4 Expert Tips You Should Follow to Build a Successful Market

4 Expert Tips You Should Follow to Build a Successful Market

From Imran Ali

The history of marketplaces began in 1995 when Amazon appeared online. Then eBay, Rakuten, and Alibaba followed.

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The history of marketplaces began in 1995 when Amazon appeared online. Then eBay, Rakuten, and Alibaba followed. Their vast success spurred global entrepreneurs to create their online marketplaces in various industries, turning the idea of online sales around.

By 2022 there will be over 10K of online marketplaces globally. And 30% of them are startups that can repeat the success of "Amazon and brothers."

Even though there are many marketplaces worldwide, this does not mean that this niche is fully engaged. New and new great marketplace ideas appear every year because user needs grow. 

In 2022 and beyond, companies have great chances to repeat the success of the marketplace giants. However, the question is how to build a successful product. Without hesitation, we decided to write our next article and describe expert tips on building a successful marketplace project. 

2 Ways of Building an Online Marketplace

Marketplaces are what modern life is impossible without. 

For users, a marketplace is an opportunity to buy some items or services efficiently and reliably. 

For entrepreneurs, a marketplace is a way to push the business in IPO (initial public offering), become a global unicorn, etc. 

Startups should consider the experience of world leaders like Amazon. Now it is a giant of the global market with an income of almost $740 million.

Amazon Revenue Forecast by Statista

It is clear that all modern businesses are searching for how to build a marketplace that likely goes down in the books as the most successful project ever. 

There are two ways to build the marketplace: using custom development, as well as a ready-made solution.

In 2022, not every modern business will decide on custom development because it can be expensive and take more time. 

However, companies should understand that a custom solution is quite profitable for: 

  • building unique functionality 

  • integrating various services

  • making the best conditions for the product from the start

If the idea of a marketplace is something innovative and gets a great response from the public even before the start of development, the best solution would be to use custom development.

Ready-made solutions for creating a marketplace are fast, inexpensive, and don't require significant investments at the very beginning. 

Many companies, feeling the pressure of competitors from outside and realizing that the development time is limited, resort to this solution. There are at least three ready-made solutions on the market.

SaaS is a form of cloud solution in which companies get a ready-made application controlled by a software service provider. Customers' application access is possible through a browser or a mobile application. The company will receive its unique account and domain to a personalized payment method on the platform.

This type of marketplace will be created using CMS - a site content management system like WordPress, Drupal, Joomla. CMS makes it possible to collect text, pictures, and other important information into one platform. It is also used to generate and process digital content. CMS provides complete control over the code base, user interface, and business logic.

PaaS is a set of services for creating modern marketplaces locally and in the cloud. With PaaS, the provider manages the operating system, and the client controls the applications exclusively, without having access to the operating system and low-level settings.

PaaS has all the main advantages of cloud computing: from transparent pricing and simple resource allocation to on-demand scaling and disaster recovery. Management is carried out with the help of unified visual panels. As a result, companies get the following opportunities:

  • simplification of system operations

  • accelerating business innovation with simple solutions

  • reducing operational, safety, and management risks 

Choosing a ready-made solution for the marketplace, companies need to pay close attention not only to the choice of provider but also to the outsourcing company of software services.

In the future, the experienced outsourcing software development company will help create better conditions for preventing complex bugs and sudden difficulties, communication, and business disagreements.

4 Steps To Follow When Creating a Successful Marketplace

No matter how companies dream of a cool project, it is necessary to outline four essential steps to achieve the desired goal.

Entrepreneurs are people who move this world and create incredibly cool things from a simple bright idea that occurred in their heads. Each of us may have dozens of great ideas a day, but all of them need to be thought, reinterpreted, and validated. 

This fact doesn't show our weakness, though; our brain cannot calculate various scenarios and analyze everything in the market. And here, the Discovery Phase will come on the stage.

The discovery phase is the development stage which includes in-depth market research, analysis of project goals, and drawing up a marketplace development plan.

Using the discovery phase, businesses will receive such crucial data about:

  • Competition in the market: a comparative analysis of all competitors, their functionality, and detection capabilities helps to find out what is missing in the market

  • Platform's goals: the marketplace should solve the real problem. If there is a specific issue for users, the need for this marketplace will be minimal

  • Suitable business model: to determine the best monetization model for a particular type of marketplace

  • Customer road map: the discovery stage helps map the customer's path from initial touch to a  purchase

What also adds to the attractiveness of the Discovery Phase is the document of specifications for the product software, along with the best tech stack, platform architecture, description of functionality, navigation, and frameworks.

Amazon, Etsy, and others started their development as an MVP and did not fail. MVP usually begins after marketing research, when a project development plan is created. 

MVP is a minimal version of your online marketplace website with only its basic functionality. It is not a mystery why successful startups started their business journey with MVP for some people. It's simple - they wanted to create a solid foundation for their full-functional product. 

Also, the minimal viable product has the following advantages:

  • attracting early customers

  • getting helpful feedback for a further upgrade of the platform

  • having an opportunity to show a product to investors 

If we recall the history of Amazon, by creating its MVP product and receiving a high influx of online visitors, the company was able to easily attract one million dollars, a considerable amount at that time. 

Modern entrepreneurs also find themselves in this situation quite often. Since the creation of Amazon, investing in the project has become quite commonplace, profitable, and promising. 

In 2021, about $132 billion were invested into marketplaces startups.

In Europe, the primary source of financing for startups is self-financing provided by the state or business partners. European companies receive funding at the idea stage, but this is not a typical case, unlike in the United States, founders can raise millions in the initial round. 

If companies have already developed MVP and received enough traction for their product, the chances of winning the hearts of investors increase significantly.

After the company receives the investment, chances are great to create a full-scale platform with unique functionality.

Scaling is about ensuring that the marketplace is robust enough to survive and then thrive and scale in that market. The overall goal of marketplace startups is to create an efficient, secure platform that could attract millions.

The scaling of the marketplace platform may include the following components:

  • Error and bugs correction

  • Introduction of new functionality

  • Migration of the marketplace platform to more modern solutions

  • Microservices for business processes

  • Product migration to cloud solutions

However, marketplace scaling is impossible without creating trust in the product. Companies need to make the best testing for their functionality implement marketing strategies and referral functions to generate word of mouth in social networks, promoting the product for further development.

Conclusion

Many entrepreneurs dream of knowing secret tips on creating a thriving marketplace website. We can say there is no secret, just planned actions that can lead to success. 

Twenty-year experience of creating platforms like Amazon and eBay showed one great idea is not enough. If modern companies build their marketplace development processes correctly, they will have a chance to receive funding and attract a large number of loyal users.

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