In 2000, Amazon changed the way we shop today. There are many other e-commerce websites where most of us turn to find absolutely everything. It is much more convenient to shop online than go to brick-and-mortar stores, and there is no turning back. In 2019, there were 263 million digital shoppers in the United States. According to forecasts, in 2024 this figure will increase to 282.7 million online shoppers, and in 2017–2024, CAGR (Compound Annual Growth Rate) will be 1.5%. Now is the best time for online marketplace development. You just have to build a marketplace website that your users will like.
How much will it cost to create top business software and how to develop a successful project? The answer of many experts in this field will be as follows: the final cost of marketplace building from scratch depends on its types and key features. In addition to selling goods over the Internet, you can provide more personalized services using advanced technologies such as artificial intelligence and machine learning. With Big Data tools, you can receive and analyze huge volumes of information for better service on the online platform. Blockchain will guarantee the transparent purchasing process, the security of online payments, and other operations.
In this article, we will introduce you to the key aspects of web development for marketplaces. What type of marketplace do you need and why? What features to add and which are better to avoid? How much will it cost to create an online store? These and many other questions will be answered below. Keep reading this guide and get the best results in e-commerce!
3 Key Types of Marketplaces – B2C, B2B & C2C
Before creating your own e-commerce site, you must decide which type of marketplace to choose and why it will be valuable for your business. There are various online marketplaces you can choose from. Your final choice should be based on the business model and target audience, as well as how many niches you’ll cover.
In general, you can specify the following available options, which you can choose depending on the business model and those who will be a direct user of your platform:
B2C – Business-to-Customer Marketplaces
This is a platform designed to transfer products or services from business to customers. AliExpress and Amazon are well-known B2C markets that today have a global reach. Even small businesses working outside the home can sell to customers across the world. Most B2C markets dominate in-store purchases. It is much more convenient and faster to shop online than when shoppers visit a physical store to buy something.
B2B – Business-to-Business Marketplaces
This is a platform for the exchange of goods or services between businesses. What is the best example of this type? Alibaba.com is, first of all, B2B e-commerce. In total, products are sold in 40 different industries on this website. The key to success is a well-developed ecosystem with manufacturers and a global market.
C2C – Customer-to-Customer Marketplaces
This is a site where customers sell products or services online directly to other consumers. Among C2C, eBay is outstanding. This is the largest auction site on the web. It makes money by taking a small fixed commission from each sale, often called a commission or transaction fee. The buyer pays the seller through the special payment processor, and then the seller is responsible for the delivery of the goods to the buyer.
What does e-commerce statistics show us? The global B2B e-commerce market, valued at $12.2 trillion in 2019, is more than 6 times the B2C market. Currently, the Asia-Pacific region holds a leading position with a market share of almost 80%, leaving North America and Europe far behind. Amazon and Alibaba are the two most prominent players on the market.
There are advantages and disadvantages of each business model. Let’s look closely at each type of marketplace in the comparison table from different points of view – values of sales, marketplacer pricing challenges, and other points.
The list should have enough good reasons to choose one or another market for your business. For example, if you are interested in promoting your brand through direct communication with your customers, you should definitely consider the B2C or C2C model. But if you want to build long-term relationships with different business representatives and focus on various sales opportunities, turn to the B2B marketplace.
How Much Does It Cost to Build a Marketplace Website
Finally, we come to the cost of developing all of the abovementioned. So, what will be the final cost to develop and design a marketplace website relevant to current and future e-commerce trends?
There is a detailed overview of project estimation with the best practices presented in our article – “How to Estimate a Software Project Easily?” Read it or contact us to make a precise cost estimate of your project!
Typically, the cost of an e-commerce marketplace can range from $5,000 to $500,000 or even more. This wide price range is caused by such factors as the scope of work and complexity of the site features, UX/UI web design, technology stack and development service provider and their prices.
Let’s focus on the complexity of e-commerce projects you may need.
(basic features with an adaptive design for various devices)
(more custom features and interactive design elements)
(enterprise-level features with more advanced design services)
|Estimated Hours||~320-480 hours||~480-600 hours||~600+ hours|
* This is an approximate cost estimate; ‘+’ means that final costs may be higher depending on a variety of factors (functionality, team size, location of development)
How to Create an Online Marketplace: 3 Simple Steps
You can follow one of two ways: use a ready-made platform (Magento, Shopify or BigCommerce) or create your own marketplace from scratch. No matter what you choose, nothing goes without a good plan. This is absolutely true even if you are going to use an existing platform. You must analyze the market, competitors, buyer persona to come up with a well-organized and successful workflow.
See how everything will be interconnected in this regard. A thorough business analysis will determine the main features of the e-commerce application that you intend to develop. The set of functions that you would like to see in your app also affects the scope of work. In turn, a certain number of specialists will be required to effectively complete the project. Finally, all of these will determine the final cost of development. So, how to develop an online store?
Do Business Analysis
The user logs on to the platform and buys goods. This is a common procedure on an e-commerce website. In actual practice, the scope of any e-commerce project is quite large and complicated. The task of a business analyst is to visualize all the business and functional processes on the platform to form the perfect solution. It is assumed that it meets all conceptual characteristics – the nature of the products offered on the platform, the target audience, their tastes, and needs, etc.
A business analysis checklist:
- User behavior on the website: what actions can a user perform on a site other than making a purchase? Perhaps they need filtering options to choose the most suitable product. From a business perspective, it would be better to create a wish list so that users can add products and keep them in sight.
- Admin console: what functions can an admin user perform?It is very important to establish effective product management on the e-commerce site. This can be done through CMS or any other tool that allows you to add or remove information about products sold on the platform. When it comes to large online stores, you need to use the advanced functionality of the system to perform and control many other activities from different admins (CRM, ERP, etc.)
- Inventory and logistics management: how to keep the site updated to accurate records? When a business is actively developing, it becomes difficult to manage all the logistics and warehouse data. Therefore, don’t neglect the development of an automated system in advance to control the flow of products in your webshop.
- Order fulfillment: what is the best way to complete an order for users? Today, there is a tendency to develop chatbots or digital voice assistants to quickly place an order. This is very convenient for most users, especially young people. There are benefits for the business as well – chatbots can cut operating costs by up to 30%. But the business analyst must determine the most appropriate way for your target audience, and experienced developers will help you actualize any of the functionalities.
- Checkout and payment: how can a user pay for a product? Some companies require customers to create accounts to proceed with payments. And there is a certain logic to this. You can offer your users to checkout as registered users or as guests. But think in advance about the security of their sensitive data. It is recommended to offer them various payment methods – payment on delivery, electronic wallets, or through third-party payment systems.
- Extra necessary services: what will help your business grow? Many systems are an integral part of e-commerce in the modern world. They are content management, real-time data collection, and analytics, promotional support, etc. Without any doubt, with the growth of your e-commerce business, you’ll need more and more automated services to maintain the whole website. For example, integrated Big Data tools will help you gather and analyze large volumes of data about products, customers.
Create MVP Design
We do not recommend starting work on the entire project immediately after a business analysis or, even worse after you came up with the idea of creating a web market place. It is better to start with the design of an MVP (Minimum Viable Product). It’s not difficult to come up with a business idea. The most important part is creating a prototype of the product that supports this idea and provides value to end-users. This is where the MVP comes in handy. Let’s dive deeper in the term:
- M – minimum. Focus on the core functionality of your project. Even a minimal number of functions will allow you to test ideas, but at the same time with the least effort and money.
- V – viable. It is so-called for the good reason – to satisfy the real needs of your customers even with the MVP in hands. Provide them with a viable solution to their possible problems.
- P – product. With the right balance between “viable” and “minimum”, you are likely to create a product that people can be interested in.
Let’s see how MVP works in practice:
Potential problem: hard to find a good used car online
|Minimum Set of Functionalities||Viable Solutions||Endproduct|
During the MVP design phase, you can change the initial idea to the most profitable one. Moreover, you will see how the application will work in practice, what to add, or what to remove so that it can bring real values to end-users. A well-designed MVP and a thorough SWOT analysis (stands for Strengths, Weaknesses, Opportunities, and Threats) minimizes the risks for investors when developing a product that will be released on the open market.
Develop a Final Product
After the previous two steps, do not hesitate to start developing the final marketplace that you are planning for a long time. Take your product from concept to a polished end product. This is the stage at which you can make important improvements or solve any unforeseen problems in the project, which may be detected by both types of analysis – business and SWOT. All key details are available to you to make data-driven solutions. In fact, it’s time to draw your attention to marketing and the practical side of transferring it to end customers, while developers are working on the technical side of your project.
Our niche experts are at your service to build an e-commerce marketplace from scratch. Contact us for free consulting and business analysis!
7 Main Features of a Successful Online Marketplace
What will help you promote your business on the Internet? That’s right, various promotions are aimed at sales growth. However, you cannot make your project prosper without powerful built-in features. Let’s see what to include first and what can be added later!
Diverse Payment Systems
Payment methods on AliExpress
What e-commerce application goes without a payment system? It is one of the main features your marketplace must have. Payment systems must provide several key functions to be effective:
- Be 100% secure to give no cause for a customer to worry about their sensitive information on your platform;
- Be flexible to provide customers with the ability to make various types of payments (credit cards, mobile payments, bank transfers, cash, etc.)
- Be customer-oriented to ensure payment security by keeping funds on escrow and giving them out to sellers only after delivery.
Intuitive-to-Use Site Navigation
Site navigation on eBay
Today’s customers are used to shopping very fast. Thus, your market should be oriented towards easy navigation. In this case, a professional UI design is useful to help potential buyers find the product they need fast and eventually get it. Proper site architecture is based on typical user behavior. For this reason, you are advised to conduct a careful study. Remember, we emphasized this in the previous section of the business analysis checklist? Follow this again if necessary, and direct the customer to the final decision on the purchase on your site.
Personal User Accounts
A user account on Amazon
The ability to create personal accounts and profiles on websites, especially on e-commerce sites, will be useful to both sellers and buyers. So, implement all the necessary functions for creating user accounts and secure storage of user data. It is no secret that most companies gather personal details to offer more personalized services based on location, birth date, tastes, and preferences, etc. You can make the best use of this e-commerce trend, but take care of your customers’ security on the website. At the same time, keep in mind that an easy way to register on a new website increases the chances of keeping a customer on it. Alternatively, you can allow users to register through their preferred social network.
Instant Messaging, Notifications & Help Centers
Help center on Rakuten
There is a slight chance that the buyer will wait for a long order confirmation. There are different types of notification depending on the user’s needs or your business goals. For example, they need to get informed about order status updates or you want to inform them about new product offers, use simple but effective messaging. The most common notifications appear within the designated area, usually in the upper right or lower corner of the screen. Push notifications can help you create your brand and increase the interest of your audience on the platform.
Besides, when searching for the necessary service or product, users often have questions. Thus, instant messaging systems are really important to react to all possible requests. For more fast results, you can develop an AI-based chatbot or digital voice assistant.
Order Management Systems
If at the start it may seem to be quite simple to manage orders manually. But more sales mean more orders, and more stock management errors. To minimize these order processing errors, save hours, reduce operational costs and boost sales, it is better to have an order management system developed for your marketplace. This is especially important for B2B e-commerce platforms when you can use multiple sales channels. Streamline your orders with an efficient ordering system that can handle batch processing and shipping.
Content Management Systems
Suppliers should be able to publish and manage the products and services that they offer, ideally with the detailed information about them with images. A content management system (CMS) is responsible for this process. According to a study by the Content Marketing Institute, 76% of organizations strategically approach content management. 78% of enterprises use some systems. A good CMS also helps maximize engagement and conversion rates, sales revenue, market share, and finally profit.
Extra CMS tools can give more opportunities to develop in e-commerce boosting your brand and products globally – multilingual support, SEO-friendly content, up-to-date product reviews, customized design, etc.
Real-Time Analytics Dashboards
These dashboards are an important component of an online store. They allow you to measure and track business transactions in real-time on a daily or even hourly basis. This opens up opportunities for continuous performance optimization through trend analysis. Besides, they can catch sudden problems or mistakes and respond as quickly as possible. What makes an e-commerce analytics dashboard effective for your business? High data accuracy, clear data visualization, easy integration with other tools and quick responsiveness. You should use real-time performance reporting to drive sales and maximize profits.
Additional Features to Add to a Web Marketplace
There are many other goodies that your marketplace can be equipped with. Let’s name some of them that you can add to future version updates. Do not try to add all the features at once. Analyze customers, their needs and preferences, and only then make a decision to expand the functionality of your software or not.
Here you are just several additional features:
- Personalized offers. Let customers get what they need most on your site. This feature, based on Big Data analytics and AI algorithms, will provide them with a wide and custom selection that cannot but affect customer loyalty.
- 3D/AR/VR viewing. Let buyers see the desired product from different angles. These solutions will help you engage your audience interactively.
- Wish lists. Let customers receive notifications about their wishes, which they leave on your platform, and fulfill them by making some special discounts. This way you can generate higher volumes of sales.
- AI-driven chatbots. Let users of your marketplace feel support 24/7. These intelligent assistants can help interact, answer questions, deliver personalized notifications, collect feedback, etc.
Why Choose Our E-commerce Developers?
Mangosoft’s core business is software development for e-commerce. We have 7+ years of experience in this niche, and our developers have already delivered 70+ projects in e-commerce. They are web applications, desktop software, online marketplaces. We can offer all types of services – business analysis, development, testing, migration and so forth.
We are ready to share one of our successful examples when we helped in developing an online marketplace. When a client turned to us, our experts analyzed the entire market and came to the conclusion that there was no direct interaction between customers and suppliers. As a result, our developers created a hybrid platform (B2C / C2C) with high scalability and fast web page load times. The business values of the given cases are as follows:
- Revenue increase by 80% 6 months after the launch of the product;
- The market share increases by 10% each month;
- The manual work process time decreased by 90%.
Contact us whenever you need our expert help in developing web applications for e-commerce based on the latest trends and advanced technologies.