on items before buying them online. In contrast, augmented reality (AR) is ideal for interactive marketing (think Pokemon Go).

In addition to these, there may be chatbots that can process complicated inquiries, start refunds and returns, and much more shortly. As smart home devices become more commonplace, voice search will become the norm, allowing users to dictate queries and get results. Several marketing norms are about to be rewritten because of this revolutionary change.



While the idea of a sharing economy is not new, it has grown in popularity since the advent of the internet. There are now tremendous opportunities for everyone thanks to modern marketplace websites that link sellers and buyers all over the globe in a matter of seconds.

The success of services demonstrates that good ideas can succeed in the marketplace. Any idea that can differentiate itself from the competition has a good chance of succeeding. Anything worthy of implementation is worth pursuing if it can improve people's lives and also generate revenue.

To help customers make an informed buying decision, some markets offer extra information/reviews in a standardized style. At last, the marketplace operator or owner reaps all the benefits of a reseller without the hassle of keeping inventory or coordinating fulfillment.

Post a Comment

Previous Post Next Post