How to Build a Marketplace Website from Scratch?

The dominance of Amazon Marketplace inspires and, to some degree, crushes the enthusiasm of digital entrepreneurs.

It is inspiring because Jeff Bezos literally started the world’s largest online marketplace in a garage after borrowing a quarter-million dollars from his parents. Back in 1995, he was effectively a garage band that seemed destined to play weddings and bat mitzvahs before producing a platinum record. Crushing because Amazon continues to monopolize e-commerce by selling and delivering everything from breakfast cereal to bling, while streaming shows, movies, and Thursday night football.

If there’s a linchpin that may help you come to terms with your fear and desire to launch your marketplace website, it’s the fact Amazon’s competitors are also prospering. Companies that include Etsy, eBay, and Wayfair have also gained household name traction. Lesser-known platforms such as Shopee, Trendyol, and Tokopedia handle enough traffic to be ranked in the Top 50 marketplaces. Building a marketplace website from scratch might not make you the richest person in the world, but it could very well generate enough revenue to get you a home in Telluride and a beach house on the coast. This is what you need to know about building a marketplace platform.

How Does a Marketplace Website Function?

If you’re considering starting a digital marketplace, you probably understand it’s a space designed to host a variety of sellers and promote their wares to consumers. As the sole proprietor or entity that owns and operates the platform, you’ll take a cut of the e-commerce traffic in some fashion. Amazon manages both sales and doorstep distribution.

That does not necessarily mean you have to be a soup-to-nuts operation. Carving out a niche and providing a quality service at a lower cost can help you onboard product manufacturers and sellers. There are wide-reaching products that can be sold over the internet and plenty of operations hungry to get out from under the Amazon monolith. In terms of what type of products and services to offer, it may be prudent to build a marketplace brand known for one of the following niches.

  • B2B: Business-to-business marketplaces promote products and services for companies rather than individual consumers. An example involves positioning your website as a trustworthy wholesaler. Companies that buy in bulk from a B2B marketplace platform base their decisions on whether they can earn a high return on investment. If you can do it better and cheaper, the B2B niche could be a big win.
  • B2C: Business-to-consumer marketplaces follow the classic model employed by Amazon, Etsy, and the like. Launching a successful platform in this vein also calls for doing it better and cheaper. If there’s a competitive edge to be found, it’s the fact household name marketplaces tend to be oversaturated. Focus on attracting products that have seemingly been lost in the shuffle, so to speak.
  • C2C: Building a customer-to-customer marketplace website involves connecting private parties who buy, sell, and barter. Operating this type of platform doesn’t typically generate revenue from the C2C users. Sites such as Craigslist are able to turn a profit from sellers who pay for ad optimization. Craigslist also charges a nominal fee for posting employment ads. It’s akin to publishing a free magazine but charging businesses for the advertisements.

It’s important to note that you don’t have to form a business that tailors solely to one of the marketplace types. As a startup, the initial platform could separate B2C, B2B, and C2C by crafting specific web pages and click-through tabs. Amazon, for example, has benefited from venturing far beyond its initial business plan as an online bookseller.

Tapping Into the Benefits of Launching a Marketplace Platform

Entrepreneurs arrive at a place where they see niche products or services that can be marketed online. Some are involved in offline businesses that are digitally underserved and model a marketplace website after their needs, and others who are similarly situated. Some identify gaps in the system and create a platform that brings the innovative services and products of others to consumers. Regardless of whether your current enterprise gains greater exposure or you promote the wares of others, these are benefits marketplace operators experience.

  • Revenue: The primary purpose of for-profit organizations is to make money, and a digital marketplace website can create wealth. U.S. marketplace operations reportedly earn between $100,000 and $1 million annually, with exponential growth opportunities. Etsy, for example, reportedly pulls down $1.82 billion in gross profit.
  • Vendor Interest: A rising tide lifts all boats. So does a well-orchestrated marketplace platform. As you onboard sellers, other vendors will be attracted to a space that caters to their niche products and services. Expect a tipping point in the company-building process when your enterprise becomes the trendy place to sell.
  • Investors: As the Amazon narrative goes, Jeff Bezos borrowed $250,000 from his parents to start an online book-selling marketplace. Today, venture capitalists are more inclined to back a digital platform designed to carry out online transactions. By creating a sound business plan and crafting an effective marketplace brand, your startup could garner investment interest that pushes it forward.

To say wading into the digital marketplace business presents a wealth of possibilities would be something of an understatement. But getting from that garage platform to a Fortune 500 company tasks thought leaders with building a marketplace website that resonates with sellers and consumers.

Steps to Build a Successful Marketplace Website

Before considering things like website design, corporate structure, and branding efforts, it’s essential to conduct due diligence about your niche. One of the pitfalls some upstart businesses make involves failing to make a dispassionate assessment of the industry.

For example, it wasn’t that long ago that people with gluten and other food allergies thought there was a market to create brick-and-mortar restaurants and grocery stores to cater exclusively to their audience. It turned out that supermarkets and eateries added the “GF” label, effectively undermining the need to travel to select stores. The point is to remember that objective data, not personal inclinations, is the key to a successful business plan. If the numbers line up, then it’s time to take the following marketplace website-building steps.

1: Choose the Right Business Structure

As a digital enterprise, you have an opportunity to form a corporation in a variety of states. Some are more business-friendly than others. So, take a deep dive into the tax incentives each offers. That being said, you’ll need to select a structure that best serves your needs regarding minimal taxation and liability. Startup ventures typically benefit from Limited Liability Company structures that protect owners from lawsuits. They also tend to be less tax-heavy, depending on the state. Run through the different options and make an informed decision about which suits your marketplace venture.

2: Choose a Business Name

Surprisingly, few business visionaries know how to name their venture. Brainstorming sessions usually result in catchy monikers that don’t always translate into profit-driving success. Start by following your state’s naming guidelines. Avoid using a business name with a similar spelling or pronunciation to another outfit. This holds particularly true of e-commerce organizations because consumers could become easily confused when running Google searches. Limiting the number of characters and selecting something memorable is also important. You can learn more about how to choose a business name that will be right for your business.

3: Consider Functionality

Aligning website functionality with customers and consumers helps reduce what e-commerce gurus call the “bounce rate.” The bounce rate is a calculation used to determine how many misdirected or frustrated website users transition to another platform. Needless to say, if a potential buyer lands on your site, it’s in your best interest to complete the sale. These are features that streamline sales and minimize bounce rates.

  • Optimized Search Filters
  • Featured Products and Services
  • Shopping Cart Visibility
  • Wishlist Opportunities
  • Consumer Reviews
  • Product Recommendations

Making your checkout and payment processing features as user-friendly as possible also helps reduce the number of customers who exit before completing the process, and helpful delivery tracking tools lower the rate of last-minute cancellations. Learn more about how you can improve your checkout experience

4: Select the Appropriate Tech Stack

A tech stack involves the digital toolset you’ll need to build a marketplace website from scratch. If this were a single-family home, the tech stack would be comparable to the hammers, nails, circular saws, and lumber used to frame the structure. Online tools typically include language programming, database management options, frameworks, and other items. These are the three key things you need to accomplish with a startup website.

  • Agility: The platform will likely evolve as you acquire new sellers. It’s not unusual to experience interest in peripheral outfits. The ability to bring them into the fold by tweaking the marketplace platform allows you to grow the operation in unexpected ways.
  • Scalability: Once the website becomes operational, the flood of traffic and efforts required to provide top-tier customer care can task you and your team. It may be in your best interest to outsource aspects of your managed IT needs. Brokering a deal with a reputable third-party firm should include scalable services. These allow you to increase and decrease IT needs to be reflected in profit-driving activities.
  • Cybersecurity: Hackers consider marketplace and e-commerce platforms high-value targets. That’s largely because these sites deal with credit card numbers, bank accounts, and link businesses and people. The digital assets accumulated by platforms can be quickly sold on the dark web. Enlisting the support of a cybersecurity expert is an absolute must. Should your startup company suffer a data breach, the losses and reputational damage could cause it to shutter.

If you are more of a visionary than a website builder, there are marketplace builders like Softr for example that don’t require coding and can help you set the fundamentals. Don’t hesitate to reach out for advice, and support, and use free online tools and guides to save money.

5: Promote Your Marketplace

Once your platform has been created and launched, it’s time to market the brand. Consider using an eye-catching logo to attract customers and business partners on social media. Create profiles on Facebook, X (formerly Twitter), TikTok, LinkedIn, and the many free social media platforms available to businesses. Add friends, post articles about products, services, and engage in consumer influencing whenever possible. During the early weeks and months, it’s imperative to drive traffic to the marketplace website in a cost-effective fashion.