How to Create a Marketplace Website That Hits the Spot?

Airbnb, Aliexpress, Uber – what unites these three super apps into one category? At first glance, there is nothing in common. But if you delve into the details, you will be surprised to realize that all of them can be considered marketplace platforms. 

Marketplace platforms are the results of the sharing economy, which gained traction in the 2000s. Just compare: back in 2010 the investment rate for marketplace projects was $4B. In 2021 it already reached $46b, with the US holding the biggest share in this growth. 

Still, in creating online marketplaces, many tricks need to be considered before the development stage. In this article, I will highlight the main stages of marketplace product development that lead to a successful application. So let’s start from the basics! 

What is a Marketplace Website?

Marketplaces are digital Person-To-Person (P2P) platforms where providers of goods and services find their customers, communicate and make deals. The P2P model plays the key element here, meaning that the main interaction on the website is made between users, while the marketplace itself connects them and helps its users by creating a convenient and trustable environment.

By the way, the potential of building a marketplace business is quite promising. In 2021 the retail e-commerce amounted to $5.2 trillion. Moreover, these stats are expected to increase by 56%, reaching about 8.1 trillion dollars by 2026.

According to Statista in 2023 Amazon became the most visited online marketplace on the US market. The platform accounted for 2.2 billion visits per month.  

4 Must-Have Features of a Marketplace Website

Building a marketplace platform does not require any goods production.  Yet, such a platform has other distinctive and high-quality characteristics that need to be included. Can users fluently interact with your platform, facing no bugs and hurdles? Most probably, if your app features the following characteristics:

  • Diverse Payment Services;
  • Clear Product Pages;
  • User-friendly Search & Filters;
  • Guest Checkout.

Diverse Payment Services

It would be beneficial to provide a variety of payment services or at least, some of the most popular payment services. Without this component, no transaction can be carried out within your marketplace. Besides, it would be nice, if your website/app has specific characteristics to provide the necessary level of convenience: 

  • Ability to generate receipts, tax invoices, and reports;
  • Developing a refund mechanism;
  • Linking the payment system to the shipping infrastructure;
  • The ability to split and delay payments. 

Clear Product Detail Pages (PDP)

Nowadays, search algorithms are elaborate, and users tend to look for specific products rather than vaguely wandering through your site. 

A common practice in marketing is adjusting the marketplace's structure and description text to SEO requirements, promoting the Product details pages instead of the Home or Category page.

What it leads to is that users pass on to your online marketplace through the search results, and their first stop is a product’s page. They find what they were looking for and probably don't even visit any other pages, going straight to the checkout. 

So if you want to keep your traffic competitive, the product pages are a thing to pore over for a while. 

The importance of a detailed description can hardly be exaggerated. This is what a PDP is for – providing all the necessary information about a product. 

So here is the list of features that will help to build strong relationships with potential users: 

  • A detailed description of the product and its provider; 
  • Highlighted important information of the product (with tags, etc);
  • Product page, that is consistent with your brand; 
  • Simplicity in elements, content, and navigation simple; 
  • Feature photos, video overviews of the product. 
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Well-developed Search and Filters

Elaborate search and filters are essential, especially when the user is still making up their mind about buying the product. The properly navigated search and filters help the user to find the right product for them intuitively. 

Using custom mechanisms, you can ensure faster and more specific search results. It is also vital to provide different approaches to viewing product lists and customize the navigation experience. 

Category filters are another feature that can boost your marketplace and make it more user-friendly. The basic fact here is that the more options users have, the more time it takes to select one. Filters can help to reduce these options and increase conversion rate, respectively.

There is a Baymard's article about comparing the different approaches to the filters arrangement. In short, the results of their study show that a horizontal filter bar, which frankly speaking isn't suitable for every website, significantly outperforms the left-sided one in terms of convenience and efficiency. The reason is that it allows for a user to keep their attention in one place – a user cannot do anything else at the same time anyway.

create online marketplace

Considering side bars, I would suggest removing long scrollable filters and show the relevant options only. The more complicated the filter is, the more likely people won't use it. 

I also can't help mentioning the difference between batch and interactive filters here. In the case of batch filtering, the user can adjust multiple options before the results of the compound query are returned, while interactive filters instantly return the results after each filter value is specified. 

Batch filtering is good-to-use, if you have heavy assets on your platform and there are some speed issues overall — it saves a user time between each request. On the other hand, it risks that a user selects a set of criteria leading to an empty result.

Interactive filtering is beneficial if you're building a large marketplace, where users tend to set only 1 or 2 filters, so they wouldn't need to fill all filter options and go straight to their results. The cons of such a filter are that you should have a good loading speed. Otherwise, your users will struggle selecting multiple filter options and waiting for a couple of seconds between them to continue. 

It's also annoying when the option bars change their location after each selection, and you need to scroll again to continue selecting more options. A good example of implementing the interactive filter can be seen at SportsDirect. 

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I wouldn't say that I prefer any of these, as when designing a filter system, the choice between using each filter type should depend on the marketplace's size, market focus, and target audience.

Guest checkout

“I don’t need to sign up for anything when I’m buying a perfume at a regular store” – this is a quote by a customer who was asked to register an account before he could proceed with purchasing the goods. Well, fair enough! 

About 37% of online shoppers in the US gave up purchasing because they were forced to register an account first. This makes a guest checkout a vital element of your marketplace web, as this is the point where the customer takes the last step to purchase a product. 

So I'd recommend here to provide a choice for a user, whether to register an account or not, and let customers do less work. Only after the user makes a purchase can you offer them to sign up. 

marketplace development with experts

Reviews Moderation

Reviews play a critical role in the customer’s decision-making process. Sometimes even a bigger one than the product’s characteristics. So having a review section on your marketplace is crucial for your business to hit it off with users. 

Besides, it is also essential to moderate users’ reviews and provide constant feedback. This includes pushing your manufacturers/sellers to answer the questions and provide support to user's requests on time in case they don't do that by themselves.

To avoid wasting your resources on moderating your partners' activity, I'd recommend creating the Loyalty program that would encourage sellers to proactively communicate with buyers. Boosting your outstanding sellers will increase the general level of competitiveness through the platform.

Simple Delivery & Return Policy

It is essential to support your customer not only during the purchase process but also after it. So the policy of delivering goods and returning them should be present on your website and be understandable and straightforward. 

Extra tip: do not make it too complicated

My advice on making your marketplace more convenient is not to overload the pages on your website with unnecessary banners, cross-up carousels, or recommendations. These elements can make the customer feel that your marketplace is not about bringing value and convenient experience, but forcing them to buy more through spamming with up-sale suggestions.

how to create an online marketplace

How to Create a Marketplace Platform: Step-by-Step Guide

It is crucial to learn your domain well enough (or even more than that) before creating an online marketplace website. Either it is an online meds store or an accommodation-sharing platform that you are building, you should conduct a profound market and user research to make your platform utmost smooth, detailed, and user-oriented. 

At Uptech, we practice an iterative approach to product development, which means we improve the product continuously. So here are the stages we come through within every iteration of building a marketplace.  

Product Discovery Stage

The product discovery process is a pinnacle in creating an online marketplace. This is the stage where you meet your users and learn their real needs. Some mistakenly believe that with a detailed marketing analysis of the market and customers, a discovery is a waste of time. However, I want to name a few Discovery artifacts that can give your marketplace a competitive edge. 

create online marketplace

Competitors’ Analysis

Even if we understand the market size and know our potential customers well, we might need to make sure that our competitors don't have a better solution yet. A competitors’ analysis is a great way to figure it out. 

Proto Persona

We could also create proto-personas to understand the type of customer we are working with. Proto persona is an artifact that portrays your customer and answers the question, “Who are we designing for?". 

When creating personas, we start with assumptions and then do research to validate them. This helps to understand if we actually need - for example - to provide text descriptions under the buttons (younger generations usually know all icons and their meaning, so we can get rid of them — if we're targeting the 18-24 years audience). 

Customer Journey Map (CJM) 

Marketplace is rather a complex platform, so creating a Customer Journey Map here is very important. In this artifact we highlight possible problems and potential solutions in general and identify deeper insights by analyzing the user's experience in steps they take in different situations.

Once we’ve traced users’ behavior through all steps, we can gather some insights to add new features to the app, or conversely, simplify the flow. 

Users’ Interviews

After testing our hypotheses we build the prototype and conduct user interviews. Via interviews we make sure that people are using our product as it was actually designed and have no difficulties or constraints while using it.

Creating and Testing Design Prototypes

Based on the research conducted during the discovery stage, we build design prototypes that reflect the primary user flow. Such prototypes should already envision the idea of the product and embody its basic functionality to test it with real users. 

In fact, design prototypes are not about design only. They reflect the general business logic of your product and show the basic functionality. For example:

  • Who is responsible for the delivery: provider or the marketplace? 
  • Who is taking care of the payments? 
  • How does the loyalty system work? 

We find the users from the potential target group within user tests and offer them to complete a goal on the given prototypes. We try to be as objective as possible in this process, not making the user cling to one option only. The key is not letting your initial assumptions stay in the way of the customer’s decision-making process. All you can do here is observe. 

create online marketplace

Software Development

After the design team creates and approves the concept and UI part, the development phase starts. The coding part usually consists of two stages: frontend and backend. At the first stage, the technical part must be solid enough for your app to scale up in the future (if you aim for scaling). For that, you need to: 

  • Make sure you have a sufficient number of partners-providers who will attract users to your website ("chicken or the egg" dilemma). Sadly, you cannot enter the market with a blank page of offers; 
  • It is always better to enter the market slowly and gradually, with enough time for development and scaling. With a proper strategy, your website has fewer chances of crushing. 

Product’s launch on the market

Finally, all the time and effort you have spent for discovery, testing, and development come to one rewarding outcome – the product’s launch. Yet, the work is not finished here, and what you need to do once the launch is completed is tracking the analytics of user’s behavior on your website. Usually, the moment of the launch is the point where you get the most important insights. So it is essential to take them into account, test, and add to the existing functionality. 

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Post-Development Activities

If you want your online marketplace website to prosper and your customers to revisit your site, you need to maintain and scale it. To that end, there is a list of activities that you can do after the development part is over: 

create online marketplace

Constant iteration and tests

To keep afloat on the market, you need to constantly find new ways of improving your marketplace once in a while by running one iteration by another. This is especially the case if you are aiming at or are already taking the lead positions. You need to be active in this, trying to be ahead of tendencies rather than reactive. 

By tracking your customers’ behavior at every point of their presence on the website, you get priceless insights that can take your marketplace up a notch. And the best news here is that it is free. 

Extending your functionality for partners

Your basic functionality will be tied to the customers who come to the website for a shopping experience in building a marketplace. 

However, a moment comes when you need to think of the partners who provide goods on the marketplace website. So it would be great if you came up with specific functionalities for providers. Even though care for partners comes after the customers, it still needs your attention for building trust and partnership.  

Developed Partnership Guideline

Though, working with providers might be rather easy in the very beginning, since you're expanding, you might have some issues with managing dozens of your suppliers. So to keep this partnership successful, you need to set forth the terms for such a collaboration. This is where Partnership Guidelines come into play. 

This document covers all the guidelines concerning how the provider represents their goods and services. For example, it may contain policies on: 

  • Using graphic elements in the product’s sale page; 
  • Details in the product’s description; 
  • Customer support and reviews moderation policy. 

This makes your marketplace more organized and user-friendly: the customer understands the "common rules" of the platform and easily navigates through it. 

Remain consistent

While scaling up and adding features, many products may push it too hard, trying to cope with deadlines/testing new hypotheses. Under such pressure, it can be simple to lose track of design consistency, so to say, and become a "Frankenstein's creature". So I'd recommend creating a Design System and carefully following its rules.

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3 Challenges of Creating an Online Marketplace

Building a marketplace website takes courage, as many hidden stones may pop up. Well, as the saying goes: “Informed means armed,” so we have you covered here!

Here are three challenges to keep in mind when building a marketplace website:

Responding to the Users’ Need

One of the problems that are typical for startups is failing to meet user needs. In fact, many startups out there are built out of nothing but a desire to make a cool thing. While this is a praisable incentive, it is unlikely to bring customers to your e-commerce platform.

The solution here is to conduct a Discovery Phase. At this stage, you should get to know your target audience, their needs, desires, and stoppers to provide a valuable solution to your users.

Without the Discovery Phase, you risk wasting your time, money, and efforts on an idea which does not solve any problem.

Learn more about the Discovery Phase in our article What “Discovery Phase” Actually Means For Your Project.

Working For Two Target Audiences

Another challenge when creating an online marketplace is suiting the interests of two target audiences simultaneously – shoppers and sellers.

How to attract shoppers to a platform with no sellers?

The solution here is to provide helpful content on your marketplace explaining what potential sellers will benefit from signing up for your marketplace website.

For example, Uber offers their drivers payment even if they have no passengers. Thus, the company attracts drivers to the platform, bringing users to the app.

Creating Good UI/UX

Good UX/UI is a thing that is unfortunately overlooked sometimes. Well, on the one hand, it’s not about looks. However, UI/UX is much more than just a nice picture.

A product UX/UI, which is user-oriented and smooth, helps your users achieve their goals in the apps faster and feel satisfied. To make your UX/UI practical and helpful, you must fill the user flow gaps. And to know where the gaps are – you need to know your user, which brings us back to the first challenge in this block.

So I cannot stress it enough: it takes profound user research to build a great UI/UX.

Keep your e-commerce platform secure

Data security is one of the critical priorities for US businesses of any kind. Well, at least it should be. According to the 2021 Thales Data Threat Report, 45% of US companies suffered a data breach at least once during 2021.

Besides that, online e-commerce business usually deals with online payments, which is another security item to take care of.

To ensure customer data protection, businesses should undertake a list of measures. For example:

  • Multi-Factor authentication;
  • Alerts and notifications in case of unusual activity in the app;
  • End-to-end encryption;
  • Secure protocol access (HTTPS instead of HTTP);
  • Secure KYC process ( a multi-step process of users’ identity verification)
  • Non-disclosure agreements signed for employees and vendors;
  • Data loss prevention.

What’s the Cost of Creating a Marketplace

The cost of building a marketplace platform depends on several factors, like:

  • Features;
  • Time/Hours spent for the development;
  • Hourly rate of developers (in Ukraine about $50/hour).
how much does it cost to create an online marketplace

According to the table above, the average cots of marketplace app development is around $60,000. Mind, that every project is different and demands a separate cost estimation. So if you want to get to know the cost of you marketplace project, feel free to reach out our team.

Bottom Line

As a P2P platform, a marketplace is an app that requires a particular focus on user needs and a customer-first approach. Thus, the profound market investigation, user research and user tests, and other activities to acknowledge the user and needs are vital stages of creating online marketplaces. 

With the seven-year experience and profound expertise in marketplace building, we are ready to become a solid partner in making your idea come alive. 

Let’s build your next product! Share your idea or request a free consultation from us.