The marketplace app is an online platform that acts as an independent intermediary between buyer and seller. In fact, it helps sellers get their products online by providing ad space. Thanks to security policies, marketplaces guarantee fair transactions for both parties.
Below we will tell you how to create a marketplace app and how much it will cost.
Types of Marketplace Apps
Now let’s take a look at the classification of marketplace apps.
According to the participants
Marketplaces are used for communication between suppliers and consumers, who can have different roles:
- С2С (customer-to-customer) – here sellers are ordinary people (not entrepreneurs);
- B2C (business-to-customer) – in this context, entrepreneurs offer goods to ordinary people;
- B2B (business-to-business) – this option implies interaction between entrepreneurs.
According to the type of product
Marketplace apps can also be divided by product type:
- goods and products;
- services;
- information;
- investment and crowdfunding.
According to the place where the buyer receives the product or service
There are two formats for transferring products or services from a seller to a buyer:
- online to offline – in this case, the final stages of the sales funnel take place offline (the seller and the buyer go to interaction outside the application);
- online commerce – all stages of the sales funnel (perhaps only except for the final one – the receipt of the goods by the client) are carried out online. Unlike the previous format, the deal will also be closed online.
According to the type of monetization
There are several options for monetizing the marketplace app:
- traffic;
- application from each new user;
- Cost-per-action model;
- commission for goods or services;
- commission for transactions;
- advertising;
- additional services (for example, placing a product in the top).
How to Build a Marketplace App: Main Stages
Let’s discuss what stages the development of a marketplace app consists of.
Market research
Before you start implementing your business idea, you need to understand how relevant it is to the current market conditions (Perhaps it is ahead of consumers’ expectations? Or, on the contrary, the idea is not too new?).
This is why the first step in market research is to determine the value of your future marketplace app to your target audience. For example, Amazon hosts offers from official suppliers of well-known brands, Airbnb hosts budget rentals, and so on.
The next thing you need to do is figure out what the advantages of your competitors are and what marketing strategies they use. Finally, answer the questions related to your potential target audience:
- How positively will your marketplace app be perceived by your target audience?
- Will it help in the long term to eliminate the pain points of your target audience?
- How big is your target audience?
- How does the estimated size of your target audience correspond to your potential earnings in the first year or two?
Drafting product requirements for the development team
At this stage, you have to draw up a document that will describe the functionality of the marketplace app, the must-have technologies (for example, the artificial intelligence), market research results, technical requirements for the product, etc. You have to agree on all these aspects with your development team.
Application development
You have two options to build a marketplace website – choose a SaaS solution or find a development team who will create a product from scratch.
In the first case, in the shortest possible time and with a minimal budget, you will receive a ready-made and reliable solution, which, however, cannot be perfectly sharpened to fit your needs. In the second case, you have to spend more money, but the finished product will turn out exactly as you intended it.
To get a balance between spent resources and possible risks, you can start by launching an MVP for your marketplace app – a product with minimal functionality, which, however, is able to demonstrate all its “chips” to potential users.
What should such a product include by default?
First of all, it must be profile-oriented and contain two types of profiles – one for buyers, the other for sellers. Both of these profiles must have some set of customizable components so that each user can customize them for personal needs.
The next default component is a catalog of goods / services with search, ordering, and filters. It should be convenient for buyers to sort products, for sellers – to get acquainted with other offers from competitors.
The next one is an online chat for communication between future participants of the deal. You will also need to provide integration with a payment gateway.
Finally, you should let your app users rate sellers and products and post reviews. Without this, you will not be able to guarantee the reliability of your marketplace app, and sellers will not have any objective competitive advantage over each other, except for prices for the same goods.
After the successful adoption of your MVP by the target audience, you can gradually increase its functionality. In particular, you will probably need to add features such as social media integration, custom statistics for sellers, a bonus system, push notifications, etc.
How Does Marketplace App Development Cost?
The cost of developing a marketplace app is formed either from the cost of the total amount of man-hours spent, or a fixed rate determined by each supplier for the SaaS solution that they sell.
On average, you will need about $ 50,000 for a customized product for the services of developers, designers, testers, and other IT specialists. The final cost of building a marketplace app depends directly on their rates, the speed of launching the product on the market, as well as the complexity of its functionality. Also, do not forget that the indicated amount implies expenses before the launch of the project. You will also need to pay regularly for server services, as well as marketing services and technical support.
Final Thoughts
Let’s summarize. Despite the fact that building a marketplace app is quite difficult, with the right marketing strategy, the initial investment will pay off very quickly. Also, you can always start by building a minimum viable product to test your business idea in practice and expand its functionality as your budget increases.
