With more and more clients switching online in the search of goods and services, there grows the popularity of online marketplaces as the ideal spots for buying and selling whatever you like. There are marketplaces for selling and exchanging goods, renting, booking, transport services, tenders, auctions, food delivery, logistics, education, job search, and many others. And new types are emerging here and there every other day. Well, why not, taking into account the profitability of the online marketplace business.
The number of digital buyers is going to reach the 1,79 billion mark by the end of 2018 with global retail sales reaching almost 3 billion dollars annually. For some well-established commerce giants online marketplaces provide more than 40 % of products sold, and for some comparatively new companies, they represent 100% of sales, sometimes exceeding the billion dollar mark. Such popularity owes much to numerous advantages online marketplaces give for all the parties involved: buyers, sellers, operators, and third-party vendors like logistic companies.
Business Advantages of Online Marketplaces
Online marketplaces bring together large numbers of buyers and sellers. They serve as mediators between different groups and provide convenient conditions and necessary guarantees. Transparent purchasing process attracts customers who can clearly see and compare relevant prices and availability on stock and choose from a wide range of options without leaving a single platform. There is no need to check dozens of sites or go to the mall, all shopping is done just in several clicks.
Sellers, on the other hand, get access to a much wider audience. Small stores or vendors who hesitate about establishing their own e-commerce website join online marketplaces to reduce risks and secure position in the market. And for marketplace operators, it is a good opportunity to earn money from transactions without keeping warehouses, dealing with logistics and other similar issues.
Taking all the above-mentioned into account, you might have already started thinking of opening your own online marketplace. Well, then you should have also wondered about the price of the issue. And though there are many things you need to consider, the first order of business is the website development. Let’s see how much it may cost and what you need to pay attention to.
Things to Consider
When building an online marketplace, you may choose from two options: using one of the ready-made platforms or building your custom marketplace from scratch. Both variants have their advantages depending on your business objectives.
On one hand, we need to face it: using an already existing platform in many cases may really turn cheaper and quicker. At the same time, using common and conventional tools, you should be ready that the product you get as a result won’t also differ much from hundreds of already existing options. Not a good chance to set yourself apart from the competitors. Or to promote a very new and specific product or service. In such cases, custom development is worthwhile.
The set of functions you would like to see in your marketplace also influences the cost of the development: the more complex the website architecture is, the more expensive it is to develop and to maintain so complicated and sophisticated functionality. But there is good news: almost all modern tricked-out giants started as very simple services with a minimum of functions. So, Etsy, for example, was built and released just in three months, and the functionality of the website changed gradually and is still expanding 13 years after the launch.
We also recommend you to start with an MVP (minimum viable product) to check how things go — and then develop your marketplace further based on the real emerging needs of your business. This is, by the way, one more argument in favor of custom development: you always can adjust your site to your business, and not vice versa. What this simplest version of your product should include largely depends on the results of the idea validation. The latter is a necessary step if you want to create a product your prospective clients might be interested in. Though, there are some most common functions which any online marketplace should include. Let’s consider them and define their implementation cost.
Mandatory Feature Set
No matter what kind of an online marketplace you are going to establish, there are two obligatory constituents you will need: the administration panel and the user platform.
The administration panel is aimed at controlling product inventory, clients, orders, payments, and all necessary marketplace settings. The administrator registers new users, sets commissions for sellers, approves products, allots categories, and manages ratings and reviews. As standard, it fully belongs to the backend side of the service and is not visible for the clients.
The user platform, depending upon your business model, may be even or may comprise different dashboards for different user roles (for example, buyers and sellers). The features it should obligatory possess are:
- registration form,
- account page,
- authorization and security,
- client support system,
- item listing,
- search engine,
- shopping cart,
- reviews and testimonials,
- integrated payment functionality,
- shipping functionality.
Without these features, it will be difficult to provide the necessary level of convenience and security for the marketplace users and to keep the site appealing and competitive. If you decide that this functionality is enough for your marketplace, you may choose a monolithic solution which will certainly cost you cheapest, but in this case, you should be aware that such websites are not scalable. That is, you will not be able to add new functions to your marketplace in the future. More complex scalable solutions include both backend and frontend development and demand REST API which enables the smooth interaction between different parts of the service.
Depending upon your business specificities, the major set of options in your online marketplace may slightly vary. Let’s examine the example of Maemo, the online rental marketplace developed by Stfalcon.com.
Example of Implementation: Maemo
Maemo is a rental service whose task is to match users who want to rent or rent out different items. Since the site has a simple purpose, it was developed as a monolithic web page by means of PHP framework Symfony. In one of our previous articles in The Startup, we explained why it fits best such types of projects. As the site is not scalable, the team had to think through the functionality very thoroughly. We used most of the mandatory features and added some additional functions to make the website handy and attractive to users.
The service consists of a standard administration panel and a user platform. Since users may want both to rent and rent out things, they can easily switch between these roles from a single account. The users can manage their profiles, items they rent, browse the history, leave reviews, make deals, and communicate with each other with the help of a real-time chat.
Users are often distracted from online purchase by the lengthy and complicated registration process. To make registration as quick and simple as possible, we integrated registration via the Facebook profile. All payments and payouts are conducted through the integrated Fondy payment system which has recommended itself well in the Ukrainian market. The specific feature of the service is an integrated map with drop-points where users can see the address of the renter and the distance from their place to the location of the rented item.
Thus, what we have is a quite simple but functional product which wonderfully copes with its tasks. Should the client have decided in favor of a scalable development, the functionality of the website might have been extended further on.
Further Versions and Additional Features
More complex online marketplace solutions may include such functions as integrated analytics, smart notification system, filters and feeds, item videos, order tracking, multiple payment options and bunching, return policy, referral programs and socializing elements like chat, likes or social media sharing. You may even implement such up-to-date technologies as virtual and augmented reality or AI.
What we strongly advise to think of is a development of a mobile app (or even several) for users. Today, people use mobiles for purchasing more and more often. According to statistics, over the course of the last 6 years, the number of people using their phones to shop has grown by 133% globally. As an example, eBay’s app has been downloaded by more than 50 million people worldwide, representing 190 countries.
Apps provide advantages which no version of the site does, like PushUp notifications, geofencing, offline mode etc. That’s why many online businesses today entrust more and more of their activities to mobile apps.
Time and Money Estimation
As you have understood, the cost of your marketplace may considerably vary depending upon the functional set you choose. The development of the online marketplace requires coordinated efforts of different specialists and includes project management, UX and UI design, backend and frontend development, layout, and quality assurance.
It will take up to 800–1000 hours to develop a website with the basic set of functions (like those mentioned above), and the development will approximately last for 3 months. The rough cost of the development of a basic functional set is $80K.
And if you decide to create a more complex solution or add some new functions to the already existing site, you will need to budget extra expenses, for example, 20–30 work hours for the development of notifications functionality or 80–90 hours for the browsing content functionality. A complex marketplace with a vast functionality may cost up to $180K.
The development of a mobile app for one platform (either Android or iOS) will take about 400 hours and will approximately cost $60K. The figures can also vary depending upon the complexity of an app.
Of course, you do need to keep in mind that the figures mentioned are approximate and will significantly vary depending upon the country of development, the professional skills and experience of the team, the terms, and the functionality included. Contacting the company’s sales representatives will provide you with more precise estimations. And we hope this article has given you a clear understanding of what to pay attention to.
Originally published at stfalcon.com.