What comes to mind when you hear the words "online business"? Is your entrepreneurial spirit ignited when you see successful online marketplaces like Amazon, Etsy, or Fiverr? Do you want to learn how to develop a marketplace app? Congratulations! You have arrived at the right location.
To begin with, let us look at the big question: why develop a marketplace app? The answer is very simple: people love to shop online.
No need to blindly believe this statement. Here are some qualifying statistics:
- Global online sales are expected to grow to $6.54 trillion by 2022, proving that one of the most popular online activities in the world is shopping. The usual reasons are convenience and competitive prices.
- A very large number of people (over 2.14 billion) around the world are expected to purchase a product or service online in 2021, up from 1.66 billion in 2016.
- Twenty-two percent of all retail sales worldwide are expected to take place online by 2023.
The popularity of online shopping has led to the creation of online marketplaces offering virtually any and all types of products and services. These can be for selling and exchanging products, renting accommodations, transportation services, auctions, food and grocery delivery services, logistics, teaching, and even job searches. Every now and then, new types of marketplace apps are developed and launched, indicating that it is a business venture with a potential for profits.
Online marketplaces create platforms for buyers and sellers to congregate together in large numbers. They act as intermediaries between various groups, providing convenient circumstances and necessary assurances. Customers are attracted to transparent purchasing processes because they can easily see and compare related prices and stock availability, as well as choose from a variety of options without leaving a single platform. There is no need to visit multiple websites or travel to the mall; everything can be done with a few clicks or taps.
On the other hand, product and service retailers have access to a much larger audience. Small businesses and vendors who are hesitant to launch their own e-commerce websites may enter online marketplaces to avoid risk and secure a market position. It is also a good way for marketplace operators to make money from transactions without having to maintain warehouses, deal with logistics, or manage other concerns.
Last but not least: online marketplaces need a lower initial investment because they are not a physical store.
Now you may be wondering, how does one go about creating an online marketplace, and what do marketplace app development services cost? Without further ado, let us proceed to the details.
The process of online marketplace app development
A problem worth solving (and your idea)
You will probably have a vision for your dream marketplace app. A basic premise for your app’s success is that it should solve a problem that users face. You will need to identify a problem worth solving.
Marketplaces could be especially challenging because you must solve a problem for both the customer and the product or service provider. To put it another way, solving one big problem might not be enough — you will probably need to solve two.
One of the most common causes of marketplace failure is the inability to solve a real problem. Make certain that your marketplace idea does not succumb to this trap.
From the perspective of a customer, a good marketplace will serve as a one-stop destination where they can find all the retailers of the same service and compare them easily. On the other hand, a retailer needs a platform to acquire more customers. If your app can resolve the problem of both parties, it is a win-win situation.
Sustainable business model
You will have to come up with a revenue model to fund your marketplace platform's operations if you want to make it a long-term success. In most cases, ongoing funding will have to come from the people you are serving — your app's customers. One of the most common reasons for a startup's failure is that it uses a business model that does not scale for long-term viability. Major business models for online marketplaces are given below:
- Percentage: A popular business model for online marketplaces comprises receiving a percentage from each transaction. When a customer pays a supplier, the marketplace handles the transaction and takes a percentage or a flat fee.
- Subscription fee: This is a model under which some or all users of a marketplace pay a periodic fee to access it.
- Listing fee: When suppliers post new listings, some marketplaces charge a fee. It is possible to utilize such a model when a provider gets value based on the number of listings they have on the app, along with a potentially high value per listing.
- Freemium: The logic of this model is that the basic offering is free, but after the customer has signed on, you can charge for value-added features. The difficulty with this model is that the paid services must offer enough value to entice a substantial portion of your users.
MVP for marketplace startup (minimum viable product)
After you have figured out the customer’s problem and decide on a business model, it is time to check how well your project idea fits in the target market. To do that, you need to develop an MVP (minimum viable product).
An MVP may be described as the version of a new product that helps a development team to gather the most validated customer learning with the least amount of effort. The MVP concept is closely associated with agile software development.
The goal of agility is to quickly create, execute, and learn. Your MVP for marketplace startup is a simple fix that solves your users' main problem better than other options already in the market. After that, the product is made available to your users to begin the learning process.
Whatever type of online marketplace app you develop, it will need these two components: an administration panel, and a user platform. The administration panel is used to regulate product inventory, customers, orders, payments, and other settings. This panel is completely hidden from clients and is part of the backend services.
Depending on the business model, the user platform can include single or multiple dashboards for different user functions, such as buyers and sellers. It must have these essential specifications:
- Account section
- Listing of products,
- Search option
- Shopping cart
- Testimonials and ratings
- Payment capability
More features may be added later as required and depending on the learning you get from your MVP. Additionally, the creation of a mobile app for users is highly recommended as people are increasingly using their cell phones to make purchases.
Starting the development process
Before diving into the creation process, it is important to remember that online shopping has come a long way since the first marketplace apps were launched – and have become popular over time. People are more accustomed to browsing, booking, and paying for things online, and they expect excellent user experiences. In other words, the bar has been raised significantly.
The bottom line is that delivering something that basically works is not enough; you must deliver something outstanding from the start. The problem is that the more you require a complex solution, the more difficult it is to create it.
Trying to create an online marketplace app on your own ─ if you do not know how to code, or have only basic programming skills ─ can be a challenging task. It can easily nullify the goal of rapidly launching and evaluating.
So, what are your options? The practical answer is very simple: identify a reputable development partner.
Choosing an appropriate development company
This is a crucial step in the development of your online marketplace app. Choosing the right development team is critical to the success of your project. You should conduct a lot of research and thoroughly examine a potential marketplace app development agency's credentials.
You should review recent projects, systems and processes, customer testimonials, and available technical experts, to get a clear idea of a development company's skills and viability. Advise the development firm concerning your concept and proposed business model, and request a project plan, including a cost estimate. After you have selected an online marketplace app development company and have agreed on deliverables and the budget, you must sign a contract.
Project planning and costing
Before you start working on your dream app, make sure you understand all the details, set aside a budget, get technical input, and weigh your options. It is also crucial to set a realistic timetable so that the development agency knows when to finalize results.
Estimated cost to build a marketplace app
The development of an online marketplace app is not often a straightforward process, with costs and timelines varying depending on a range of factors. It usually ranges from $50 per hour all the way to over $120 per hour, while the time required may be anywhere between 700 hours to over 1500 hours. This is just a rough estimate; major influencing parameters are given below:
- Complexity and time taken
- Technology platform ─ Android, iOS, Windows, or others
- Number of developers on the team
- Choice of ecosystem ─ Desktop, Mobile, or Both
- Development partner
Embedded analytics, smart notifications, filtering and feeds, product videos, order tracking, various payment options, replacement plans, promotional events, social interaction elements, such as a chat feature, or social media sharing, may be included depending on the structure of your marketplace app.
You might even use cutting-edge technology like virtual and augmented reality, and artificial intelligence (AI). These features often have a separate cost. Here is a more detailed costing to help you in planning.
If you to ask an app development company for a ballpark, they will most likely quote the following figures:
A representative online marketplace app
Foodly, a restaurant marketplace app, can give you a good idea of the diverse array of features that may be added to elevate customer experience. Foodly has a number of components that make it a technically advanced yet easy-to-use marketplace app.
Profiles can be created by both, users and brand owners. Users can find nearby restaurants, manage their orders, and track status. Menus can be listed with groupings for breakfast, lunch, and dinner. Brand recognition may be increased through user ratings and reviews.
Please keep in mind that an online marketplace business is a technology-intensive and long-term initiative. To create a sustainable and successful marketplace platform, you need a reliable development partner who has the required technical skills coupled with practical experience. Identify such a partner, and you are well on your way to accomplishing your dream!