How Much Does it Cost to Build a Marketplace Platform?

How to Create a Marketplace App

Digital marketplaces are becoming popular day by day. A marketplace platform consists of a buyer-seller community, like eBay and Amazon. Amazon currently has over 300 million active users and generates a revenue of more than $170 billion annually.

Online marketplace connects service providers and customers via an engaging platform. Service providers and service seekers need a bridge, and an online marketplace serves as that bridge. The number of marketplaces has increased dramatically in the past few years for the extensive convenience offered. Also, a marketplace is accessible to a broader audience than a retail store.

Read More: How to Build an App like TEMU – A Comprehensive Guide

Customers prefer convenience over anything. It’s the development team’s responsibility to ensure that the marketplace mobile app allows users to access the inventory electronically and have real-time information about all the products.

Marketplace app development costs depend on various factors, including app features, platforms, and more. Let’s have a look at the process and costs of developing a marketplace platform.

The cost to build a marketplace app depends on the following factors:

• Type of Platform – Desktop, Mobile, or Both
• Platform –Android, iOS, Windows, or others
• Features of the Marketplace
• Functionality of the Marketplace
• Design – Basic, Individual, or Customized
• Development Partner

2 Types of Marketplaces

Before we dive into the details of marketplace development costs, here’s a breakdown of the types of digital marketplaces:

Vertical

Vertical marketplaces are dedicated to one product niche. They offer a range of items from expert sellers but are exclusive to one type of product.

Zillow, for example, is a free site for homeowners or real estate agents. Multiple vendors can access the marketplace to create property listings, but the platform only supports renting, selling, or buying houses.

Horizontal

Horizontal marketplaces have products from multiple categories, but they all have a shared secondary characteristic.

For example, DogVacay offers various services but is exclusive to pet owners. Similarly, Etsy is a well-known marketplace where individuals can sell or buy items in eight categories, provided that every product sold is handmade.

Global

Global marketplaces, like the name suggests, are a one-stop solution that offers almost everything under the sun. From books to furniture, grocery to apparel, toys, and software, all are available under one roof.

They serve a global audience providing exceptional quality goods, at maximum speed and minimum price.

Amazon and eBay are an excellent example of global marketplaces. Upwork is also a digital marketplace where entrepreneurs can hire freelancers in any niche.

Analyze the Market and Start Small

The first step to create your marketplace platform is to focus on global and local competition when creating an online marketplace. Instead of competing directly with powerhouses like Amazon or eBay, shift your attention towards building an exceptionally well-designed app with key features. Start small, target a niche, and gradually expand your business.

With an increase in marketplaces across the globe, competition is getting tighter. Your marketplace must have a unique selling proposition and should target a niche.

Here is why you investing in a marketplace mobile app is a lucrative business opportunity:

• Because it’s not a brick and mortar store, marketplaces require a less initial investment.
• In 2019, $2.03 trillion was spent globally on the top 100 online marketplaces.
• US-based marketplaces enjoyed a sales growth of 18% in 2019.
• In 2020, online shopping is expected to hit $4 trillion.
• Millennials spend $420 on average during Black Friday and Cyber Monday.

Building a Successful Marketplace

The success of a marketplace depends on its innovative features and convenience offered through the platform. Amazon has over 5 million registered vendors, allowing an incredible number of vendors to use the platform. Amazon’s scalability is one of the many reasons for its popularity, offering almost everything customers might night. Being a hybrid marketplace, Amazon connects buyers and sellers to interact on a shared platform and is self-producing as well.

Developing the right marketplace model is the key to building an engaging platform. The right marketplace offers features that support both buyers and sellers. Buyers want to buy, and sellers want to sell, which means as a developer, you need to design a platform that will:

• Allow sellers to list, sell, and dispatch products efficiently.
• Allow buyers to search desired products, place orders, and have a hassle-free shopping experience.
• Offer seamless experience to buyers and sellers via the platform.

Resources Required for Developing a Marketplace

The development team to build a marketplace website usually includes:

Dedicated Resources:

• 1 X Project Owner
• 2 Web Developers
• 3 Mobile App Developers
• 2 UI/UX Designer
• 2 Devops
• 1 QA Engineer

Shared Resources:

• Solution Architect
• Database Administrator

How Much do We Charge?

$50 per hour, for everything!

What Does this Mean?

Now, when you look at the charges of every individual professional, you might notice a huge difference between the hourly rates of a freelancer and the hourly rate of a full-fledge software agency like Cubix. A project manager charging more than $20 an hour focuses only on providing his expertise and agile hours when it’s flexible. Their hours don’t include flexible meetings, extra hours per week, and comprehensive workshops breaking down the project life cycle for clients.

When you’re looking to outsource your marketplace development project, there are several factors that come into play. You can easily hire different professionals and make up a team, or you can reach out to a software agency that will do your work for you, like Cubix. The major difference is the variation in basic hourly rates. Let’s go in detail about the price structure.

Read More: Mobile App Development Cost (A Breakdown)

Freelancer Costs vs. Software Agency Value: What You Get for $50 Per Hour

With freelancers, you have to pay $20+ to 5-6 individuals to turn your marketplace app into a reality. With a software agency like Cubix, you can have a standby team on your side, charging only $50 per hour. Yes, that’s way more than the hourly rate of a freelancer, but the benefits you reap out of $50 per hour are commendable.

When you don’t have the technical skills to do the job, you rely on outside opinions and information. This is where software agencies come into play. The planning, approach, and execution of complex solutions, for instance, a marketplace app, is advanced 5 times more through a software agency. No one charges a certain rate without considering all affecting factors. if we charge $50 per hour, we commit to delivering quality work as well.

$50 covers a whole range of activities included in marketplace development. At Cubix, or a software agency, for that matter, you will find years of experience in their pocket. We’ve been in this industry for more than 12 years, which allowed us to gather firsthand experience taking over some of the simplest and most complex projects of all time. But, not one of them seemed impossible because of the team we have. Every seat we have at the table, every resource we hire, every hour they give in, and every ounce of hard work that goes into turning your idea into a reality is why we charge more than freelancers.

With freelancers, you have the choice to pick people and assign tasks. With a software agency, we choose the right people for your dream project. We do all the work on your timeline, your budget, and your requirements

Developing a marketplace requires a lot of effort, money, and time. When a client is looking to outsource their project, they want to make sure the agency they hired can deliver high-quality results and reach their expectations within their budget.

Read More: How to Hire a Full-stack Developer?

Finding Your Development Partner

Finding the right development partner for your marketplace is essential to create an excellent platform. You have multiple options to choose from, depending upon your marketplace requirements, budget, time constraints, and other factors.

Here are some of your options:

Marketplace Development Costs with Freelancers

Freelancers will develop your marketplace at a fraction of the price. It will help minimize costs but comes with various risks associated, such as miscommunication, zero face-to-face meetings, no project manager, different time zones, and more. These challenges directly impact the quality of the digital product.

Before hiring any freelancer, make sure to do your homework. Go through their projects, identify their interests, and align them with the goals of your marketplace app. You don’t want to work with someone who isn’t capable of understanding your idea.

Let’s take a look at the average hourly rates freelancers charge around the world.

Marketplace Development Costs with App Development Agencies

App development agencies have a team of veteran developers, designers, engineers, mathematicians, creative artists, project managers, and everyone else needed to build extraordinary products. Unlike freelancers, app development agencies have diverse experience, expertise on modern technologies, and infrastructure required for next-level developments. App development companies are your best choice for a flawless platform within your budget.

App development agencies, like Cubix, charge $25 per hour or $1800 per week for a project. No one wants to build another Facebook or another Snapchat. They know it won’t turn successful. Every idea has a Unique Selling Point integrated into it. You just need the right team to identify it.

Understanding $50 Per Hour

To build an e-commerce marketplace, let’s dive into the breakdown of this price.

When you choose to outsource your project, you firstly share your idea and the requirements needed. A meeting or a workshop is conducted with the team heads and core developers to evaluate and understand every requirement you have for the project. We make sure to dedicate 220 hours to conducting workshops to streamline tasks and revise any errors. Understanding these requirements and drawing out a mind map takes 110 hours for a team which equals at least 4 days, which means every member of the team is putting more than 8 hours every day. What does this mean? $ It gets you professional expertise, multiple workshops, agile working hours, and revision.

Selecting a platform and working on it takes approx. 530-695 hours depending on whether it’s Android or iOS. Designing the web panels, APIs, frameworks, and libraries take up 1589 hours or almost 10 weeks. $79,450 plus $5,500 cover the required development hours where project managers, developers, and UI designers work hard by putting in 10 weeks’ worth of time for your marketplace project.

From revising requirements and choosing a platform, to designing Admin and Service Provider panels and integrating APIs for web services, we involve the client in every step. We stick to the agile model of SDLC as we believe in building relationships with our clients, not a business deal. We aim to make sure the project we deliver is exactly the same or even better than what the client is paying for.

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Effort and Time Investment in Marketplace Development

Now, let’s dive into the non-development hours the tech team puts into the marketplace app. The UI designers and core developers work hand in hand for 110 hours to set up the architecture and database of the marketplace platform. 110 hours are divided into 55 hours for each. From research to coding to executing, the project manager, the developers, and the database administrator work relentlessly to deliver things on a strict deadline.

Network, testing and release per sprint take almost four weeks. These tasks take 5.7 weeks to complete requiring the team to put in 973 hours collectively in total for these tasks only. While we charge 50$ an hour, we don’t charge extra for revision and believe in agile working. ‘No’ is not a concept we follow. Listening to the client’s feedback and making changes at the same cost helps nurture our relationships with the clients.

In the tech industry, research is a critical aspect. The team you hire will decide how your dream project ends up. You certainly want to know all your options before choosing who to get in bed with.

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Marketplace Development Costs with Silicon Giants

Silicon Giants will undoubtedly cost you an arm and a leg. It is difficult for startups to afford high-end development companies, like Oracle and IBM. The average hourly rate for such companies starts from $150 per hour.

Tech Stack

When we’re discussing the cost of developing a marketplace platform, we need to look into the tech stack that goes into its development. For features like in-app payments, search, and instant messaging, for example, here are the technologies that you will need:

Backend

• Node.js
• MySQL
• Swagger
• EC2
• Express 4
• Sequelize

Frontend

• WebStorm
• Angular
• JavaScript

Integrations

• Twilio
• Stripe
• Amazon SEScript
• PayPal
• S3

Other technologies that might be used include Elastic Search, Braintree, and Firebase for in-app search, payments, and instant messaging, respectively.

Start with an MVP

MVP defines minimum viable products that offer only the bare minimum features related to the software’s core function. Once the website or app is successful in the market, you can then add more features and updates later.

That said, starting with an MVP is the best practice when launching a new development project. It’s because it allows you to launch your marketplace faster and get feedback from the customers on improvements.

So, let’s look at the standard MVP marketplace features for sellers and buyers:

MVP Features

Registration

Every digital marketplace requires users to create an account to access full platform features. They need to fill in details like full name, email address, and password to register. Alternatively, you can provide social sign up options via Google or Facebook, for example.

The registration form also displays links to pages like Terms and Conditions and Privacy Policy, allowing users to read terms of use before signing up.

User Profile

For a marketplace, there are two types of users: vendors and buyers. Meaning, requirements for both profiles differ.

Buyers would need to add or edit profile details like changing email addresses or delivery address, for example. Add payment method or manage email subscriptions are other options they would need in their profile settings.

Digital marketplaces also provide an Order History tab, allowing buyers to check or repeat past orders.

For the vendors, on the other hand, marketplace websites need to ensure ease of management. That is, changing account settings or adding payment options must be convenient and straightforward.

Other details a seller may need to add:

• Company Name
• Contact Details like phone number and email address
• Social media links
• Rating and Review options
• Customer Testimonials

Some marketplaces also add an option to switch account types from a buyer to the vendor within the user profile section.

Homepage

The homepage is the first interaction between users and your MVP marketplace. So, it needs to be exceptional with straightforward UI/UX design, simple navigation, search filters and featured recommendations or popular products list.

You can also add a last viewed section to the homepage, allowing buyers to shop faster, without the need to look for the same items again.

Virtual Cart

A digital marketplace is an online platform where buyers may purchase one or more items at a time. Thus, a virtual shopping cart is a must-have feature to integrate within your MVP.

The cart should display details like a list of items added, total price, discount bar, delivery address, payment methods, and other additional comments. It should also allow buyers to add or remove items from the list before they proceed to check out.

Note that for an MVP marketplace PayPal or credit card are enough to have.

Add Listing (Sellers)

When it comes to sellers, a marketplace must allow them to add products and their details. They need an option to list multiple items, create new ones, add photos, descriptions, and availability of products to inform visitors if it’s out of stock or not.

Payout Management (Sellers)

Where buyers have payment methods, sellers get a payout management system. Your MVP marketplace must allow vendors to view payout details, retrieve earnings, and add or change the payout method.

Product Details

From a written description to visual content, sellers must provide all product details, including its availability, price, warranty (if any), and delivery options.

Review and rating also help buyers understand if the vendors and their products are reliable.

Changing Account Type

Instead of creating a new account, most e-marketplaces allow buyers to become sellers by switching their account type directly via their user profiles. You can keep it free or charge a selling fee.

For example, Etsy charges $0.20 for listing. Amazon, on the other hand, charges $39.99 per month for its professional sellers’ account, plus an additional selling fee. It allows users to switch account types from their profile, enter seller name, items, billing methods, and more.

Admin Panel

A marketplace must also have a separate panel for the admin to monitor all actions via buyers’ and vendors’ accounts.

Its must-have features for an MVP include:

• User management – Manage the list of registered users, create an account manually, edit, delete, or block users, and user search.
• Messages – Manage messages received via the Contact Us option on the website.
• Products Management – Create product lists, add details, availability, and more.

Read More: The Merits of Building a Minimum Viable Product

Calculate the Costs of Developing a Marketplace

Costs for Different Platforms

Development costs for a marketplace vary with the platform, due to the difference in platform requirements, device configuration, and more. Here is a breakdown of costs, as per the platform you choose to develop for:

Costs for Different Features of the Marketplace

Features for Service Providers

Sign-Up

You may allow service providers to sign-up with their email address, social login, or with two-step verification. It is recommended to have a two-factor verification to ensure the reliability of the service providers.

Seller Profile

The main goal of a seller profile is to provide relevant seller information to customers. The buyer will view contact information, seller rating, and the number of completed orders. Seller profile management includes editing, adding, and removing information regarding the seller.

Ratings and Reviews

It enables transparency between service providers and customers. It develops trust and increases the credibility of the service provider. These reviews and feedback will help sellers improve their products and service and enable easier decision-making for buyers.

Order Processing

Service providers can receive notifications for new orders, accept and decline order requests, view shipping information, and view order status.

Seller Dashboard and Analytics

A personal dashboard will allow service providers to monitor and manage their performance accordingly. As a service provider, you want to know which of your products are generating the most revenue, common issues faced by customers, and areas that need improvement. The right metrics will help sellers improve their performance.

Features for Customers

Sign-Up

Customers can sign-up their email address, social login, or two-step verification. It is recommended to have social login or two-factor verification as users don’t like filling long forms and prefer quick sign-ups.

Order Tracking

Customers do not like waiting for their products to arrive. It is frustrating to wonder when the product will arrive or if it will ever arrive or not. It is important to offer order-tracking, build credibility, and keep the customer at ease.

Product Search

Some customers browse the marketplace, unsure of what they are looking for. Such customers explore the products and then decide what to purchases. Other customers know what they want and prove to be power searchers. They quickly find it and purchase it.

The marketplace you are developing should cater to both types of customers. Integrate power search tools, which include category filters, product tags, and more.

Data such as most-viewed categories, most popular filters, and top search items can promote sales. It’s your job to make product-searching easy for them.

Chat with Sellers

Just like communities, online marketplaces require communication as well. Providing an active communication channel that allows buyers and vendors to communicate freely is essential. In-app messaging is the way to go. A communication-centric platform not only increases user engagement but also enhances user experience.

Multiple Payment Options

Advanced payment functionality is a core requirement of your marketplace. Enabling multiple payment methods will allow the buyer to complete payment comfortably. Many customers like having the freedom to pay through either credit cards or digital wallets like PayPal.

Push Notifications

Push notifications are integral to engage the customers, push offers and discounts, and reach the customer at just the right time.

Features for Admin Panel

The administrator is responsible for moderating the platform. Without an administrator, the quality of the platform can drop fast. Let’s look at the features required by the admin:

Authorization

The admin will be responsible for approving the registration of all users. Upon registration, users will receive an authorization email, which will confirm their approval to the platform. Verifying users sustains the quality of the platform.

Marketplace Management

The admin interface panel will oversee every activity and issue on the platform. The admin panel will include tools to support

• Product Management
• Publisher Management
• Profile Management
• Banner Management
• Order Management

Help and Support

In case of any issue or drawback faced by any user on the platform, requests will be forwarded to the admin panel dashboard. The support and help requests will then be managed by the authorized user.

Process of Developing a Marketplace

Knowing Your Technical Goals

Having a clear understanding of your requirements is the first step to building an incredible marketplace. Clearly communicate the requirements to your development partner and specify your expectations.

Designing the Marketplace

Designing takes up to 15 to 20% of the development time, depending on the complexity and functionality of the platform. The versatility and flexibility of the plays a vital role in the success of the platform. The design of the app is the single most crucial element of the app. Without a well-designed interface, there is no chance of attracting customers.

If you want to get a wireframe of the app before investing in the design, the estimate of the wireframe alone can cost you up to $5000.

Marketplace Development

Before the whole development process begins, setting an environment is essential. The developer needs to create a system that includes all the necessary APIs. In this stage, your ideas would come to life. This is where coding, designing, and quality assurance come together. This is your guide on how to build an online marketplace.

We, at Cubix, believe communication is essential in making anything work. Every piece of code, every design element, every functionality is communicated throughout the development process by our project manager. Apart from strictly sticking to deadlines, we make sure that every app we develop is thoroughly tested by our QA specialists to avoid bugs and issues in the future.

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Deployment and Testing

Testing the app is necessary before the big launch, as it helps detect errors and mistakes.

Deploying the marketplace app to the app store will make it accessible to the public, and it’s the developer’s responsibility to fully optimize the platform for the app store’s search engine so it can gain attention and recognition from the audience.

Read More: Why is a QA Tester Needed on a Software Development Team?

Maintenance and Support

For people to keep using your platform, the app needs to be regularly updated with new libraries to support new operating systems and new versions.

After-sales services are a crucial part of your platform’s lifecycle as it includes maintenance and support of the app.

Read More: How Much Does Mobile App Maintenance Cost

How to Choose the Right Development Company?

You certainly want to know all your options to create your marketplace platform. The team you hire will decide how your dream project ends up. Before hiring an agency, going through their portfolio, policies, experiences, and pricing are crucial.

Research, Research, Research

Learn about the agency’s projects and analyze its portfolio and expertise. Read testimonials and reviews so you can assess the agency’s abilities. Make sure you have communicated the project requirements effectively before deciding. After all, signing a contract means beginning a relationship, and you don’t want to be caught off guard in case of any drawback in the future.

Explore Your Budget and Set a Timeline

Developing a marketplace requires a lot of effort, money, and time. Make sure you hire an agency that can deliver high-quality results and reach your expectations within your budget.

Setting a realistic timeline is essential, so the development agency knows when to produce results.

Read the Contract

Make sure you read every point stated in the agreement. Go through the contract and discuss every legal obligation before finalizing the deal. Ask the development team about how to build a marketplace app for your business before signing a contract.

Ready to Develop a Marketplace?

In today’s digital times, we see online marketplaces taking over retail stores. Now is the best time to set up your marketplace and build a community of service providers and potential customers.

Wondering how to make a marketplace app? Our team is excited to hear your business idea. Schedule a meeting with us today!