How to Create an Auction Marketplace Website Like eBay
This article was originally published on Codica blog.
We know eBay as one of the most well-known e-commerce platforms. It offers customers millions of items within practically all product categories and thus brings its owners a high revenue.
You may wonder what it takes to create a similar platform. Well, today we are going to provide you with our insights into this subject.
This article offers a step-by-step guide on how to create a website like eBay. We will discuss the required functionality and the right technology stack for a similar website. Finally, you will learn the main pros and cons of such multi-vendor marketplaces.
What is eBay about?
eBay is an online multi-vendor marketplace connecting buyers and sellers within the B2C and C2C sectors. In other words, the platform gives vendors the opportunity to place their goods and allows buyers to purchase them online.
The research by Statista shows how the annual net revenue of eBay has been changing over the past six years.
The history of eBay
A computer scientist Pierre Omidyar started the marketplace as a hobby in 1995. Initially, it was called AuctionWeb and had the following homepage:
By the end of 1998, eBay had 2.1 million users and generated $750 million in revenue.
The pros and cons of eBay-like platforms
Each type of online marketplaces has its strong and weak sides. Before developing an auction website like eBay, let’s take note of its pros and cons for customers.
Pros for users
Target a huge audience
eBay had 182 million active users in the second quarter of 2019. It means generating high traffic which makes starting a marketplace like eBay a beneficial solution.
Let’s explore how: sellers provide tons of goods and target a large audience of potential customers. When consumers start buying products, vendors pay different commissions and fees that go to marketplace owners. Finally, it becomes a profitable system for both platform vendors and business owners.
Get support as a new seller
It will be much easier to create a new online store on a website like eBay with valuable guidelines, different community features like discussion boards and question and answer (Q&A) forums offered by the platform. This way, you can learn from the most successful vendors.
Get loyal clients
If vendors want to grow their profit on the platform, they will surely try to provide an excellent buying experience for clients to get loyal customers. This can be achieved by offering products of high quality, express delivery and shipping, and providing repeated clients with particular bonuses. Simply put, once made a sale, vendors have good chances to get loyal customers by offering a perfect service or high product quality.
Finally, it is a win-win strategy for both sellers and marketplace owners: vendors want to stand out from the crowd and provide high-quality products due to high competition that makes more money for the online marketplace.
Sell Anything
One of the key features of websites like eBay is the all-in-one approach. It means that you can sell and buy almost everything: clothes, books, shoes, accessories, electronics, etc. Such diversity is beneficial for both marketplace owners and users. Consumers can find and buy any product they like, making vendors pay different fees to the marketplace.
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Cons for users
Pricing policy
A newly created online store on a website like eBay, both generates new sales and charges fees. Most frequently, a fee is some amount of each deal in percentage terms. For example, you sell a book for $15 and you will pay from $0.5 to $1.5 vendor fee to the platform.
Here you can see the table of basic fees for most categories on eBay.
Limited layout opportunities
The platform allows sellers to create a personal online store layout and allows managing the position of different elements. However, these manipulations are mostly restricted since marketplaces are interested in promoting the products, not the sellers.
Shipping speed affects store visibility
The platform rewards the sellers having the possibility of shipping the item on the same day or the next one. It means that if there are some challenges with shipping, your online store visibility will be decreased.
High competition
There are millions of users wanting to place their products on eBay. It means that vendors are forced to face a huge competition. They have to find new innovative solutions to overcome this issue: to offer a unique product, cut down prices, or avoid listing some categories at all. This way they get a chance to overcome the competitors.
To conclude, websites similar to eBay offer multiple advantages to both buyers and sellers. However, you should remember that such platforms have their drawbacks as well. Consider all of them and come up with the optimal balance to satisfy all the parties.
How to create a website like eBay?
1. Find your specific niche
When launching a new marketplace, many business owners consider high competition their biggest challenge. Entrepreneurs gradually give up on the all-in-one approach because they find it hard to compete with such big names as Amazon, Etsy, OLX, or AliExpress.
Instead, they tend to choose a specific niche. By finding a unique solution to a pain point that has not been addressed by the competitors yet, marketplace owners increase the chances of success and gaining their specific audience.
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2. Choose a suitable business model
The next step will be the choice of a proper revenue strategy. To put it more simply, you need to decide how you will charge consumers for using the platform.
When choosing the right business model, be sure to take into account the following factors:
- Platform’s type (vertical/horizontal);
- Participants (C2C, B2C, B2B);
- Niche (products, services, information, investment/fundraising).
Let’s discuss the most common revenue models for a website like eBay.
- Commission
The platform gets a percentage or a fixed amount of the total trade value per transaction.
- Listing fee
Sellers pay for their goods to be listed on your platform.
- Lead fee
Buyers place requests and vendors pay a fee to bid on these customers.
- Membership fee
This is an effective business model for platforms with the highest value. Consumers pay a certain fee to access extra features, for example, to receive a bigger list of sellers.
- Featured listings and ads
Service providers often use this revenue source. It works the following way: sellers can purchase different types of posting: the top ad of a category or posted on the marketplace homepage, etc.
3. Solve the chicken and egg problem
What side to attract first: sellers or buyers? You will definitely have this question when starting a website like eBay.
Let’s briefly mention the most effective solutions to the so-called chicken and egg problem.
- Gain the hardest side first
- Focus a particular niche
- Attract the most valuable side
- Organize an exciting live event
- Cooperate with a celebrity
- Become a producer
- Set time or demand constraints.
4. Define the key functionality
The right functions will help you attract more users and as a result, get a higher profit. It would be a big mistake to implement numerous features at once. Instead, you should define the most necessary options for both buyers and sellers. These functions include sign-in/up, product listing and page, search feature, checkout process, and admin panel.
As your online marketplace grows, you can improve the user experience for both parties by adding such features as:
- Authorization process
- Inventory management
- Admin panel
- Product search
- Product page
- Shopping cart
- Chat
- Multiple payment gateways
- Reviews and ratings
- Analytics.
5. Choose the technology stack
eBay is a website with diverse functionality. Its implementation requires using lots of different tools and technologies.
Let’s define what instruments and frameworks deserve your special attention.
- Back-end
When it comes to server-side, choose the most advanced and modern tools since they can help you build a scalable, maintainable, and sustainable product. For example, we use Ruby, Ruby on Rails, ElasticSearch, Redis, i18n gem, MySQL, Sidekiq.
- Front-end
As for the client-side, we prefer the tech stack that enables us to offer our customers a brilliant web application providing both high performance and stability. I am sure that such technologies for front-end development as HTML5, CSS3, JS, Ruby, Ruby on Rails, React, Vue.js, Angular will help you succeed.
- Tools and integrations
You should create an efficient development process and pick a suitable hosting service. To succeed, take a look at the next tools: AWS S3, GitLab, GitHub, Slack, Digital Ocean.
Conclusion
Online marketplace development can be a tall order, especially if you are building a platform with diverse functionality similar to eBay. However, we are sure that our guide will help you grasp the basics of creating a similar auction website.
For further reading on the subject, we recommend our article: How to create an auction marketplace website like eBay.
