Marketplace E-commerce

Table of Contents

This section will investigate the strategies of the Business to Customer (B2C), Business to Business (B2B) and Marketplace E-commerce. Furthermore, this part contains three main articles and this article will discuss Marketplace E-commerce.


Building an online marketplace with existing software has many benefits compared to coding from scratch. But comparing dozens of service providers and choosing the right one can be quite a challenge. This article helps you make the right decision. There are five approaches to building the technology that powers your online marketplace. You can either code a marketplace from scratch or pay a developer or an IT-company to do that for you. It’s also possible to build a platform on top of existing marketplace software, either by yourself or with outsourced help. Finally, you could use a hosted software-as-a-service solution that doesn’t require any coding skills.

In many cases, using existing online marketplace software is the fastest, easiest, and most cost-efficient way to launch your business. But there are dozens of solutions out there, and new ones are launched almost every month. How to choose the right one?

Comparing software providers carefully is important. After all, they will be offering the technology that powers your entire business. Therefore, this choice is arguably one of the most important decisions you’ll make.


5 Key Things to Finding the Best Marketplace Solution :

1. Focus of the Software

No software solution handles all different types of marketplace ideas perfectly. The more focused the software is to your specific online marketplace type, the more likely it is to be a good fit for you. Different dimensions affect the choice of marketplace software:

  • Is your marketplace about selling products or services?
  • If it’s about products, are they physical or digital?
  • Is it consumer-to-consumer (C2C), business-to-consumer (B2C), or business-to-business (B2B)?
  • Do you want to build a website or a mobile app?

As an example, Sharetribe Flex focuses on marketplaces in the “sharing economy”. That means C2C and B2C web or mobile platforms that deal with rentals (think Airbnb) or booking local services (think Handy, Treatwell or Rover). Meanwhile, Sharetribe Go supports also C2C marketplaces for selling physical products (think eBay), but it doesn’t allow for mobile apps. If you are focusing on digital products (think Themeforest), Marketify combined with Easy Digital Downloads might be a good solution for you.

Most online marketplaces do have lots of requirements in common. For example, platforms typically need listings, reviews, and user profiles in their feature set. But there are other features that are more specific to marketplace type. For example, marketplaces dealing with rentals or services will need a booking calendar, while marketplaces focusing on products don’t.


2. Extendability of the Software

Building a successful online marketplace platform is a process, not a project. The initial launch of your platform is just the very beginning. After launch, once you get data by talking to your users and looking at your analytics, you should be able to constantly adapt your platform. This means your software solution needs to be easily adaptable.

An off-the-shelf marketplace software tool is often the best solution for validating your idea and building your Minimum Viable Platform. But sooner or later, you will need to build features specific to your concept—your secret sauce that separates you from the competition.

Due to the unique nature of these features, your marketplace software vendor most likely won’t offer them out of the box. Building a new platform from scratch at this point is naturally an option, but doing that would take time and money you’d probably be more willing to use on growth. Not to mention you’d essentially be spending most of those resources building the kinds of basic features your Saas-powered platform already has.

That’s why it’s important to think ahead when you’re choosing your online marketplace software. Make sure the vendor offers the possibility to extend the platform to allow you to grow your marketplace without having to start from scratch.


3. The Company’s Business Model

Entering into a partnership with an online marketplace software provider is a major decision. Their technology and services will power your entire business, so you’ll want to be sure their interests are aligned with yours.

The best way to understand this is to look into how the software company makes money. If the company charges a large amount of money upfront—before you have even launched your marketplace—beware. In such a model, the vendor makes money whether you succeed or not. This means their incentive is to create an attractive-sounding software tool with a long list of features. This might mean they’re less inclined to offer tools that help you build, sustain, and expand your business.

If the revenue model of the vendor is based on your user count or transaction volume, you’re probably in good hands. When your software provider only makes money when you do as well, they have a strong incentive to develop their software tools and services in a way that helps your business succeed. Mutual benefit is typically a good starting point for a partnership.


4. Services Included in the Software

Does the software provider offer hosting, server monitoring, automatic software updates and data backups?

If you’re not technical, needing to set up the required hosting and backups might be a deal-breaker even if you do get the basic software out of the box. As your user volume grows, making sure your platform works smoothly and securely can require a full-time developer and take a surprisingly big chunk of your monthly budget.

You might also want to make sure that your software provider adheres to all the best security practices and handle regulatory compliance. For instance, in September 2019 the payment regulation changes in Europe, requiring marketplaces to adapt their transaction flow. It’s good to check beforehand that your marketplace software provider will take the responsibility to adapt to possible changes in local legislation, for example.

Many vendors offer some kind of free trial period. You should use this time before committing to a purchase, and test all the aspects of the software thoroughly.

During this time, it’s also a good idea to be in touch with the software company’s customer service. You will likely communicate with the customer support a lot as your platform starts growing, so you want to make sure they answer quickly and to the point, and that making yourself understood is easy.


5. The Company’s References

The software company you choose is an important partner, almost comparable to a new team member. If this relationship doesn’t work well, your business probably won’t either. You should approach the selection process with the same seriousness as you would approach recruiting.

Interview your candidates for marketplace software providers. Ask them how long they have been in business, how big their team is, what is their financial situation, and how many paying customers they have. Note that the number of paying customers is what you’re after, not how many marketplaces have been created using the software. Like we discussed earlier, you should be looking for a company that is invested in helping you create a long-term business. Ask them to provide examples of their most successful customers, both in general and in your domain.

You want to find a vendor that is willing to share such information openly. They should be able to demonstrate that they themselves have traction and that others have been able to succeed with them. You need to be able to trust the vendor fully, so they should take these questions seriously and answer them convincingly.

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