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The idea of an online marketplace has been a popular option for some time. It offers greater convenience to people who want to purchase products or services online. The internet has made things easier for everyone, and marketplaces allow customers to find their desired items and have them delivered to their homes at affordable rates.

With a couple of clicks, you manage to find great deals online and have any type of product, electronic gadgets or furniture delivered to your doorstep. Anyone aiming at selling their products understands the benefits of the strong online presence and wants to build a marketplace app, but creating a successful app requires considerable resources and a lot of knowledge. If you have been searching for information online on how to build a marketplace app, you have come to the right place.

Below, we discuss the following questions: 

  • What the main marketplace characteristics are 
  • What differentiate marketplaces from online stores
  • How you can build a marketplace app from scratch.

What is a Marketplace Platform?

Unlike online stores, a marketplace offers independent sellers the opportunity to list their products and services. 

There are various types of marketplace platforms of different sizes marked with lots of options ranging from products that sellers offer to choice of the marketing strategy. The technology and pricing will also be different depending on the location and purpose of the marketplace.

The important factor to regard is to realize the role of the marketplace as a mediator. Marketplaces bridge the gap between sellers and buyers. Hence, the purpose of a marketplace is to provide the effective cooperation while connecting buyers and sellers.

Take a look at online shopping platform we've recently helped to create

Online stores only offer their own services and goods and control all aspects including the products, prices, delivery, and the payment. A marketplace offers you a platform for listing services and a payment system. These marketplaces can be used for exchanging goods or to trade since they include everything from online services like coupons and apps to physical objects like electronic devices, furniture, or clothing.

Why Should You Build A Marketplace App?

Marketplace apps are the hottest trend right now, especially with the dominance of market leaders like Amazon, Etsy, eBay, Airbnb, Uber, and Groupon. All these companies have gone on to become billion-dollar businesses that achieved unparalleled growth. This has obviously shed light on different marketing concepts like B2B, B2C, and C2C. A successful marketplace will be based on scalability, execution, performance, and design.

Mobile commerce has become the preferred method for customers shopping online, as they can easily access different products and services online. E-commerce sales in the United States have gone through the roof after the emergence of mobile commerce companies, with revenues generating more than $200 billion last year. The popularity of mobile shopping has meant that more retailers in the United States have started to invest in marketplace apps.

Most global businesses that are online have moved their activities to mobile platforms, as smartphones and tablets have allowed them to interact with clients in real-time. The market for mobile commerce applications is expected to achieve exponential growth, as eBay’s mobile application shows. It has been downloaded more than 51 million times, has been localized in 10 languages, and is available in over 195 countries worldwide!

Classification: The Main Types of Marketplaces

Before you build your marketplace app it is important that you determine what type of marketplace you want, since there are various versions of marketplaces. 

They can be divided into different categories according to customer type, selling model, market sectors, etc.


Classification of online marketplaces

By target audience
  • Peer-to-Peer (P2P) 
  • Business-to-Customer (B2C)
  • Business-to-Business (B2B)
By focus
  • Vertical 
  • Horizontal
By management approach
  • Unmanaged
  • Lightly managed 
  • Fully managed
By products
  • Goods
  • Services
  • Projects
  • Hybrid
By interaction
  • Online commerce
  • Online-to-offline

By target audience

Business-to-Business (B2B) marketplaces

The business-to-business model enables businesses to use a marketplace for bringing more customers to sellers, expand the area of reach and perform the function of product distribution at best.  

Business-to-Customer (B2C) marketplaces 

Opting for this model means products and services are sold directly from businesses to customers. Majority of B2C marketplaces (AliExpress is one of the most prominent examples of this kind) introduce one-stop-shop solutions with offering diverse goods. Vendors’ propositions range from footwear to electronics.

Peer-to-Peer (P2P) marketplaces 

A peer-to-peer (P2P) also known as customer-to-customer (C2C) marketplace is best presented by Uber and Etsy: in this model, the marketplace lets customers share products and services and manage selling. 

By focus

Vertical marketplace

In a vertical model, consumers are interested in certain business niche. It reduces the number of users but enables highly efficient promotion with targeting the audience without fail.

Horizontal marketplace

With this platform, consumers get access to different types of goods and services of certain characteristics. 

By products

Product marketplaces

The most common type of marketplace featuring products offered by sellers with Amazon and eBay as the key players.

Check our case study: Online product marketplace, created by CodeIT team from scratch

Service marketplaces

Aimed at those in need for services (repairing, transportation, household, car and apartment rentals, beauty/medical services, and IT services) offered on Uber, Airbnb, Upwork, and TaskRabbit.

Project marketplaces

These marketplaces arrange funds through crowdfunding for startup projects like on Kickstarter, Indiegogo, and Fundable.

Hybrid marketplaces

As the name suggests, they usually offer both services and products (for example, OLX, Craigslist, Oodle).

By interaction

Online commerce

Online commerce platforms (for example, Google Shopping) conquered markets through Data Interchange that requires suppliers and customers to set up a dedicated data link to the marketplaces where customers expect to buy advertised product. .

Online-to-offline

Online-to-offline commerce platforms (O2O) spot customers in the online space. Taking this approach implies bringing online customers to brick and mortar locations by creating a seamless digital experience. 

GOT AN IDEA FOR A MARKETPLACE APP? LET'S DISCUSS!

How Do You Build One?

The secret of marketplace app development lies in a lot of material gathering and investigation. It is imperative to evaluate all risks before starting any project, and this doesn’t involve any perfect code to create a marketplace app. Grasping what the process demands is integral to creating a successful marketplace application, and that is exactly what we are going to discuss below.

The costs associated with marketplace app development are mainly dependent on the features you want in the app. However, if you want to build a mobile app like Amazon or eBay, it will require a lot of time, effort, and resources. The good news is that you can do it if you go about it in the right manner. So, here is how you should go about creating your own marketplace app:

The Importance of Identifying User Activity

The first step towards building a successful online marketplace app is to understand the user activity that will take place in the marketplace. This will determine the type of marketplace you are building, how it will operate, and what it will offer to users. Keeping user activity in mind when building a marketplace app is crucial since it allows you to set specific targets. So, let’s check out the various eCommerce marketplaces and what type of user activity they get:

Product marketplaces mainly target buyers and sellers, with the sellers listing their products and the buyers purchasing them.

Service marketplaces attract freelancers, vendors, and professionals who are willing to provide their services, and employers looking for experts to perform tasks.

More of our projects: Australia's leading peer-to-peer platform that allows independent care workers to connect directly with aged community

Project marketplaces target backers and owners who are investing money in a project or raising money for the project, in the hopes of getting a profit in the future.

Hybrid marketplaces target various types of users, since they offer a mix of everything, and therefore users are mainly guests, employers, vendors, buyers, and sellers.

Setting Up the Structure

One of the most important steps in building a marketplace app is to set up a proper structure for your app. The structure of your marketplace app is preconditioned by different aspects and is linked with your overall business strategy. Therefore, when laying down the foundations of a marketplace, you must set clear business goals with a proper strategy.

So, how do you go about setting up the structure? You can start by answering the following questions:

Who will be using the marketplace?

It is important to know your potential users and what they expect so that you can improve the UI of the platform. The type of user activity on the marketplace will determine the functionality of the marketplace and what it offers users.

What services will be offered?

This is one of the most important questions to consider because the answer will govern the entire structure of the marketplace. For example, Airbnb and eBay are both an online auction and accommodation rental services marketplace, but they are completely different in terms of looks.

How will tasks be carried out?

The answer to this question will help you decide what APIs, plugins, and integrations to implement in the development process of your marketplace.

Building a marketplace app isn’t easy by any stretch of the imagination, and the only way it will work is when you have a deep understanding of your business and have experienced developers who consider every aspect and use cutting-edge solutions that allow exemplary operation of your marketplace app.

Want to create a marketplace app? We consult at no charge

Choosing a monetization model

There are five models to choose from:

  • Commission
  • Subscription fee
  • Listing Fee
  • Featured listings
  • Advertising. 


Charging commissions off each transaction registered on the platform is one of the most widely used monetization models applied by such giants as Rakuten, eBay, Etsy, Airbnb

Subscription fee implies that users pay money for membership that ensures the access to the service. Fees can be charged monthly or annually. The apps that use this kind of monetizing are Amazon Prime, Netflix, and Google Play Music.

This model is applied when marketplaces charge a fee from providers posting new listings. In this case, providers get value based on the number of listings available on the site. The example of this model can be found on Flippa.

Featured listings enable sellers to get more visibility for their offerings. Providers have to pay to get featured on the homepage of the site, or appear on the top in category search. This model is utilized by Gumtree, for instance. 

Advertising in the form of a paid promotion for sellers getting a place at the top of the listing is very popular as the channel of the marketplace revenue. Google Ads service is one of the well-known examples of application of this model.

Marketplace Application End User

The marketplace apps functionalities differ by the end user they are designed for and showcase different usability that we discuss below.  

Product/Service Provider App

The app is designed for vendors that want to become recognizable in their respective industry and reach customers easily. The app usually features a vendor account and includes options that allow vendors to manage products and orders, get instant notifications and create reports.

Customer App

The most important for the customer is to view diverse products or services and be able to choose the best deal. It means that the app has to feature products and have info on promotions. With a buyer account, customers expect to have options of social connect, clear products listings, quick checkouts and support of multiple payment methods.

Administrator App 

It is designed for mediators that take care of the operational part of transactions and get revenue from a fee charged for services.

Setting Up the Mandatory Features

Irrespective of the marketplace app type, the app requires development of the following panels : 

  • administration panel
  • seller (merchant) panel
  • buyer panel. 

Administration panel

This will enable control over the product inventory, procedures associated with payments, managing orders, clients database, and similar settings like commissions for sellers, registering new users, categorizing items, managing reviews and ratings, and approving selected products. The administration panel being not essential for the customers will be visible on the backend side.

The must-have features include: 

  • Real-time updates from a single dashboard
  • User management solutions
  • Options for charging commission
  • Analytics and Reports
  • Stock visibility and management 
  • Customer management
  • Invoicing Solutions
  • Itemizing by Category
  • Tax management. 

Seller/Merchant panel

The must-have features for seller panel include: 

  • Social Connect and Sign-up Login
  • Display of vendor-specific store URLs
  • Order management solutions 
  • Stock management
  • Offers, promotions and discounts
  • In-app chat system
  • Transaction management
  • Reports and analytics

The buyer panel

The mandatory features include:

  • Registration/Authorization
  • Management of personal profile
  • Client support for connecting with sellers
  • Listings
  • Search engine for easy search
  • Shopping cart
  • Wishlist
  • Reviews and testimonials
  • Integrated payment functionality
  • Tracking of customer order

As a side note, it should be stated that you can combine seller and buyer roles within an application or create two separate apps. But for administrators, a separate web application, preferably for desktop, is mandatory.

When it comes to online marketplaces and eCommerce it is tough to differentiate major features from your competitor’s app, but you can offer add-ons and more value to attract users. These can include free product listing for vendors, money-back guarantees, next day shipping, free shipping, discounted pricing, and other benefits offered additionally. Naturally, the features of your marketplace app will vary depending on your business specifications and your goals.

Major development stages in-depth

You can choose between two options of building an online marketplace app. 

  • Developing on top of existing marketplace software
  • Coding a marketplace from scratch.

In the first case scenario you get a ready-made solution that saves you time on launching the marketplace by taking shortcuts on wireframing, developing, or testing. But you must be ready that your competitors use the same template reducing your chance to stand out and reach customers faster. Besides, you will have to optimize the software performance on a regular basis.

When you decide to build your marketplace from scratch, you should be ready that it is more time-consuming because the process of development implies coding, quality testing, and fail-free launch. But in the long run, it’s a more reliable solution enabling you to get tailored functionality and integrations.

The process of custom marketplace app development goes through the following stages: 

Prototyping and Project documentation

At this stage, you create a marketplace prototype so that it is easy to understand how the end-user can utilize the application, which requires detailed description of interactions within the product functionality. This stage also includes checking the business potential of the idea, and preparing the project documentation in the form of descriptions of software functionality and purpose. A technical specification includes stating the goals, writing down the specific guidelines, and descriptions from the end-user perspective. 

UI/UX Design

While outlining the design, the team renders screens based on the stated goals, defined target audience, and approved functionality.

As a rule, there are several styles in work at this stage. When the design is confirmed, the screens are designed to comply to the approved concept.

Complex designs start with a minimum viable product (MVP) introducing the first version of the application.  At this stage, the information on bugs is gathered and revision based on feedback is provided for further performance of debugging and improving the design of the product. 

The choice of tech stack

The technologies and tools utilized in development are as listed below: 

Programming languages: Java, PHP, and Python.

Mobile development: Android - Java, iOS - Swift, cross-platform - React Native

Front-end: Angular, ReactJS, HTML5, CSS

Back-end: Node.js

Payments: Stripe, Braintree, and PayPal

Recommendations: Machine learning algorithms

Analytics: Google Analytics

Marketing Automation: HubSpot, MailChimp (for e-mails)

Infrastructure: Amazon Web Services

Databases: PostgreSQL, MySQL, MongoDB. 

The team engaged in creating a marketplace app for Android and iOS include Project manager, Backend developer, UI/UX designer, Android and iOS developers, and QA engineer.

Scaling and Expansion

Once you launched your product and feel confident that your marketplace app has garnered enough attention and is doing well against your competition, you should move towards scaling and expanding. This can be done by:

Targeting multiple platforms

Release your products on the most popular and accessible platforms, so that users on diverse mobile platforms can easily access and use your marketplace app.

Enhance functionality

You can also revamp or improve the functionality of your app by introducing new features that provide users with more luxury and more engaging experience. You should interact with users to learn about their needs, so you can develop innovative features they want.

Start marketing for growth

At this stage, you need to have a portrait of your potential suppliers and buyers to identify the best channels of attracting your consumers. 

You can do it by yourself or with assistance of marketing professionals. In the first case you need:

  • Get insights on your audience
  • Analyze keywords that your prospective customers use in regards to your niche

Now you are ready to connect with the suppliers and negotiate the terms of your service.

Upon reaching an agreement, you begin to attract buyers and start test advertising on the most popular platforms (Facebook, Instagram, Google, YouTube). In addition, you can use the power of blogging and storytelling so that the audience get engaged while sharing their ideas and opinions. 

Building the proper marketing strategy can help you instantly reach your audience. It leads to building a community and ensures that your marketplace app continues to achieve growth.

Third-Party Integrations

All the most successful marketplace apps and online e-commerce stores use third-party integrations, as it allows them to scale and expand quickly. You can leverage third-party integrations like personalized emails, chat messages, GPS services, and payment systems.

Money and Time Estimation

The cost of your marketplace app will vary depending on the functionality you have chosen, and the development of your app will need a coordinated effort from various specialists. That means accounting for quality assurance, layout, front-end as well as back-end development, project management, and UX and UI design. If you want a complex solution or want to add new functions to your app, you must set aside an additional budget for that expanse. Overall, the cost of developing a custom marketplace ranges from $30,000 to $150,000. The more accurate estimate can be defined upon analysis of the expected functionality of the app. 

If you need a detailed estimation, don’t hesitate to send us an e-mail: sales@codeit.us.

TELL US ABOUT YOUR PROJECT IDEA AND WE’LL ESTIMATE IT FOR FREE

Conclusion

We hope that by providing an in-depth look at how to build a successful marketplace mobile app, you will be equipped with the required knowledge to embark on your project.

The vital stages to achieve success imply market research and gathering of all the important details related to running your app on the marketplace. 

To accomplish your project goals with the marketplace app, it is highly recommended to work with professionals that have a track record of building successful marketplace apps. Make sure you collaborate with the experts to guarantee the desired results of building a marketplace app designed to engage your consumers.

You may also like:
🛒What is an online marketplace?

Marketplaces bring together supply and demand, and provide an effective way to save costs by skipping the middleman. The purpose of a marketplace is to provide effective cooperation while connecting buyers and sellers.

🛍️What are the main types of marketplaces?

They can be divided into different categories according to customer type, selling model, market sectors, etc.

By target audience:    

  • Peer-to-Peer (P2P) 
  • Business-to-Customer (B2C)
  • Business-to-Business (B2B)

By focus:    

  • Vertical 
  • Horizontal

By management approach:    

  • Unmanaged
  • Lightly managed 
  • Fully managed

By products:    

  • Goods
  • Services
  • Projects
  • Hybrid

By interaction:    

  • Online commerce
  • Online-to-offline


🛒How to create a marketplace?

Development of a marketplace application requires the following steps:

  • Explore the market and choose a marketplace type
  • Pick the right business model
  • Define the set of required features
  • Prototyping and wireframing
  • UX/UI design
  • Pick the best-suited platform or tech stack
  • Build and launch an MVP
  • Promote, grow and scale your product

Choosing the right software development company is a key factor in project success.


🛍️How do marketplace apps make money?

There are five monetization models to choose from:

  • Commission
  • Subscription fee
  • Listing Fee
  • Featured listings
  • Advertising


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