What comes to mind when you hear the words "online business"? Is your entrepreneurial spirit ignited when you see successful online marketplaces like Amazon, Etsy, or Fiverr? Do you want to learn how to develop a marketplace app? Congratulations! You have arrived at the right location.
To begin with, let us look at the big question: why develop a marketplace app? The answer is very simple: people love to shop online.
No need to blindly believe this statement. Here are some qualifying statistics:
The popularity of online shopping has led to the creation of online marketplaces offering virtually any and all types of products and services.
These can be for selling and exchanging products, renting accommodations, transportation services, auctions, food and grocery delivery services, logistics, teaching, and even job searches. Every now and then, new types of marketplace apps are developed and launched, indicating that it is a business venture with a potential for profits.
Online marketplaces create platforms for buyers and sellers to congregate together in large numbers. They act as intermediaries between various groups, providing convenient circumstances and necessary assurances.
Customers are attracted to transparent purchasing processes because they can easily see and compare related prices and stock availability, as well as choose from a variety of options without leaving a single platform. There is no need to visit multiple websites or travel to the mall; everything can be done with a few clicks or taps.
On the other hand, product and service retailers have access to a much larger audience. Small businesses and vendors who are hesitant to launch their own e-commerce websites may enter online marketplaces to avoid risk and secure a market position.
It is also a good way for marketplace operators to make money from transactions without having to maintain warehouses, deal with logistics, or manage other concerns.
Last but not least: online marketplaces need a lower initial investment because they are not physical stores.
Now you may be wondering, how does one go about creating an online marketplace, and what do marketplace app development services cost? Without further ado, let us proceed to the details.
Online marketplace app development process
A problem worth solving (and your idea)
You will probably have a vision for your dream marketplace app. A basic premise for your app’s success is that it should solve a problem that users face. You will need to identify a problem worth solving.
Marketplaces could be especially challenging because you must solve a problem for both the customer and the product or service provider. To put it another way, solving one big problem might not be enough — you will probably need to solve two.
One of the most common causes of marketplace failure is the inability to solve a real problem. Make certain that your marketplace idea does not succumb to this trap.
From the perspective of a customer, a good marketplace will serve as a one-stop destination where they can find all the retailers of the same service and compare them easily. On the other hand, a retailer needs a platform to acquire more customers. If your app can resolve the problem of both parties, it is a win-win situation.
Sustainable business model
You will have to come up with a revenue model to fund your marketplace platform's operations if you want to make it a long-term success. In most cases, ongoing funding will have to come from the people you are serving — your app's customers. One of the most common reasons for a startup's failure is that it uses a business model that does not scale for long-term viability. Major business models for online marketplaces are given below:
MVP for marketplace startup (minimum viable product)
After you have figured out the customer’s problem and decide on a business model, it is time to check how well your project idea fits in the target market. To do that, you need to develop an MVP (minimum viable product).
An MVP may be described as the version of a new product that helps a development team to gather the most validated customer learning with the least amount of effort. The MVP concept is closely associated with agile software development.
The goal of agility is to quickly create, execute, and learn. Your MVP for marketplace startup is a simple fix that solves your users' main problem better than other options already in the market. After that, the product is made available to your users to begin the learning process.
Whatever type of online marketplace app you develop will need these two components: an administration panel and a user platform. The administration panel is used to regulate product inventory, customers, orders, payments, and other settings. This panel is completely hidden from clients and is part of the backend services.
Depending on the business model, the user platform can include single or multiple dashboards for different user functions, such as buyers and sellers. It must have these essential specifications:
More features may be added later as required and depending on the learning you get from your MVP. Additionally, the creation of a mobile app for users is highly recommended as people are increasingly using their cell phones to make purchases.
Starting the development process
Before diving into the creation process, it is important to remember that online shopping has come a long way since the first marketplace apps were launched – and have become popular over time. People are more accustomed to browsing, booking, and paying for things online, and they expect excellent user experiences. In other words, the bar has been raised significantly.
The bottom line is that delivering something that basically works is not enough; you must deliver something outstanding from the start. The problem is that the more you require a complex solution, the more difficult it is to create it.
Trying to create an online marketplace app on your own ─ if you do not know how to code or have only basic programming skills ─ can be a challenging task. It can easily nullify the goal of rapidly launching and evaluating.
So, what are your options? The practical answer is very simple: identify a reputable development partner.
Choosing an appropriate development company
This is a crucial step in the development of your online marketplace app. Choosing the right development team is critical to the success of your project. You should conduct a lot of research and thoroughly examine a potential marketplace app development agency's credentials.
You should review recent projects, systems and processes, customer testimonials, and available technical experts to get a clear idea of a development company's skills and viability.
Advise the development firm concerning your concept and proposed business model, and request a project plan, including a cost estimate. After you have selected an online marketplace app development company and have agreed on deliverables and the budget, you must sign a contract.
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 marketplaces connect 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.
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 take a look at the process and costs of developing a marketplace platform.
Foodly, a restaurant marketplace app, can give you a good idea of the diverse array of features that may be added to elevate customer experience. Foodly has a number of components that make it a technically advanced yet easy-to-use marketplace app.
Profiles can be created by both users and brand owners. Users can find nearby restaurants, manage their orders, and track status. Menus can be listed with groupings for breakfast, lunch, and dinner. Brand recognition may be increased through user ratings and reviews.
You need to keep in mind that an online marketplace business is a technology-intensive and long-term initiative. To create a sustainable and successful marketplace platform, you need a reliable development partner who has the required technical skills coupled with practical experience. Identify such a partner, and you are well on your way to accomplishing your dream!
The cost to build a marketplace app depends on the following factors:
Types of marketplaces
Before we dive into the details of marketplace development costs, here's a breakdown of the types of digital marketplaces:
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 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 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.
Analyze the market and start small
The first step to create your marketplace platform is to focus on the 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 investing in a marketplace mobile app is a lucrative business opportunity:
Building a successful marketplace
The success of a marketplace depends on it comprising 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:
Marketplace development resources
The development team to build a marketplace website usually includes: Dedicated Resources:
Ensures effective communication between the client and the development team. Ensures deadlines are met and helps avoid misconduct with the client.
Is responsible for the right communication between the database, server, and the marketplace platform. Takes care of the flawless functionality of the web.
Writes the codes and integrates the mobile app with the data source. Is responsible for fixing bugs in the app.
Takes care of the interface. Ensures that the platform’s look and feel resonate with the brand persona. Responsible for web and app optimization.
Responsible for uninterrupted system administration, supporting the development team, and enabling successful deployment.
Ensures that the platform meets all requirements, controls design and code quality, and ensures that the platform runs flawlessly.
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 examine the details concerning the price structure.
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. So, 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 other software agencies, 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.
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.
Cost of Building a marketplace app with freelancers
Freelancers will develop your marketplace at a fraction of the price. It will help minimize costs but comes with various associated risks, 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 what $50 per hour entails
To build an e-commerce marketplace, let’s dive into the breakdown of this price.
The major parameters are:
Embedded analytics, smart notifications, filtering and feeds, product videos, order tracking, various payment options, replacement plans, promotional events, social interaction elements, such as a chat feature, or social media sharing, may be included depending on the structure of your marketplace app.
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 in more than 8 hours every day. What does this mean? It refers to your professional expertise, multiple workshops, agile working hours, and revision.
Selecting a platform and working on it takes approximately 530-695 hours, depending on whether it’s Android or iOS. Designing the web panels, APIs, frameworks, and libraries take up to 1589 hours or almost 10 weeks. $79,450 plus $5,500 cover the required development hours where project managers, developers, and UI designers work hard by putting in 10 weeks’ worth of time for your marketplace project.
From revising requirements and choosing a platform to designing Admin and Service Provider panels and integrating APIs for web services, we involve the client in every step. We stick to the agile model of SDLC as we believe in building relationships with our clients, not a business deal. We aim to make sure the project we deliver is exactly the same or even better than what the client is paying for.
Now, let’s dive into the non-development hours the tech team puts into the marketplace app. The UI designers and core developers work hand in hand for 110 hours to set up the architecture and database of the marketplace platform. 110 hours are divided into 55 hours for each. From research to coding to executing, the project manager, the developers, and the database administrator work relentlessly to deliver things on a strict deadline.
Network, testing, and release per sprint take almost four weeks. These tasks take 5.7 weeks to complete requiring the team to put in 973 hours collectively in total for these tasks only. While we charge 50$ 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.
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.
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:
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:
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.
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 addresses, 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:
Some marketplaces also add an option to switch account types, Buyer or Vendor, within the user profile section.
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.
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 your credit card is 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.
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 names, items, billing methods, and more.
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:
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:
All iOS devices, including iPhone, iPad, MacBook
All Android devices, including Samsung, Huawei, Lenovo, and others
iOS and Android
All iOS and Android devices
Costs for different features of the marketplace
Features for service providers
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.
Sign-Up with Email Address and Password
Social Login, with Facebook, Twitter, LinkedIn, Google+
Two-Step verification, with a unique code, is sent to the users’ mobile phone.
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.
Simple profile with contact information and rating
Complex profiles with one-on-one interaction with customers
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.
Rating and reviews on seller profile
Service providers can receive notifications for new orders, accept and decline order requests, view shipping information, and view order status.
Complete order information, from order placement to delivery
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.
Seller dashboard with a graphical summary
Analytical metrics to review periodic performance
Features for customers
Customers can sign-up with 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.
Sign-Up with Email Address and Password
Social Login, with Facebook, Twitter, LinkedIn, Google+
Two-Step verification, with a unique code, is sent to the users’ mobile phone.
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.
Order status update via email
Real-time tracking of orders when dispatched
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.
Arrange products into categories and sub-categories
Wish List for users to mark products they are interested in
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.
Live text chat with sellers
Audio calls with sellers
Chatbot for instant queries
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.
Handle and store card data directly
You enjoy customized branded experience for your clients, which includes Payment Card Industry Certification.
Existing mobile POS
Accepts payments through a mobile point-of-sale app. PayPal is an example.
Mobile payment widgets
Using gateways like Stripe or PayPal. Card data is handled by their libraries, restricting your exposure to PCI compliance and effort of implementation.
Using a gateway API
Applying gateway API gives you full control over user experience. The advanced-development-complexity expense and gateway lock-in.
Push notifications are integral to engage the customers, push offers and discounts, and reach the customer at just the right time.
Drop messages to customers at any 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:
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 with the platform. Verifying users sustains the quality of the platform.
The admin interface panel will oversee every activity and issue on the platform. The admin panel will include tools to support
Management of products, categories, profiles, orders, and more.
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 a 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 play 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 .
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.
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.
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.
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 because the development agency needs to know 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 your marketplace app?
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!