An online marketplace today holds a lot of potentials. Especially over the last three years, ever since Covid-19 came into existence, several traditional brick and mortar stores have started their own online marketplaces.
Another popular option is for these sellers to move their operations to already established marketplaces like Amazon or Shopify to skip the hassle of setting up their own. However, with the advent of technology and related services, starting an online marketplace today is not that difficult. It requires some amount of time and patience, yes. But, the entire process has been made quite simple.
An online marketplace can be defined as a digital platform like a website or application that acts as a virtual store where shoppers can browse and purchase products. There are different types of online marketplaces – some sell only one specialized category of products and are confined to certain geographical areas while some sell all categories on a global scale.
Benefits of launching an online marketplace:
- Having an online marketplace quickly gives you access to a large number of customers due to the absence of geographical constraints. The provision of different categories of products being sold from one platform means it brings together customers looking for a variety of things or even complementary products. Since most people today use smartphones, they’re subject to viewing ads. Ecommerce marketplaces use ads that target people everywhere and easily, thus increasing the amount of traffic and potential customers to the marketplace.
- The initial costs of setting up an online marketplace are much lower than a physical one. You don’t have to spend a lot of money on setting up a store and maintaining staff to look after the store and ensure its smooth functioning. Therefore, less capital is required. All you have to worry about is the operations of your marketplace running smoothly. On the whole, the financial risks involved are at a lower level with lesser effort.
- When you have a marketplace with everything in place, you do not have to worry about finding vendors and customers. Once you advertise it, they themselves will find you and once you ensure that you’re providing good quality goods, merchants will automatically flock to sell their goods on your marketplace due to the number of shoppers you attract.
As a marketplace owner, you need not worry about manufacturing and production, hence you can see which niche or category of products you want to be able to cater to. You can choose what’s most profitable.
- It is easier to expand an online marketplace internationally than it is with a physical one. All you need to do is get your logistics in order to sell internationally. Attracting international customers is easy with the right advertising efforts. Once you catch the attention of customers from these foreign marketplaces, you can easily begin to reap the benefits of borderless expansion and international selling.
Steps to start an online marketplace
Before you launch an online marketplace, you need to conduct research into what kind of marketplace you want to operate, what kind of technology or software you’ll be using to manage your marketplace, and study your competitors.
You need to have a clear understanding of who your customers will be, and what kind of an audience you want to sell to. You need to be able to validate the potential of your marketplace. Also, your marketplace and its product need to solve a problem for customers and vendors on the whole and have something unique to offer.
Analyzing your competitors is crucial to the success of your own marketplace. Check what niches your competitors cater to, the UI/UX of their website or app, the number of fees they charge, the policies they have in place to regulate their sellers, etc.
The next important thing on the list is the business model of your marketplace which refers to how you’re going to make money. There are different ways in which you can make money – by charging fees for signing up, subscription fees on a monthly or annual basis, listing fees, and selling fees.
Sign-up fee refers to an amount that sellers are liable to pay when they sign up to become a part of your marketplace. You can ask sellers to pay subscription fees periodically so that you have a steady stream of revenue every month. For every item that a seller lists on your marketplace, you can charge them a listing fee according to the type of product.
Once you decide on all the important factors that go into the foundation of your marketplace you can begin building one.
- The first step is to create a prototype of your marketplace website or app and test it. This way you will identify the problems with it and see how well it works and fix whatever issues it has. While developing your app or website, you need to ensure that there are two kinds of users – one for sellers and one for buyers. There has to be a system in place for buyers to register, and a simple interface to facilitate easy browsing and view sellers’ information. For sellers, they need to be able to manage what information is public and what information stays private and be able to create promotions and deals easily.
- There has to be a safe payment system whereby sellers and buyers can handle payments in a secure way. You can integrate a system like PayPal or any other well-known payment gateway.
- A chatbot or chat system for assistance is another important feature to set up so that buyers can ask whatever product-related questions to sellers. Other features like being able to wishlist, compare prices, share products on other platforms, and push notifications all need to be integrated.
- You need to have a good domain name that represents your marketplace.
- You also need to secure your users’ valuable information by providing privacy with something known as an SSL certificate. These certificates also enhance your Google SEO and help you rank better and reach more customers.
- Promote your marketplace with Google ads and look at your advertising reports to understand where your traffic is coming from, where you can improve, and what’s not working.
Best marketplaces to sell online in 2022
There are a plethora of marketplaces available today for different purposes and different kinds of products. Here’s a list of the top 10 best eCommerce marketplaces to sell online today:
- Mercado Libre
For a comprehensive guide to the best eCommerce marketplaces for selling online, click here.
Online marketplaces are a great business opportunity and have a high potential for scaling. All you need to do is plan systematically, be organized in your approach, conduct the necessary research, and have all your systems in place. Bringing shoppers and buyers together is a challenge but it is one that offers a lot of opportunities for you as the marketplace owner as well as the people using your platform.
Arishekar N is the Senior Director of Marketing and Growth at SellerApp, an e-commerce data analytics solution. He is responsible for overseeing the development and implementation of marketing strategies, as well as increasing process efficiency by executing cutting-edge Search Engine Optimization strategies at SellerApp
Arishekar has over 10 years of experience in marketing analytics and SEO. He has worked as a Digital Specialist for the tech giant IBM and most recently as the Senior Marketing Specialist for ZioTive Technologies where he enhanced their site structure by increasing website and mobile usability. Previously, he worked as a Senior SEO Analyst for Star Group where he was responsible for managing SEO Audits and analytics.